July 2, 2017 admin

Making $12 Billion

Still significantly undervalued with fundamentals and macro environment improving quarterly.  Write OTM covered calls, over them, to create additional income.  With the premium and dividend create a positive carry.

Warren Buffett’s bet on Bank of America Corp. is about to pay off with a roughly $12 billion windfall.

Warren Buffett Bloomberg Will Gold 100Capital Partners Denver ColoradoThe billionaire plans to exercise warrants obtained six years ago in a vote of confidence in Bank of America while its shares were tumbling amid multibillion-dollar probes tied to the housing meltdown. The cash infusion helped the bank put to rest doubts about whether it had enough capital, and its shares have more than tripled since then.

In the 2011 deal, Buffett’s Berkshire Hathaway Inc. invested $5 billion in Bank of America in exchange for preferred stock and the right to buy 700 million common shares, a stake now worth $17 billion. Berkshire said in a statement Friday that it would convert its preferred shares into common stock once the Charlotte, North Carolina-based bank increases its dividend, now planned for the beginning of the third quarter.

Buffett laid out his thinking for the conversion, which will make him the company’s biggest shareholder, in a February letter to investors, saying that the decision would come down to simple math: The preferred investment pays $300 million a year in dividends, so it makes sense to convert that into common stock if those shares began earning more.

See the entire article by clicking here.

Written by Noah Buhayar and Katherine Chiglinsky

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