The Oracle (BRK.A, BRK.B) is on record as saying he would swap out of Berkshire's preferred stake in Bank of America (BAC +2.8%) for common stock were the lender to boost its annual dividend to $0.44 per share (from the current $0.30). Should that exchange be made, Berkshire would own about 7% of BofA's common, ahead of Vanguard's 6.6% stake.
At that $0.44 level, the common share dividend would be more than what Berkshire receives from the preferred. The preferred, though, has little downside, so a switch to the common would be seen as far more than pure dollars and cents, but instead a pretty big vote of confidence in the bank.
Berkshire would continue to hold warrants (expiring in 2021) to buy 700M shares of BofA at just $7.14 each (current price is $23.92).
Bank of America's capital return plans should be known after the CCAR results are released following the close tonight.
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