Billionaire Warren Buffett Sold 39% of Berkshire's Stake in Bank of America and Is Piling Into a Historically Cheap Legal Monopoly

At the end of the year, billionaire Warren Buffett will officially step down as Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) CEO and hand the reins over to predetermined successor Greg Abel. In his 60 years at the helm, the aptly named "Oracle of Omaha" has overseen a cumulative return in his company's Class A shares (BRK.A) totaling more than 5,884,000%, as of the closing bell on June 27.

Although Buffett is 94 years old, investors still wait on the edge of their seat for clues as to which stocks he's buying and selling. After all, mirroring his trading activity has been highly profitable for decades.

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Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

Berkshire Hathaway's quarterly Form 13F filing with the Securities and Exchange Commission (SEC), along with select Form 4s, provides investors with a concise snapshot of which stocks Warren Buffett has been purchasing and selling.

Based on a slew of regulatory filings, we know the Oracle of Omaha has been a persistent seller of Bank of America (NYSE: BAC) stock for three consecutive quarters. But we also know he's been absolutely piling into a historically cheap company that's one of Wall Street's few legal monopolies.

Berkshire Hathaway's billionaire chief is ringing the register on Bank of America

In instances where Berkshire Hathaway holds a 10% or greater stake in a public company, such as Bank of America in July 2024, it's required to file Form 4 with the SEC within two business days. A Form 4 details all buying and selling activity in a stock.

On July 17, Warren Buffett began dumping shares of Bank of America (also known as "BofA"). Between July 17, 2024 and March 31, 2025, Berkshire's billionaire chief sent more than 401 million shares of BofA to the chopping block, equating to a reduction of around 39%.

Some of this selling may represent nothing more than simple profit-taking. Before Buffett ramped up his selling activity in BofA, he opined during Berkshire's 2024 annual shareholder meeting that the peak marginal corporate income tax rate would likely climb in the future. With President Trump's flagship Tax Cuts and Jobs Act reducing the peak marginal corporate income tax rate to 21%, which is its lowest level since 1939, Buffett intimated that investors would, in hindsight, appreciate Berkshire Hathaway for locking in gains at an advantageous rate.

But it's also possible more nefarious factors have played a role in Buffett's decision to jettison north of 401 million shares of Bank of America since mid-July of last year.

For example, BofA is the most interest sensitive of America's money-center banks. When the Federal Reserve rapidly increased interest rates from March 2022 to July 2023 to curb the highest prevailing rate of domestic inflation in four decades, it sent Bank of America's interest income screaming higher. However, with the nation's central bank now in a rate-easing cycle, there's the potential for BofA's interest income to decline at a faster pace than other large U.S. banks. It's possible Berkshire's billionaire chief was anticipating a decline in interest income.

The other issue that may have enticed Warren Buffett to dump around 39% of his Bank of America stake -- it still represents one of Berkshire's largest holdings by market value -- is the company's valuation. Though some of Buffett's unwritten investment rules have, on occasion, been broken, the one unbendable rule Berkshire's CEO stands by is valuation. He won't chase after companies whose shares don't offer perceived value.

When the Oracle of Omaha initially invested in BofA's preferred stock in August 2011, its common stock was trading at a 62% discount to its book value. As of this writing on June 27, BofA's common stock is now trading at a 29% premium to book value. While this isn't particularly pricey, it is well above average for BofA over the past 15 years.

Image source: Sirius XM.

Warren Buffett is dialing up shares of this super cheap legal monopoly

Despite being a net seller of stocks for 10 consecutive quarters, to the tune of $174.4 billion (in aggregate), Berkshire Hathaway's brightest investment mind has found a few companies that check all the right boxes. One of the stocks he can't seem to get enough of is satellite-radio provider Sirius XM Holdings (NASDAQ: SIRI).

Since the merger of Sirius XM's common stock with that of multiple classes of Sirius XM's tracking stock, Liberty Sirius XM Group, during the second week of September last year, Buffett has been pressing the buy button with some degree of regularity. Between Sept. 30, 2024, and March 31, 2025, 14,621,663 additional shares of Sirius XM were purchased, which brought Berkshire Hathaway's total stake in the company to 119,776,692 shares. This represents more than 35% of Sirius XM's outstanding shares.

The broad-based lure of Sirius XM as an investment is simple: It operates as a legal monopoly. While it still faces plenty of competition for listeners from terrestrial and online radio companies, there isn't another company licensed to operate satellite radio. This unique distinction does afford Sirius XM a degree of subscription pricing power that traditional and online radio companies would struggle to match.

But what's arguably far more important than Sirius XM's legal monopoly status is the way it generates revenue. Traditional radio providers bring in almost all of their revenue through advertising. Though this works great during long-winded economic expansions, sales can dry up quickly during periods of heightened fear and/or downturns.

In comparison, Sirius XM generated only 19% of its first-quarter net sales from advertising. The bulk of its revenue (77.5%, net) comes from subscriptions. When the going gets tough for the stock market or U.S. economy, subscribers are far less likely to cancel or alter their service than businesses are to pare back to marketing budget. This leads to more consistent cash flow for Sirius XM year after year.

Something else that's helped differentiate Sirius XM from more traditional radio companies is the partial predictability of its cost structure. While royalty and talent acquisition costs are going to vary from one quarter to the next, transmission and equipment costs remain relatively static no matter how many subscribers the company has. This means a steady or growing subscriber base, coupled with Sirius XM's reasonably strong pricing power, should lead to operating margin expansion over time.

Lastly, Sirius XM stock offers Warren Buffett something that he's struggled to find on Wall Street for almost three years: a good deal. Even with the "Buffett Indicator" just a fraction below its all-time high, shares of Sirius XM can be scooped up for less than 8 times forecast earnings in 2025 and 2026. This represents a 60% discount to its average trailing-12-month earnings multiple over the last five years, and a 45% discount to its average forward-year earnings multiple since 2020.

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Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America and Sirius XM. The Motley Fool has positions in and recommends Bank of America and Berkshire Hathaway. The Motley Fool has a disclosure policy.