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Thursday, August 25, 2011

Warren Buffett To Invest Bank Of America Corp (BAC)

The Oracle of Omaha makes his move again!

Earlier today Bank of America Corporation(BAC) announced today that it reached an $5 billion agreement to sell 50,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share to Berkshire Hathaway, Inc. in a private offering.  In addition, Berkshire Hathaway will also receive warrants to purchase 700,000,000 shares of Bank of America common stock at an exercise price of $7.14 per share.  This move by Warren Buffett, the so called Oracle of Omaha, establishes a strong floor for the collapsing price of BAC stock and may give the investment master a potential 100% return in years to come.

Last time Warren Buffett made such a move was during the peak of the financial tsunami when he invested $5 billion at Goldman Sachs.  Within a year the stock went up more than 50%.  This time with economy is on the edge of a double dip recession and banking stocks are on the verge of collapsing, it makes total sense for value investment guru like Warren Buffet to grab quality big bank like Bank of American as its shares are trading near two years low of $7.7 per share.  

This may be a perfect time to follow the master and buy some shares of BAC.  If the price keep falling?  Don't worry someone already promised to buy 700 million shares at $7.14 per share.


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