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since mid-july, warren buffett has been aggressively selling shares of bank of america, the second largest bank in the united states. in the series of sales, buffett has cashed out about $6.97 billion, making the cash reserves of berkshire hathaway, which he controls, even stronger.

according to a new document recently submitted to the sec, berkshire hathaway reduced its holdings of bank of america shares for three consecutive trading days on september 3, 4 and 5, 2024, totaling 18.746 million shares, cashing in about us$760 million. bank of america is berkshire hathaway's third largest holding.

however, berkshire remains bank of america's largest shareholder, with a stake of approximately 11% worth $34.7 billion based on the latest closing price.

it is worth noting that if buffett continues to sell shares in the second-largest u.s. bank, his stake may soon fall below the 10% regulatory threshold. at that time, he will no longer be required to disclose transactions within two business days as he does now. buffett prefers to buy and sell stocks without quick public disclosure.

buffett, 94, built berkshire's investment in bank of america in 2011 through a $5 billion preferred stock and warrant deal. over the years, buffett has been increasing his stake in the bank and praising its leadership, but so far he has not publicly explained his recent decision to reduce his stake.

some analysts believe that the reasons include bank of america's overvaluation and buffett may be preparing for a shift in the federal reserve's monetary policy.

especially with the federal reserve's september interest rate meeting approaching, the market generally believes that the long-awaited "first rate cut" is finally coming. banks of america are very sensitive to changes in the interest rate cycle, perhaps even more sensitive than other banking peers.

bank of america has benefited greatly from the fed's most aggressive rate hike cycle in 40 years starting in march 2022. in the recent press conference after the fed's july interest rate decision, fed chairman powell has almost made it clear that interest rates will be cut in september, which means that bank of america's net interest income may be hurt more than its peers.

as for whether buffett's continuous selling really means that he will liquidate bank of america, it is still unknown. however, according to his habit, when he starts to sell a stock, he will eventually liquidate the stock. moreover, in recent years, berkshire has liquidated the stocks of many banks, including us bancorp, wells fargo, and bank of new york mellon.