Thursday morning saw a notice 5000000000 mighty dollar investment Warren Buffett’s Berkshire Hathaway, with consequent increase in shares of Dow component is taken. The investment is a clear indication that a significant long-term investors in the world has lost confidence in the bank despite the continued plunge of its shares.
Buffet believes Bank of America to be a company with great strength and exceptional leadership, so he decided to invest in this sector. On the terms and conditions of the agreement of 50,000 preferred shares worth $ 100 000 each will be issued at Berkshire Bank of America. They come with a rather heavy 6 percent annual dividend, paid quarterly.
Coupons another 700 million shares of Bank of America would also be collected by diffusion Berkshire over the next 10 years, with $ 7.14 exercise price of the shares is approximate. Thursday saw the share of Bank of America trading at over $ 8.15, which implies that if Buffet activated his reason today its profit has already reached $ 1 billion.
The reason for the Bank of America taking a player has the possibility of its obligations in the capital increase to support its balance sheet. On Wednesday, however, have reservations about a comeback after a comment Meredith Whitney, an influential analyst does not need new capital to the bank.
Although the bank was required to raise additional capital, do not do now, 5000000000 dollar is invested. Equity Research Analyst, S & P, says Erik Oja, investment is a kind of bridge, whose goal is to help Bank of America to win this stage of uncertainty.