This page has been archived and commenting is disabled.
Bank Of Berkshire America: Buffett To Buy $5 Billion In Preferred Stock In Bank Of America
Goldman bailout part 2 is here. And so the Octogenarian of Omaha doubles down on another taxpayer bailout. At least we can put aside all the lies that Bank of America did not need capital. It needed capital: $5 billion of it. It also confirmed it was completely locked out of both debt and equity public capital markets - the bank's only recourse was a private raise with a crony capitalist who is once again doubling down on the global ponzi.
From the press release:
Bank of America Corporation announced today that it reached an agreement to sell 50,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share to Berkshire Hathaway, Inc. in a private offering. The preferred stock has a dividend of 6 percent per annum, payable in equal quarterly installments, and is redeemable by the company at any time at a 5 percent premium.
In conjunction with this agreement, Berkshire Hathaway will also receive warrants to purchase 700,000,000 shares of Bank of America common stock at an exercise price of $7.142857 per share. The warrants may be exercised in whole or in part at any time, and from time to time, during the 10-year period following the closing date of the transaction. The aggregate purchase price to be received by Bank of America for the preferred stock and warrants is $5 billion in cash.
“We are building the best franchise in financial services and we have laid out a clear plan to deliver long-term shareholder value,” said Bank of America Chief Executive Officer Brian Moynihan. “I remain confident that we have the capital and liquidity we need to run our business. At the same time, I also recognize that a large investment by Warren Buffett is a strong endorsement in our vision and our strategy.”
“Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it,” said Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett. “I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That’s what customers want, and that’s the company’s strategy.”
»
- 23251 reads
- Printer-friendly version
- Send to friend
- advertisements -
this is fucking sick.
How the fuck are you supposed to play this rigged shit!
Start with $5B...and be the rigger.
How do you make a little money on Wall Street?
- Start with alot more!
Easy - you dont!
Precisely. Be defiant. Don't play.
Vivek
Physical PMs.
Just goes to show HOW BAD THINGS WERE / ARE at BAC.
Gold bubble popping ? Oh noooooooo !
5 billion down. 95+ billion to go.
Here we go...
The recent Panic and Fear in the market is not something to be taken lightly. According to the chart above - it is only second to the Panic during financial meltdown in 2008 and only slightly higher than we have experienced last year in May. Some people are talking about today's Sell Off in Gold as a sign that Bernanke "will do nothing" and his "tool box" is empty. We see this "trash Gold operation" as a part of PPT plan to save the market again. Please do not make any mistake - it is not for the sake of investors, at least not ordinary ones with their pension plans - it is for the insolvent financial system in order to keep it running. The falling market in the deflation death spiral with ticking up CDS on all banks, with the stars like Bank of America in the headlines, will make the real financial meltdown is just one policy mistake away. Gold, VIX, Panic and the PPT in action - will we see QE after all? http://sufiy.blogspot.com/2011/08/gold-vix-panic-and-ppt-in-action-will....
Warren Buffett is clueless about this company and how poorly managed it is, he could have bought AT&T or Verizon and got a 6% return, not some lying sack of shit company that has continued to fuck clients over and make terrible acquisition decisions, what a stupid old man
That's what the meeting with Obama was abouit 2 days ago
this whole thing stinks....
...evil, pure evil.
I think Warren got the money yesterday when he sold some Gold to finance the BAC preferred shares acquisition.
Dumping 5 billions worth of Gold could explain probably the 100$ in 1 single day....
I like the way you think. Left hand, right hand, both hands, over fist. All is well with the world!
Vivek
Sometimes it's just time to go gracefully into retirement. Warren has had one heck of a run, but it's time for him to hang up his hat.
700,000,000? That can't be right.
700,000,000? That can't be right.
Note this comes the day after NY AG Schneiderman was kicked off the corrupt foreclosure committee. Washington has Buffett's back.
http://www.washingtonpost.com/business/economy/ny-bumped-from-50-state-f...
Tell Becky Quick to quit nursing the newborn and fly to Omaha - Warren is calling and needs some stroking.
Maybe he's looking at this as just an early installment of his Giving Pledge
Maybe he's looking at this as just an early installment of his Giving Pledge
Perhaps he wants to share the light of Rockefeller - he "saved the day" way back when.
So why didn't the genius Buffet buy at the $6.01 low we had earlier in the week. Smells like another TPTB desperation move to me!
What's not to say he bought a butt load of call options at that price. Actually, the dude is a genious. Think about it. I'll put down 5B to make the stock go up and my calls will make more than 5B. Man, nice play.
There are hundreds of deals behind the scenes and no one including ZH could figure out beforehand
Is this what his meeting with Obama was about?
Hmmmm????
As a side note. May I suggest you guys to look at Nat gas today?
Strong divergence on UNG... and a Short sell recommendation by Goldman this summer to Short October contract at 4.84.
You know that? October contract never got there after the Goldman recommendation and free fall to 3.88. ZH was suggesting at that time that Goldman was in fact "buying" nat gas. Which they did IMO. Now, September contract are about to expire. And, storage number are for today at 10h30.
Simply sharing info here on nat gas. Nat gas is a pure comodity IMO, not linked to the USD nor Gold nor bailed out banks. But a reflect of Demand and Offer. Still one commodity exist working on that simple principle.
Marc Faber calls Treasuries the short of the century. Maybe it's now BAC. Warren's derrivatives must be pegged to the market going up. As short lived as it is, this is a criminal manipulation of the market.
Can ZH start posting when Warren's $5 BIL is worth $4 BIL, $3 BIL, $2 BIL, ... Kind of like when silver was going up.
John Paulson will be pleased.
Are those warrants a 7% dilution if exercised?
Bahaha... ZH short position getting blown up.
Curious how Mr. Buffet swings into action as the talk of capping bank exposure to lawsuits kicks in as well.
Yes and congress is an accomplice in this w/ former GS employee lobbying to protect banks further:
http://thinkprogress.org/politics/2011/08/18/298485/exclusive-goldman-sa...
Either Warren has made a big favour to his friends or he knows something we don't.
Well, yes he knows something. Obama told him over cocktails on the Vineyard that a nationwide mortgage refi will be announced by the great one after his well deserved vaca.
Any possibility he's trying to jumpstart buying on BAC in order to help out O's buddy Paulson?
I wonder why this move from Buffet today?? one day before Jackson Hole...
This explains the gold trade. Maybe some of it's margins but "the street" knew this was deal/bailout was coming and acted accordingly buy smashing Gold.
..............
How comforting is it that the nation's largest bank has to get a loan from their "Uncle"?
I mean, they fucking PRINT money and they cannot stay solvent?
It ain't that tough, print money, lend at interest, collect buckets of money. These clowns could fuck up a one car funeral.
pods
A man who's ONLY God is Money.
Ha ha ha ha ha ha ha ha ha ha ha.
And who prays to his empty money GOD
Every Day
Ha ha ha ha ha ha ha ha ha ha ha.
I am normally a compassionate person
but for a person like you
Mr. Buffett
Welcome to Hell
Oh, and I piss upon your grave....
http://www.youtube.com/watch?v=QqEU5F7z7FI
paulson and tepper sue bofa for giving such a stupid deal to berkshire?
More ponziness from the radical of ohmahaha
I warned you guys about the excessive TICK readings.....
What ever rally comes out of this high level of fear is going to be a big one.
Oh shut the hell up Robo, a few weeks ago you were warning about TICK readings and saying 'get all in here at DOW 12,700' and anyone who listened to you got screwed big time. Youre nothing.
Berkshire is up almost a billion dollars on the warrants in just one day. Nice for BRK!
Didnt he loan GS billions BEFORE they dropped to a record low? Seems like the same script. I am sure he was given private assurance that Bernanke will do everything in his power to remain the head of the Fed which can only be achieved if Pres O wins in 2012. Anyone else gets in and he is out of there. So the "non-political" Fed is now going to do whatever it can to unleash record billions into the banking coffers in order to get the markets up so the TOTUS has a chance of being re-elected. This is disgusting even the printer cannot prevent this economy from worsening.
Warren Buffett, supporting the gubbermint sponsored equity bubble since 200? What a great world we live in...
Becky Quick calls in and says she just got out of bed with, I mean off the phone with Warren Buffett.
WB is buying time for The Benster, there won't be anything tomorrow! he is doing this of course for some chump change also! BOA is marode and will eventually fail but he will have his dough out of it before that, like the CME margin hike on gold :)))! Think of this "brilliant" move, it gives even JP time to get out :)))! I am staying short folks! I smell a KILLLLLLIIIIINNNNGGGGG!
So whole market rallying on the fact that BAC locked out of public debt and equity markets. Hmmm.....Okay.
How stable is there biz model if BAC has to pay 6% interest plus $5B in the money warrants, to raise $5B in capital?
- Block of 8000 calls traded yesterday at 1:30PM at $0.02 on BAC.
Warren would not have done this without the explicit support of Obama/Treasury.
Consider him to be BAC's receiver.
He just bought all of BAC for $6B in preferred stock.
Backdoor bailout, Buffet just the bag man. Solves nothing.
The BAC bondholders might have a problem with that interpretation of events. And we all know that nothing, NOTHING, can impair the bondholders.
Actually Buffett is betting that everyone, including the STOCKHOLDERS, will be bailed out. And why not, that's what TBTF means apparently. Americans will toil for decades or centuries to pay for this.
"And we all know that nothing, NOTHING, can impair the bondholders."-Tell that to GM and Chrysler's bondholders. We are in full criminal mode now, 230 years of BK law have been rewritten by this administration. Expect bondholders to get f*cked if it comes down to it in favor of the debt brotha's crony in Omaha.
All crises appear to be solveable. Told-you-so: Boring world we live in.
Insured Bankster Savings Account:
contramanfund | Just another WordPress.com site
this is interesting. these aren't warrents . buffet is not riding a wave like he did with goldman sachs when he KNEW THERE WOULD be a government bailout and was insider trading.
what this is, is warren buffet getting basically a debt intrument from a triple credit AAA........at 6%!!!!!
dude, bank of america is paying 6% for money now. and all for the pleasure of reassuring investors????
the question is, how quickly do they burn through this cash, as it seems to signal bac is lying and might , just might, tip their hand.
the average idiot sees buffet and thinks, oh that's king midas touch. to me, i'm seeing moynihan clearly and utterly lying about defending the company's lack of any need to raise capital ONLY TWO DAYS AGO. This is a sure sign of weakness. perhaps admitting that QE2 is not coming tomorrow and that bank of america needs 5 billion of cash to prepare for the damage ahead.
5 billion might be like a fart in the wind. and if bac has a run on its money in the next few months, you will see the fed come to the rescue and simply shred the law of barney frank and the other crap ass who wrote a piece of financial shit dodd. that guy. even their piece of shit 'laws' will be tossed out the window when inconvenient.
z
These are pfd shares AND warrants representing 7% of outstanding shares. Huge dilution, telling you BAC is desperate.
ditto what he said above, BK _lawyer
most of your posts are more intelligent, and you're sure not the first zHead to miss a sentence, or misunderstand one, and come out a-blazin like yosemite sam
yep, moynihan may have lied *gasp a bankster lying* as tyler sez in sentence #2. what i get is that the fix is probably in at a very high level to save BAC's bacon from the fires of litigation. "somebody" working on the srtong case for the states/victims got taken off ze case being the visible fix, the tip of the iceberg, most likely.
why else would warren beffett pop here?
justice? in america? justice = help if you're rich and politically connected = jail if you're poor = impoverishment if you are in between
here is the BAC Board:BANK OF AMERICA CORP (BAC:US): Board of Directors - BusinessWeek
And god said Thou shalt not fail and it was so.
Regardless of the BOA fundamentals , the short squeeze will be extraordinarily painful. Month-end coming and leveraged performance has sucked wind. I will not be fading this move.
I amalso broke, where's my bail out?
Unfortunately, In Uncle Ben's pocket
Fuck You Warren Buffet.
You piece of shit. Rothschild pet is all you are.
Since when does diluting your shares get you a 20% increase in your share price?
And Brain has Timmy on his side. What else do you want if you want to suck government tits?
i can't stop laughing...
Including the warrants....700mil shares at 7.14, this deal looks like he only paid 2 Bil. The Jan 2019 13.3 are quoted at 4.18. He could hedge this out and take in nearly 3 Bil and still make the spread. So he is geting interest of 15 percent on the2 Billion Net iinvestment if he hedged this all out.
Can I cry now!!!
So when he asks for sacrifice from his fellow "millionaires", does that include getting backroom deals on BAC preferreds too? The old fuck...
Fed about to Bail BAC Big time telling Buffet to buy and they will guarantee him $$$$$$$$.
Same with GS in the past.
I can't wait for Tyler to post the deer in the headlights picture!
so what bank doesnt Warren have money in.......this guy has been exposed..........he is evil
How many nights a year does WB sleep in his Omaha bungalo ? Does he stay in modest hotels, too ? Does he fly coach ? Monedas 2011 Clinton's a "Veegan" ? There goes his ejaculation volume ! Breathe easy, blue dresses !
Obummer met with Buffet a few weeks ago, this must be Buffet's favor to the government so he doesn't have to pay back taxes.
Before Obama, I thought Buffet was an honest good man, he's really a scum bag.
Just for a laugh Obama aught to have the IRS audit Buffet...
CNBC said Buffett thought of this 5 Billion deal while taking a bath 2 days ago. HMMMMM-- 2 days ago- isn't that the same time he met with our PRES. Is this another example of buttbuddy crony-capitalization? Just thinking.
The shareholders just got diluted. I don't care that they now have more capital to stave off lawsuits, the market is not responding rationally. Preferred dividends come out of EPS before they are available to common shareholders, so not only are the warrants dilutive, but the preferred dividends are as well. Everyone long BAC just got double-teamed and they are thanking Moynihan and begging for more!
Buffet another American systemic disease masquerading as a hero. Just another parasite that adds nothing to the country. Fortunately he is old so wont live that much longer.
I really thought the Oracle of Omaha would lose his fortune more slowly than this. Wow...dumping this much into one failure is really taking one for the team.
This deal is certainly positive for the image of BAC but there are some problems as well. CNBC claims that Buffett decided that he wanted to do it and called BAC. Doesn't look like much analysis or research had been done. It does look like he did it for the price rather than for BAC's quality. For existing shareholders this is a very expensive deal and not a great deal looking at the cost. It does look like a desperate move on the side of management. Couldn't they use the capital market to raise equity at a more reasonable cost? Even better, couldn't they issue capital when the shares were priced higher? This tells you something about the quality of management at BAC.
For those who are familiar with PIPE deals, this is just one on a very massive scale.
For the $5 billion, this is what Uncle Warren gets:
As with most PIPE deals, this isn't a great deal at all for the existing equity holders. Uncle Warren is essentially butting in line and taking $300 million a year (6% of $5 billion) in available free cash flows that won't go to equity holders now-- AND gets the opportunity to dilute the hell out of shareholders if the stock goes on a trading rally.
You only do this type of deal if your company is scraping to turn the lights on next month.
The worst case for Warren (it appears) is that he gets his $5 billion back in the event of bankruptcy... plus any interest that's paid quarterly. I'm surprised he didn't request MONTHLY payments, though. Uncle Warren doesn't even need to know the dirty details of crap that is hidden in BofA's sordid balance sheet-- all that he needs to know is whether he gets his $5 billion back if the S hits the F.
I think we now know the answer to that...
Damn, Buffet just cornholio'd the common holders and is using the US taxpayer's as his downside put protection in what will no doubt be a home run investment for him after Uncle Sam makes him whole and then some.
Congrats America you have just been ass raped sideways by a money grubbing, wrinkle dick'd fuckface.
Thanks Warren. You just gave me a huge-ass discount. Doubled down on more puts. This bitch is going to be the first domino to collapse IMHO.
He should have waited a few days. He could've bought the East Coast shorefront from NC to CT apocolyptic prices.
More things to make you go hmmm:
1) Why is Buffet buying preferred vs common stock here? He's stated often that many of his biggest preferred stock deals would've been better off had he just purchased common stock, including this segment of a letter to investors:
"We paid $600 million in 1989 for Gillette preferred shares
that were convertible into 48 million (split-adjusted) common
shares. Taking an alternative [I] probably could have purchased 60 million shares of common from the
company... I probably could have bought the stock at a discount of at least 5%. I can't be sure about this, but it's likely that Gillette's management would have been just as happy to have Berkshire opt for common.
But I was far too clever to do that. Instead, for less than
two years, we received some extra dividend income [at] which
point the company - quite properly - called the issue... If I had negotiated for common
rather than preferred, we would have been better off at yearend
1995 by $625 million, minus the "excess" dividends of about $70
million."
Link
http://www.berkshirehathaway.com/letters/1995.html
Does Buffet not believe what he states? Is BAC different this time? Is Warren just a victim of the very character flaw he constantly harps about - not being greedy enough when people are scared? Maybe he's just trying to convert from low-paying (high risk IMO) debt and into fixed income. After all, preferred stock deals are a sign of having a lot of cash and not a lot of places to put it. Whatever it is, it's clear he thinks his investment is safe enough to continually return the 6% but apparently not safe enough to buy the common stock. He couldn't possibly think that BAC would be bailed out in the event it goes bust, could he? Hmmmm.
2) Buffet's position in BAC back at the end of 2010. Great strategy really - 1) Sell; 2) sh*t immediately hits the fan and price collapses over 50% in 2011; 3) buy. Hmmmm.
3) Countless articles pertaining to put options on BAC. How many journalists made mention of the large volume swarming to short BAC in the days leading up to Buffet's purchase? What were some of the bigger players doing in the days leading up to this announcement? Were they selling the puts or did they get run over with the rest? Hmmmm.
NObama to Buckethead.... Warren buy that stock then the US Government will bail it out.. How is that fund raiser going?
Since we all know the Crony Capitalist Buffet doesn't pay enough taxes, he should have donated the 5 billion to the treasury.
Following reports that President Obama phoned Warren Buffett from vacation in Martha’s Vineyard to discuss the economy, The “Oracle of Omaha” is hosting a fund-raiser for Obama’s re-election, billed as an “economic forum,” Page Six has learned. Tickets for the event at New York’s Four Seasons restaurant on Sept. 30 start at $10,000 a head, with VIP tickets a budget-boosting $35,800. Guests get an hour of “Q&A moderated by one of President Obama’s closest economic advisors, Austan Goolsbee.” VIP ticket-holders get a “private reception for about 20 minutes prior to the dinner.” A blurb with the invite adds, “As all guests are seated for dinner, Buffett will go around to all tables and shake hands, then he and Austan will sit for the program and discussion.” What will be discussed is Buffett’s recent highly publicized claim that the wealthy should pay higher taxes. But as one invitee sniffed, “Nothing like advocating tax equality when you are charging $35,800 a ticket.”
Read more: http://www.nypost.com/p/pagesix/buffett_obama_pigout_rCcS4YvtrzA10ytZBUDUoM#ixzz1W3Srp8B5
Well, the ol' fella is clearly off his nut. He just bought himself a piece of sh*t bank. Geez, maybe Obama and "friends" should be charged with Elder Abuse for putting him up to this one.
Next up,
An article on Snopes.com debunking rumors that BoA is actually insolvent.
Stock price jumps to record highs as the herd mooooooo!ves the stock up.
Hmmmmm.
Not long ago there were articles in circulation about Buffet possibly replacing Little Timmy G as Treasury Secretary.
Here is one speculating on the idea:
http://www.wnd.com/?pageId=334549
I wonder of this could be the payback?
I will be interested to see WHEN BH exercises those warrants. This looks like legalized insider trading as these imps all huddle around the zombie banks experimenting on them knowing there is nothing left to lose.
6.5% immediate dilution to the existing common shareholders is clearly good news.
QUESTIONS FOR OUR BELOVED WARREN:
DID YOU MEET PRESIDENT OBAMA BEFORE YOU INVESTED IN BAC?
DID OBAMA DISCUSS HIS STIMULUS/JOBS SPEECH WITH YOU?
DID OBAMA DISCUSS HOUSING/MORTGAGE RELATED PLANS IN HIS SPEECH?
HOW DO YOU THINK OBAMA'S SPEECH IMPACTS BANKS WITH MORTGAGE EXPOSURE, INCLUDING BAC? FAVORABLY OR UNFAVORABLY?
SHOULD YOUR DISCUSSION WITH OBAMA BE CONSIDERED MATERIAL NON-PUBLIC INFORMATION THAT COULD INFLUENCE BANK STOCKS, INCLUDING BAC?
Blackhawks Jersey Patrick Sharp Jersey Patrick Kane Jersey Jonathan Toews Jersey Marian Hossa Jersey Duncan Keith Jersey Bobby Hull Jersey Brent Seabrook Jersey Bobby Orr Jersey Dustin Byfuglien Jersey Antti Niemi Jersey Tony Esposito Jersey Stan Mikita Jersey Blank Jersey Dave Bolland Jersey Jeremy Roenick Jersey Keith Magnuson Jersey Brian Campbell Jersey Tomas Kopecky Jersey Troy Brouwer Jersey Kris Versteeg Jersey Niklas Hjalmarsson Jersey John Madden Jersey Adam Burish Jersey Brent Sopel Jersey ED Belfour Jersey Ben Eager Jersey Cristobal Huet Jersey Martin Havlat Jersey Steve Larmer Jersey Glenn Hall Jersey Andrew Ladd Jersey Denis Savard Jersey Marty Turco Jersey Nick Leddy Jersey Penguins Jersey Kris Letang Jersey Sidney Crosby Jersey Jordan Staal Jersey Maxime Talbot Jersey Andre Fleury Jersey Mario Lemieux Jersey Chris Kunitz Jersey Evgeni Malkin Jersey Brooks Orpik Jersey Tom Barrasso Jersey Sergei Gonchar Jersey Tyler Kennedy Jersey Ruslan Fedotenko Jersey