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Alex Bäcker's Wiki / Warren Buffett's $5 billion investment in Bank of America
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Warren Buffett's $5 billion investment in Bank of America

Page history last edited by Alex Backer, Ph.D. 12 years, 10 months ago

Warren Buffet makes $1.2 billion in 2 minutes. By announcing that he had invested 5 billion in Bank of America, the price went up 24% in 2 minutes. But that's just half of the deal! He also gets warrants to purchase 700M shares at a price that's already below the current price. He gets 10 yrs to choose when to exercise them. Warren will make well over 10 billion dollars with this transaction. Scale has its advantages. So does reputation.

 

 

It's an incredible deal. He gets a liquidation preference of $5 billion, which in a co. worth 80 billion even in bad times is pretty much an assured $5billion. He gets the warrants to purchase $5 billion worth of stock for 10 years at the lowest price it's been anytime but the 2009 crash. And he gets a 6% return paying him $300M per year in dividend.

 

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