--- title: Warren Buffett Made $12 Billion This Week With One Brilliant Move description: Warren Buffett's Berkshire Hathaway invested $5 billion in Bank of America in 2011, allowing it to buy $5 billion more at a discounted rate today. authors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2017-06-30T17:13:39.000Z' modified: '2017-06-30T17:13:39.000Z' section: Investing tags: - Bank of America - Berkshire Hathaway - common stock - preferred stock - Warren Buffett word_count: 290 canonical: https://money.com/warren-buffett-bank-of-america-berkshire-hathaway/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Power Lunch](https://img.money.com/2017/06/warrenbuffettbofa12billion-in-468227268.jpg) *Warren Buffett, CEO of Berkshire Hathaway* With one move this week, Warren Buffett's Berkshire Hathaway made a paper profit of $12 billion while becoming the biggest shareholder of Bank of America. [CNBC](http://www.cnbc.com/2017/06/30/warren-buffett-just-made-a-quick-12-billion-on-bank-of-america.html) described Buffett's investment maneuver as "quick" and "clever," but it was actually years in the making. In August 2011, in the aftermath of the financial crisis when Bank of America was still coping with legal struggles and national investigations into its foreclosure practices, [Berkshire Hathaway agreed to purchase $5 billion](https://dealbook.nytimes.com/2011/08/25/buffett-to-invest-5-billion-in-bank-of-america/) worth of the bank's preferred stock, which paid out a 6% dividend. The [dividend alone](http://www.businessinsider.com/warren-buffett-bank-of-america-wells-fargo-largest-shareholder-stake-2017-6) generated roughly $300 million annually. More importantly, the investment came with warrants giving Berkshire Hathaway the right to swap its preferred Bank of America stock for 700 million shares of common stock at a price of $7.14 each. Back in August 2011, when BofA shares were trading below $7 for much of the month, that may have seemed like a reasonable deal from the standpoint of Bank of America shareholders. As of Friday morning, though, the stock was at about $24.50. Buffett's firm said on Friday that it would indeed exercise its warrants and exchange the preferred stock for common shares. Berkshire Hathaway will officially exercise its warrants on Monday, when Bank of America is boosting its dividend rate from 44 cents to 48 cents. "After the swap is completed, Buffett's firm will begin collecting $336 million of annual dividends, more than the $300 million he gets from the preferred shares, which have a 6 percent dividend," [Reuters explained](http://www.reuters.com/article/berkshire-hatha-bank-of-america-stock-sw-idUSL3N1JR3U1). The takeaway is that Berkshire Hathaway will have spent around $5 billion on BofA stock that's now worth over $17 billion. That's a paper profit of more than $12 billion at the same time his company will be collecting tens of millions more in dividends. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/warren-buffett-bank-of-america-berkshire-hathaway/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "Stocks", "item": "https://money.com/stocks/" }, { "@type": "ListItem", "position": 4, "name": "Warren Buffett Made $12 Billion This Week With One Brilliant Move" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/warren-buffett-bank-of-america-berkshire-hathaway/#webpage", "url": "https://money.com/warren-buffett-bank-of-america-berkshire-hathaway/", "name": "Warren Buffett Made $12 Billion This Week With One Brilliant Move", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2017-06-30T17:13:39.000Z", "mainEntity": { "@id": "https://money.com/warren-buffett-bank-of-america-berkshire-hathaway/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/warren-buffett-bank-of-america-berkshire-hathaway/#breadcrumb" }, "dateModified": "2017-06-30T17:13:39.000Z" }, { "@type": "Article", "headline": "Warren Buffett Made $12 Billion This Week With One Brilliant Move", "articleSection": "Investing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2017/06/warrenbuffettbofa12billion-in-468227268.jpg", "width": 3000, "height": 2000, "caption": "Power Lunch" } ], "author": [ { "@type": "Person", "name": "Brad Tuttle", "url": "https://money.com/author/brad-tuttle/", "@id": "https://money.com/author/brad-tuttle/#author", "description": "Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals.\r\n\r\n", "image": "https://img.money.com/2014/01/Brad-Tuttle.png?w=226&h=247&crop=1", "alumniOf": "Columbia University School of Journalism, MS", "sameAs": [ "https://twitter.com/bradrtuttle", "https://linkedin.com/in/brad-tuttle-834b225" ] } ], "publisher": "https://money.com/#organization", "datePublished": "2017-06-30T17:13:39.000Z", "description": "Warren Buffett's Berkshire Hathaway invested $5 billion in Bank of America in 2011, allowing it to buy $5 billion more at a discounted rate today.", "abstract": "Warren Buffett's Berkshire Hathaway invested $5 billion in Bank of America in 2011, allowing it to buy $5 billion more at a discounted rate today.", "@id": "https://money.com/warren-buffett-bank-of-america-berkshire-hathaway/", "inLanguage": "en-US", "dateModified": "2017-06-30T17:13:39.000Z", "wordCount": 290, "keywords": [ "Bank of America", "Berkshire Hathaway", "common stock", "preferred stock", "Warren Buffett" ], "about": [ { "@type": "Thing", "name": "Investment", "sameAs": [ "https://en.wikipedia.org/wiki/Investment" ] }, { "@type": "Thing", "name": "Stock", "sameAs": [ "https://en.wikipedia.org/wiki/Stock" ] } ] } ] } ```