Buffett extracts a handsome price from BofA

Many value investors who profess to follow in the footsteps of the Sage of Omaha prefer to avoid financial companies altogether, as the complexities of their accounts can make it hard to know what exactly what might be lying beneath the surface…

Mr Buffett, the billionaire investor behind Berkshire Hathaway, has again stepped in to bless a troubled financial company, offering support to BofA in a similar way to the deals extended to Goldman Sachs and General Electric during the financial crisis.

As in those transactions, he has extracted a handsome price for his support. Berkshire is investing $5bn in BofA preferred stock that pays a fixed dividend of 6 per cent. The bank can buy it back at any point – for a 5 per cent premium…  (more)