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How To Make $12 Billion In 2 Steps: Step One, Be Warren Buffett ...

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How To Make $12 Billion In 2 Steps: Step One, Be Warren Buffett ...

Warren Buffett is having a pretty good week. How good? $12 billion good.

Warren Buffett's investment firm Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) will not only collect a $12 billion profit in an investment made in Bank of America Corp (NYSE: BAC) six years ago but will also become the bank's biggest shareholder, CNBC reported.

Bank of America inked a deal in 2011 in which Buffett will buy $5 billion worth of preferred shares. The shares pay a 6 percent annual dividend, or $300 million. But after this week's "stress test," Bank of America said it will boost its annual dividend payout and Buffett is ready to cash in.

Buffett plans on swapping the $5 billion preferred shares it bought years ago for the common stock in a cash-free transaction at an exercise price of $7.14 versus Friday's trading price of around $24.30 per share.

Buffett will also begin collecting 48 cents per share in dividends which amounts to $336 million annually, CNBC added.

Buffett's move shouldn't necessarily come as a surprise. In his recent letter to shareholders he said that there are no plans to execute the warrants until the 2021 deadline unless the dividend payout would rise above 44 cents per share.

In addition to being Bank of America's biggest shareholder, Berkshire remains Wells Fargo & Co (NYSE: WFC) biggest shareholder as well.
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Image Credit: By USA White House - https://www.whitehouse.gov/photos-and-video/video/2011/02/16/2010-presidential-medal-freedom-recipient-warren-buffett, Public Domain, via Wikimedia Commons

Posted-In: banks Berkshire stress test Warren BuffettCNBC News Dividends Media Best of Benzinga

 

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