A new "eighth giant" has emerged in the U.S. stock market

On Wednesday, Warren Buffett's Berkshire Hathaway became the first non-tech U.S. company to surpass a $1 trillion market capitalization, joining an exclusive club dominated by companies like Apple and Microsoft.

Over the past six decades, Buffett has transformed the massive conglomerate into a powerhouse that touches nearly every corner of the U.S. economy. Its rail cars run on over 32,000 miles of track across the nation, it owns a key parts manufacturer for Boeing, and it operates one of the largest auto insurance companies in the U.S.

Buffett, who turns 94 this Friday, has been selling stocks throughout the year, including half of Berkshire's stake in Apple, generating huge trading profits and reinvesting the proceeds into cash and short-term U.S. Treasury bonds.

Berkshire continued selling part of its holdings

On Wednesday, Berkshire continued selling part of its holdings in Bank of America. Since mid-July, Berkshire has sold Bank of America stock in five of the past six weeks, unloading a total of 129 million shares and earning $5.4 billion from these sales.

Berkshire has not disclosed the motivation behind selling part of its Bank of America shares. It remains the bank's largest shareholder, holding over 900 million shares valued at more than $35 billion. Currently, Bank of America is Berkshire’s third-largest position, behind Apple and American Express.

During Buffett's selling spree, Bank of America's stock price has dropped by more than 9%. So far this year, the stock is still up by about 18%, trailing behind competitors like Goldman Sachs, JPMorgan, and Citigroup.

Berkshire still remains the bank’s biggest stockholder

The string of sales signals Buffett’s biggest pullback from an investment that long served as a stamp of approval on the leadership of Bank of America Chief Executive Officer Brian Moynihan, whom the 93-year-old investor has repeatedly praised in public.

Berkshire still remains the bank’s biggest stockholder — with 903.8 million shares worth $35.9 billion, based on Tuesday’s closing price.

A representative for Bank of America declined to comment. Berkshire didn’t immediately respond to a request for comment outside of normal business hours.

Berkshire’s market value has increased

Buffett first invested in Berkshire in 1962 and took control of the struggling textile manufacturer three years later. Over the following decades, he and his late partner, Charlie Munger, transformed the company into an insurance giant, using premiums as capital to acquire companies and invest in stocks.

Berkshire’s recent performance:
1. Berkshire’s market value has increased by more than $200 billion

2. Its Class A shares rising nearly 30% since the start of the year

3. Berkshire’s Class A shares closed at $696,502, up 0.8%.

4. The company’s cash reserves surged to a record $277 billion in June


Jeff Muscatello, a research analyst at Berkshire investor Douglass Winthrop, attributed the company's long-term stock growth to the "consistency of their approach" and Buffett's investment rules since he took over the company in 1965.

"The first rule is not to lose money," Muscatello said. "The second rule is not to forget the first rule and to let the power of compounding work over a very long period."

Buffett has not overlooked the rising valuations of Berkshire's stock and the broader market. In May, the billionaire slowed the company’s stock buyback plan and revealed in June that no shares were repurchased that month.

Buffett has full discretion over the buyback plan and typically limits repurchases when he believes the stock is overvalued. He found little appealing to invest in the public markets. While Berkshire's reluctance to make acquisitions in the past has sometimes worried investors, few are sounding alarms now. At Berkshire’s annual shareholder meeting in May, Buffett remarked:

"When I see the alternatives available in equity markets and what I see happening in the world, we find building cash positions attractive."

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