1. Warren Buffett becomes biggest shareholder in second and third largest US banks

Warren Buffett becomes biggest shareholder in second and third largest US banks

As billionaire Warren Buffett turns 87 today, Berkshire Hathaway is now the largest shareholder in the second- and third-largest US banks, with stakes of roughly 6.6% in Bank of America and 10% in Wells Fargo and Company.

By: | Updated: August 30, 2017 11:23 AM
The legendary investor Warren Buffett turns 87 today. (Image: Reuters)

As billionaire Warren Buffett turns 87 today, his investment firm Berkshire Hathaway Inc has become the single-largest shareholder in Bank of America — the second-biggest bank in the US — by exercising its right to acquire 700 million shares at a steep discount. This has more than tripled the investment the firm made in the bank six years ago.

Warren Buffett’s Berkshire Hathaway is now the largest shareholder in the second- and the third-largest US banks, with stakes of roughly 6.6% in Bank of America and 10% in Wells Fargo & Co, according to Reuters. Other banks in which Berkshire Hathaway has a stake include JPMorgan Chase & Co, the largest US bank, where Todd Combs, one of Buffett’s deputy portfolio managers, is a director.

Bank of America on Tuesday said Berkshire Hathaway exercised warrants to acquire its shares for roughly $7.14 each, at about 70% discount to their closing price of $23.58 on Monday. The announcement was made after US markets closed. Bank of America’s new common shares are worth roughly $16.5 billion, giving Berkshire a roughly $11.5 billion paper profit. Warren Buffett has run the Omaha-based conglomerate since 1965.

Bank of America Chief Executive Brian Moynihan said, “In 2011, we welcomed Berkshire Hathaway as a shareholder, and we appreciate their continued support now as our largest common shareholder.” Berkshire will collect $336 million of annual dividends from Bank of America, more than the $300 million generated by the preferred stock, Reuters reported, adding that the firm also receives close to $800 million of annual dividends from Wells Fargo.

Earlier this month, Berkshire Hathaway cashed out its entire stake in the 125-year-old American multinational conglomerate General Electric worth $315 million in the second quarter, according to filings. Berkshire Hathaway owned about 10.6 million shares in the company. Following the exit of General Electric’s long-time CEO Jeffrey Immelt, Warren Buffett dumped all the holdings remained after he extended help in 2008.

(With inputs from Reuters)

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