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BERKSHIRE WARRANTS FOR 700M SHRS EXERCISE PRICE $7.142857/SHR

Posted by WARREN MOSLER on August 25th, 2011

Once again, management is quick to sell the shareholders down the river with a fat coupon, low strike, dilutive preferred.

This is one of the inherent risks of being a common shareholder under current law.

It keeps stocks cheaper than otherwise, which makes them more attractive as takeover candidates, as
when you own the whole thing you don’t have this risk.

BUS 08/25 13:10 Berkshire Hathaway to Invest $5 Billion in Bank of America
BN 08/25 13:12 *BERKSHIRE WARRANTS FOR 700M SHRS EXERCISE PRICE $7.142857/SHR
BN 08/25 13:10 *BOFA TO SELL 50,000 SHRS PFD, LIQUIDATION VALUE $100K/SHR
BN 08/25 13:10 *BERKSHIRE HATHAWAY TO GET WARRANTS TO BUY 700M SHRS :BAC US
BN 08/25 13:10 *BERKSHIRE HATHAWAY TO INVEST $5B IN BANK OF AMERICA :BAC US
BN 08/25 13:10 *BOFA TO SELL 50,000 SHRS PFD :BAC US
BN 08/25 13:10 *BOFA TO SELL 50,000 SHRS :BAC US
BN 08/25 13:10 *BERKSHIRE HATHAWAY TO INVEST $5B IN BANK OF AMERICA

Berkshire Hathaway to Invest $5 Billion in Bank of America

By JoAnne Norton

August 25 (Bloomberg) — Berkshire Hathaway Inc. agreed to
buy 50,000 preferred shares of Bank of America Corp. for $5
billion, the bank said today in a statement.

7 Responses to “BERKSHIRE WARRANTS FOR 700M SHRS EXERCISE PRICE $7.142857/SHR”

  1. wsm Says:

    Wtf are you talking about? The common is up 17% so far.

    Reply

    WARREN MOSLER Reply:

    It reduces earnings per share of common

    Reply

    djp Reply:

    @WARREN MOSLER,

    Disgusting example of cronyism and/or celebrityism.

    Not to mention the possibility that it smells a little like insider trading with all of the talks between Buffett and Obama.

    Reply

  2. roger erickson Says:

    with access to these kinds of preferential deals, no wonder Buffet doesn’t care so much about his personal tax rates;

    he’s got bigger fish-fries to steal

    Reply

  3. Paul Palmer Says:

    The current control and tax laws so favor private ownership that many wonderful “savings opportunities” are deprived to the general public, but available to private equity.

    With “savings desires” so prominent in MMT, has this impact on the economy been explored? Doesn’t it drive “asset bubbles?” With negative returns in stocks, people put money into real estate, then commodities, etc. In the meantime private equity sits back and pays 15% income tax on supposed “dividends”

    Reply

    WARREN MOSLER Reply:

    Lots of ugly tax law out there for sure

    Reply

  4. SethM Says:

    Stern Prof. Damodaran has a nice write up on this: Buffett and Bank of America: Playing Poker with Patsies…

    http://aswathdamodaran.blogspot.com/2011/08/buffett-and-bank-of-america-poker-and.html

    “Perhaps, this has become Buffett’s competitive advantage. Rather than buy and hold under valued companies, which is what he used to do, he focuses on companies that have lost credibility and he sells them his credibility at a hefty price.”

    Reply

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