Warren Buffett became Bank of America’s largest shareholder on Tuesday in a deal that made him billions.
A Berkshire Hathaway Inc. investment that began in 2011 translated into 700 million shares Bank of America Corp. stock by the end of the day. Berkshire Hathaway is now the biggest shareholder in both the second- and third-largest U.S. banks, with 10 percent stakes of Wells Fargo & Co and 6.6 percent of Bank of America.
“In 2011, we welcomed Berkshire Hathaway as a shareholder, and we appreciate their continued support now as our largest common shareholder,” Bank of America Chief Executive Brian Moynihan said in statement, Reuters reported.
The iconic CEO’s move involved the exchange of $5 billion in preferred stock for common shares.
The Wall Street Journal estimated the deal as netting $13 billion in profits.
“The swap was made possible by Bank of America’s decision in June to boost its dividend 60 percent, after the Charlotte, North Carolina-based lender passed a Federal Reserve ‘stress test’ of its ability to navigate tough markets,” Reuters reported.