Print edition: 
NEW YORK — The smart money is split on Bank of America.
Big investors George Soros and John Paulson are selling shares of the nation's largest bank. But Bruce Berkowitz, Thomas Brown and other fund managers find the stock so attractive that they are buying up boatloads. Billionaire investor Warren Buffett also invested $5 billion in the bank.
So, who's right?
For now, the sellers are winning this bet. Bank of America Corp.' s stock plunged 44 percent in the third quarter. On Monday it sank another 9 percent to $5.53, a level not seen since the financial crisis in March 2009. There has been customer backlash over a recently-announced $5 fee on debit cards and a several-day outage of its website.
The Charlotte, N.C., bank has been crippled by losses from poorly written mortgages, especially those from Countrywide Financial Corp., the subprime mortgage lender the bank bought in 2008. It's also fighting a barrage of lawsuits from the government and other large investors who say the bank should either buy back billions of dollars of faulty mortgage securities or pay damages. In the first half of the year alone the bank paid out $12.7 billion to settle such claims.
The best-known seller is Soros, who sold 1.2 million Bank of America shares in the second quarter. Paulson and David Tepper of Appaloosa Management each sold half of their Bank of America holdings in the same quarter.
Other investors are enticed by the low price of the stock. At around $6 a pop, the shares of Bank of America are the cheapest among large U.S. banks. Goldman Sachs Group trades above $90.
"Bank of America right now is very, very cheap," said Thomas Brown, CEO of hedge fund Second Curve Capital, who has been buying the stock in recent months.
Brown's recent shift turned heads because he was one of the most vocal critics of Bank of America for years when he was a widely followed financial analyst at Smith Barney and Donaldson Lufkin & Jenrette. Brown particularly disliked the bank's strategy of pursuing growth via acquisitions.
"It's poorly managed and it's still too big, but getting smaller, which is a good thing," said Brown.
Another optimist is Buffett, the renowned investor and CEO of Berkshire Hathaway. Buffett paid $5 billion for preferred shares that will earn him an annual dividend of 6 percent. He also gets the option to purchase 700 million shares of common stock at $7.14 per share. Buffett's warrants are worthless for now.
Fairholme Capital Management's Berkowitz bought another 7 million shares in the second quarter for a total of 99 million, making him one of the 10 largest shareholders of the bank. Berkowitz, who was named stock manager of the decade by research firm Morningstar last year, said he thinks the bank has the ability to generate enough cash to be well capitalized.
The reason the stock is so battered is that as the nation's largest mortgage lender, Bank of America holds the largest amount of troubled loans following the housing market bust. Investors fear that Bank of America might run short of capital because of large mortgage-related settlements it has struck with angry investors who bought securities backed by those problem loans.
Brian Moynihan, Bank of America's embattled CEO, has been desperately trying to shore up the bank's financial standing by selling parts of the company to raise cash. He also shook up the bank's top management ranks last month and slashed 30,000 jobs, after cutting 6,000 jobs earlier in the year. The bank says it is looking for more cost savings.
