Saturday, February 11, 2012

It's good to be a friend of the king. Will the OWS crowd notice?

BUFFETT’S BANK OF AMERICA

WARREN BUFFETT’S NET WORTH JUMPS $154M THANKS TO MORTGAGE SETTLEMENT

Warren Buffett’s stake in Bank of America Corp. increased in value by $154 million after President Obama and the U.S. Justice Department announced a $25 billion foreclosure abuse settlement with the five largest U.S. banks Thursday, records show.

Buffett invested $5 billion in Bank of America (BofA) on Aug. 25, 2011. As part of his investment deal, Buffett gained warrants that allow him to buy 700 million shares of Bank of America stock at a strike price of $7.14 a share. However, on Dec. 19, 2011, it was reported that Buffett was $1.5 billion underwater on his stock warrants, with shares of BofA stock trading at $4.94. But on Thursday, after President Obamapersonally announced the details of the settlement, BofA stock closed at $8.13 a share. The stock opened Friday morning at $8.31 and reached as high as $8.35 a share.

If Buffett had exercised his warrants Friday morning, he would have made $847 million. $154 million of that profit would have been related to the foreclosure deal.

This is not the first time Buffett has profited from Obama administration policies. In November 2011, it was reported that President Obama’s two-year postponement of the deadline to determine the future of the proposed Keystone XL pipeline would force North Dakota oil producers to rely more heavily on the Burlington Northern Santa Fe Railroad. Buffett’s Berkshire Hathaway Inc. holding company purchased the Burlington Northern Santa Fe Railroad Corp. in a total package worth $44 billion in 2009.

Buffett has personally contributed $5,000 to Obama this election cycle, while Berkshire Hathaway has contributed $30,800 to the Democratic National Committee.

This summer, Obama will accept the Democratic Party’s 2012 presidential nomination with a speech at Bank of America Stadium in Charlotte, N.C.


1 comment:

budlab said...

Readers who wish to learn more about Warren Buffett’s businesses can review 70 of them in the new book MOATS. It is about the competitive advantages of each business. Moats will be on Amazon.com in mid February, 2012. It is currently available on Lulu.com here: http://www.lulu.com/spotlight/4filters

Major points of interest:

1. MOATS discusses 70 historically profitable businesses worthy of study.

2. MOATS examines the competitive advantages and sustainability of each business.

3. Each MOATS chapter has both a Warren Buffett and a Charlie Munger quote or idea weaved into the discussion.

4. The MOATS chapter on Lubrizol includes an estimated valuation based on Free Cash Flows.

5. Each MOATS chapter was checked by two people.

6. Even if you buy the MOATS hardcover edition, 50/70 is $0.72 value per business or chapter.

7. If you liked “Good To Great” by Jim Collins, you will enjoy 70 GREAT Berkshire Hathaway Businesses.

The MOATS book introduction audio mp3 file: http://www.frips.com/moats.mp3