Buffett’s $5 Billion Investment Nets $1.3 Billion On First Day


NEW YORK – Warren Buffett may have earned $1.3 billion in one day on his $5 billion investment in Bank of America Corp. The preferred shares Buffett’s Berkshire Hathaway bought are worth about $3.53 billion, Phil Jacoby, chief investment officer at Spectrum Asset Management Inc. in Stamford, Connecticut, estimated. Warrants included in the deal are worth about $2.73 billion, based on Bank of America’s share price of $7.65 as of 4:15 p.m. in New York trading, said Clay Struve, a partner with Chicago-based CSS LLC.

The 25% first-day return–more than 9,000% on an annualized basis-shows the premium Bank of America chief executive officer Brian T Moynihan was willing to pay to attract Buffett as an investor . As Berkshire’s CEO, Buffett has garnered a reputation as one of the world’s best investors, with shareholder returns over the past decade that are more than double those of the Standard & Poor’ ‘ 500 Index.