Buffett: No plans on selling BofA warrants

"Basically we love the position of being an owner," says Buffett of the 10-year warrants Berkshire (BRK.A, BRK.B) received when it purchased a $5B preferred stake in Bank of America (BAC) in 2011. The warrants are struck at $7.14 each and allow the purchase of 700M shares of BofA common up to the year 2021 (last night's close was $14.61; bravo, Mr. Buffett).

Buffett expects to hold the warrants until near-expiration and then convert them to common stock, though that calculation could change were the bank to institute a significant dividend.

On redeeming Buffett's preferred stake, BofA CEO Moynihan says the bank has more expensive capital to retire first. "There will be some day that we’ll talk about this, but that’s far out there."

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Comments (8)
  • gwynfryn
    , contributor
    Comments (6479) | Send Message
    It's like that Burns (at age 90) joke "Caeser's Palace wanted me to sign a ten year contract, so I said to them "how do I know you'll still be around in ten years?"
    20 Sep 2013, 09:39 AM Reply Like
  • june1234
    , contributor
    Comments (4412) | Send Message
    What else is he going to say Buffet has always been in the bond/debt business not stock picking one . He almost went under in 08 as heavily exposed as he remains to that space.The "Oracle" as they call him told CNBC this spring/summer than he had never bought Apple or Intel or any tech stock meaning he never participated in the tech revolution of the 90' as an investor not directly anyhow .
    20 Sep 2013, 09:51 AM Reply Like
  • gwynfryn
    , contributor
    Comments (6479) | Send Message
    He has stated a preference for buying into things people consume on a daily basis ( a sound strategy for someone with enough money, and in for the very long term) so tech doesn't qualify.
    20 Sep 2013, 11:50 AM Reply Like
  • Stillport Investments
    , contributor
    Comments (44) | Send Message
    Um ... almost went under?? No, that is incorrect. Berkshire was a supplier of liquidity in '08, a company in distress does not provide capital to other companies. Further, "...told CNBC this spring/summer ...."? His lack of tech holdings has been old news since the '90's, he's never made any attempt to hide the fact he didn't hold tech stocks. Sure, he didn't participate in the late '90's tech rally, but he also didn't participate in the sell off. And the fact he didn't buy Apple doesn't mean anything ... there are lots of other companies he didn't buy into that did better than Apple, and many others that he didn't buy that did atrocious. He's got a pretty good track record picking stocks - Google "Buffett's Alpha."
    20 Sep 2013, 12:03 PM Reply Like
  • jagmanvdp
    , contributor
    Comments (200) | Send Message
    he almost went under? you must belooking at a different balanceshhet than i


    he was buying in 08
    20 Sep 2013, 08:29 PM Reply Like
  • Mike Lipper, CFA
    , contributor
    Comments (11) | Send Message
    While he may have not owned stocks that are labeled technology, he is a user of tech in his office, widely used in his operating companies and understands what technology has done to the investment market places e,g, Goldman Sachs, etc. Note that his two internal ex-hedge funds internal managers may have different views. I suspect that they are the source(s) of the Dish position which in the long run will make its growth of earning from social media which is based on technology. What he is showing while he does not use something or invest in an area others that work for him might and do.
    20 Sep 2013, 10:20 AM Reply Like
  • osteomed
    , contributor
    Comments (2) | Send Message
    Truth of the matter is, Buffet was a stock trader in his early years, where he amassed his wealth. At those times he could be in and out of Market quickly making money.
    But now that he has billions to invest for his Berkshier investment funds, his trades and investments take longer to execute and so his montra has been the "buy and hold" of stable and good "doorstop" types of companies.
    his trades can move the markets, due to his large cash transactions but because of the amount of cash used in his transactions, it takes a much longer time to execute.


    But he definately was a trader in his, not too early, early years.
    20 Sep 2013, 12:51 PM Reply Like
  • healthpicker
    , contributor
    Comments (1098) | Send Message
    The fact that Moynihan has funding more expensive than Buffett's tells you he still has very big cost of funding issues to address. Any capital accumulation this year will be applied again to reduce cost of funds and eventually he will get down to Buffett's money. He will do some more stock buybacks just to keep natural dilution in check (stock options) so don't expect to see much if anything regards dividends for quite a while yet.
    Negative agreement judgment may set his capital allocation scenario back quite a bit . (ruling due within the next few weeks).
    20 Sep 2013, 08:45 PM Reply Like
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