FX168 financial news agency (Asia-Pacific) reports that the stock god Warren Buffett's Berkshire Hathaway has once again sold $0.863 billion worth of stocks in Bank of America (BofA), reducing the stake to 10.5%, approaching the regulatory threshold of 10% ownership.

According to regulatory documents, after completing the latest disposal within the three trading days ending on Tuesday, September 24, Berkshire Hathaway currently holds 10.5% of Bank of America's shares. As long as the shareholding percentage exceeds this threshold, the company must disclose the transaction details within a few days.

(Source: Bloomberg)

The 94-year-old Buffett started reducing this massive investment in mid-July.

Even after months of selling, Berkshire Hathaway's remaining stake in Bank of America is still valued at $32.1 billion. Based on Tuesday's closing price, it still maintains its position as the largest shareholder.

According to The Motley Fool article, Buffett has been a long-time fan of Bank of America, repeatedly praising its CEO Brian Moynihan. Since purchasing Bank of America preferred shares in 2011, he has held the bank's stocks.

Bank of America is the second-largest bank in the USA in terms of assets, and has long been Berkshire Hathaway's second-largest holding after Apple. However, Buffett has sold a significant portion of the stake in the past few months. In the latest filing submitted on September 10, Berkshire Hathaway stated that the company sold 5.8 million shares of Bank of America stock in just the three trading days before that day, with proceeds of approximately $0.23 billion.

Since mid-July, Berkshire has sold about $7.2 billion worth of Bank of America stocks. Buffett has not yet commented on the sale, but there are many speculations about it. Moynihan stated that he does not know why Buffett sold the stocks and cannot ask him.

Some people believe that Berkshire intends to reduce its stake to below 10%, so that it no longer needs to report its stock activities. Buffett earlier this year also told Berkshire shareholders that part of the reason for selling Apple stocks was to hedge against higher capital gains tax rates, although Washington seems to no longer consider such actions.

Berkshire's CEO may also simply want to raise cash to prepare for a possible economic downturn. After selling a large amount of Apple shares, the group's cash balance has reached a record high. Finally, Buffett and his team at Berkshire may no longer consider Bank of America as good an investment as before.

In its latest financial report, Bank of America announced mixed performance. This quarter, revenue remained flat, increasing by 1% to $25.4 billion, but net interest income decreased by 3% to $13.7 billion. Earnings per share dropped from $0.88 to $0.83.

The company's loans are growing, slightly up from the same period last year to $1.05 billion, with average deposits increasing by 2% to $1.91 billion, indicating growth on its balance sheet.

The Fed cut interest rates by 50 basis points last week, but the impact on Bank of America is expected to be mixed. With narrowing net interest margins, net interest income may decrease. However, a strong economy is good news for Bank of America, as it is expected to encourage more credit card spending, more consumer and business borrowing, lower provisions for credit losses, and an increase in refinancing and mortgage loan demand.

The company indeed expects net interest income to increase from $13.9 billion in the second quarter to $14.5 billion, benefiting from the repricing of fixed-rate assets due to the rate cut and the end of its paying bank yield index. The repricing of fixed-rate assets indicates some benefits for Bank of America from the rate cut, although the direct impact of the rate cut is expected to be negative.

As a stock, Bank of America appears to have solid value, with a PE ratio of 14 and a dividend yield of 2.6%.

Since Buffett started selling, the company has hardly changed, despite changes in the interest rate environment. Therefore, investors in the Bank of America may want to observe the company's business over the next few quarters to see how it performs in a declining interest rate environment.

In fact, the best reason to hold Bank of America stocks may be Buffett's long-standing support for the Bank of America business. Buffett previously stated that Moynihan won't do "stupid things". Berkshire selling Bank of America stocks does not seem to be due to any issues with the Bank of America business.

"The bank's stock is worth holding, and for value and dividend investors, this seems to be a good investment, " The Motley Fool concluded.