So, Warren Buffett’s Berkshire Hathaway is now the largest single shareholder of Bank of America. He recently converted his $5 billion holdings of BofA 6% preferred shares and warrants into 700 million shares of common stock. With BAC currently trading at $24.82 a share, Berkshire Hathaway’s holdings are now worth $17.34 billion.

Unrealized gains of $12.34 billion - not bad for a 6-year return on investment. And lest we forget that Berkshire Hathaway also took down $300 million each year in preferred share dividends.

BUFFETT’S SWEETHEART DEAL WITH BANK OF AMERICA.    In August 2011 Buffett helped bail out Bank of America, whose shares had fallen 30% in the first 3 weeks of August over concerns the bank didn’t have enough capital. Berkshire Hathaway provided Bank of America with a $5 billion cash infusion, along with an implied imprimatur, or endorsement, from the most respected investor in America.

For his “troubles,” Buffett and Berkshire Hathaway received $5 billion worth of preferred shares that paid a 6% dividend. He also received warrants for 700 million shares of company stock - with an exercise price of $7.14, the price at which BAC shares then were trading. FYI - later that year, BAC’s market value dipped further as shares fell below $6. But of course, that was only temporary.

BERKSHIRE HATHAWAY’S OTHER WALL STREET HOLDINGS.    Just so you don’t think that Warren Buffett is a one-trick pony - not that you would entertain such thoughts - it’s worth noting that Berkshire Hathaway has a well-diversified portfolio of Wall Street banks and financial institutions, that includes the following (as of 3/31/17):

• Wells Fargo – 480 million shares, or nearly 10% (biggest shareholder).
• US Bancorp – 85 million shares, or 5% (7th biggest shareholder).
• M&T Bank – over 5 million shares, or 3.5% (8th biggest shareholder).
• Goldman Sachs – nearly 11 million shares, or 2.8% (7th biggest shareholder).
• BNY Mellon – 33 million shares or 3.1% (8th biggest shareholder).
• American Express – over 151 million shares or 17%.

Source:  New York Post (6/30/17), CNBC Portfolio Tracker.