I don't fault myself too much for selling early, because at this point the shares seem to be trading at an irrational premium. It is difficult to know when to sell with this fund because obviously the premium can keep going higher, but there is no fundamental reason for BIF to trade at a premium at all.
During 2005 and early 2006 the fund persistently traded at a double-digit discount, and the only change in BIF since then is that the fund adopted a $0.10 per month distribution policy. Apparently investors like the new managed distribution policy, even though according to press releases, the distributions consist of mostly a return of capital. I may be old fashioned, but if I owned a fund that was trading at a premium, I would want its distributions to consist of actual dividends and capital gains, rather than a return of capital. If a fund was trading at a discount I would be somewhat less concerned about this.
Also, speaking of managed distribution policies, here is a letter (.pdf) on the topic that was recently sent from the SEC to BIF's chairman.