Berkshire Hathaway Earned $13 Billion, or 28% per year, on its 6 year, $5 Billion Investment in Bank of America

Berkshire Hathaway exercised its Bank of America warrants to purchase 700 million shares at $7.14 per share.  These shares have a current market value of about $16.5 billion.  Berkshire’s initial cost in August 2011 was $5 billion (6% preferred stock plus warrants to purchase 700 million shares at $7.14).  Berkshire’s $5 billion investment has resulted in a profit of about $13 billion ($11.5 billion capital gains in Bank of America common stock, plus $1.8 billion in Bank of America preferred stock dividends).  Its return of 28% per annum includes its compounded annual rate of return of 22% on Bank of America common stock plus its 6% annual dividend on Bank of America preferred stock.

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