Back in the summer 2011, when Warren Buffett first invested in Bank of America stock when it was trading in the single digits, he reportedly did so after a "eureka" moment while dreaming in his bathtub.
Fast forward to today when Buffett appears to have again been in the bathroom because as Bloomberg reports, the Omaha Octogenarian (who will turn 90 next August), is now seeking Fed permission to increase Berkshire's stake in Bank of America to more than 10%, a level that typically triggers a regulatory review.
According to Bloomberg, Berkshire - which in July disclosed that it had hit that threshold - filed an application with the Fed in recent weeks making a variety of assurances to show that it will passively invest in the bank, according to a copy of the application provided by the regulator. Berkshire “may decide to purchase additional shares of common stock of Bank of America based on its evaluation of the investment opportunity presented by such purchases,” the conglomerate wrote in the filing signed by Buffett, without specifying how many shares it might look to purchase.
The news sparked a rally in the stock, which rose as much as 4% on massive volume ahead of earnings. Considering Buffett's style in recent years, it is safe to assume that the bulk of BofA's earnings per share will be on the back of stock buybacks, just like Citi and Wells Fargo earlier today.
Earlier today banks reported mixed results, with JPM's FICC trading revenue rising more than expected, while both Goldman and Citi disappointed, as Wells Fargo's NIM tumbled to record lows.