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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (442523)	8/25/2011 12:50:37 PM
From: Bridge Player	1 Recommendation Read Replies (1) \| Respond to of 793900

One bear on BAC had this to say about Berkshire's investment: " Warren Buffett's ( BRK.A) $5 billion investment in Bank Of America ( BAC) is showing investors his confidence in the industry. The investment is very similar to the investment in Goldman Sachs ( GS) during the financial crisis. Buffett will receive preferred stock with an annual dividend of 6%. The securities are callable any time with a 5% premium. Buffett will also receive Bank Of America ( BAC) warrants to buy 700 million shares with a 10-year expiration. The warrants have a strike price around $7.14. Buffett is getting an amazing deal from Bank Of America. This deal however is not available to the rest of the market. The bulls are equating Buffett's buy as a vote of confidence in the common stock. That is not the case. Yes, he does have 700 million shares in warrants, but he is also earning a 6% annual dividend on his preferreds. Buffett is getting paid to wait this out, and in the long run will work out well for him. I don't think it will play out as well for common shareholders in the short term. If you wait to go long once we get a better economic outlook, you could get a much better price to start a long-term buy position." ................ ............... ............... seekingalpha.com