The billionaire investor has made Bank of America one of Berkshire Hathaway's top holdings.
Berkshire Hathaway (BRK.A -0.54%) (BRK.B -0.72%) is known for its massive $350 billion stock portfolio, as many of its positions were hand-selected by legendary investor CEO Warren Buffett himself.
Bank of America (BAC -0.34%) is Berkshire's second-largest stock investment. As of the latest information, Berkshire owns 1.032 billion shares of Bank of America, representing a 13.1% stake in the mega-bank. Based on the stock's price as of this writing, Berkshire's investment is worth $38.2 billion. Berkshire is Bank of America's largest shareholder.
One of Buffett's best investments
Not only is Bank of America a large investment for Berkshire, but it is one of the most successful in its portfolio.
Buffett first invested in Bank of America in the wake of the financial crisis -- in an unusual way. In August 2011, Buffett invested $5 billion of Berkshire's capital in Bank of America preferred stock that paid a 6% dividend yield, generating $300 million in annual income.
However, the preferred stock also came with warrants to buy 700 million shares of Bank of America common stock for $7.14 each. (This allowed Buffett to exchange his preferred stock for 700 million shares.)
Once Bank of America's common stock dividend increased to the point where Berkshire's dividend income would exceed the $300 million it was receiving from the preferred stock, Buffett exercised the warrants. So, Buffett paid $7.14 per share for most of Berkshire's stake -- less than one-fifth of its current stock price. Since the initial investment, Buffett has added more than 300 million shares.
Why Buffett likes Bank of America so much
In 2023, Buffett and his team unloaded stakes in several different bank stocks as several high-profile bank failures caused fear in the sector. But he never sold any of its Bank of America shares.
At Berkshire's 2023 shareholder meeting, Buffett reiterated how much he liked the bank's management (he has previously praised CEO Brian Moynihan).
Moynihan successfully navigated the aftermath of the financial crisis and turned the bank from an extremely troubled institution into one of the highest-quality, most respected institutions in the sector.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. Matt Frankel has positions in Bank of America and Berkshire Hathaway. The Motley Fool has positions in and recommends Bank of America and Berkshire Hathaway. The Motley Fool has a disclosure policy.
FAQs
The bank is Berkshire's second-largest investment, with a stake of 13.1% worth about $38 billion. The Bank of America investment was also one of Berkshire's most profitable.
What is Warren Buffett most invested in? ›
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What financial stocks does Warren Buffett own? ›
Top Warren Buffett Stocks By Size
- Bank of America (BAC), 928 million.
- Apple (AAPL), 400 million.
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- Sirius XM (SIRI), 132.9 million.
- Chevron (CVX), 118.6 million.
Warren Buffett typically does not give money to individuals, although he frequently donates to charities. However, he has in the past forwarded individual requests for money to his sister, Ms. Doris Buffett, who operates an organization called the Sunshine Lady Foundation.
Did Warren Buffett grow up rich or poor? ›
Warren Buffett wasn't born rich, though today, he is best known for his success in amassing his fortune through a thoughtful value investing strategy. The fact that Buffett wasn't born rich appears to have influenced his philosophy on generational wealth.
When did Warren Buffett make most of his wealth? ›
“His skill is investing, but his secret is time,” Morgan Housel wrote in the bestselling business book, “The Psychology of Money.” “That's how compounding works,” Housel wrote. To that point, 99% of Buffett's net worth was accumulated after he was 65 years old, Housel said during a 2022 interview with CNBC.
What is Warren Buffett's golden rule? ›
Title: The Essence of Warren Buffett's Golden Rule: Never Lose Money.
Does Warren Buffett recommend bonds? ›
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| STOCK | % OF PORTFOLIO | MARKET VALUE OF SHARES |
|---|
| Microsoft Corp. (MSFT) | 32.7% | $15.6 billion |
| Berkshire Hathaway Inc. (BRK.B) | 21.0% | $10 billion |
| Waste Management Inc. (WM) | 15.8% | $7.5 billion |
| Canadian National Railway Co. (CNI) | 13.6% | $6.5 billion |
3 more rowsAug 28, 2024
Buffett's $300 billion bet
Through the first six months of 2024, Berkshire Hathaway padded its Treasury holdings by $94 billion. The company held a total of $277 billion in Treasury bills and cash as of the end of the second quarter.
How much will Warren Buffett's children inherit? ›
Warren Buffett is only leaving his three children an inheritance of 2 billion each out of his predicted estate of 65 billion. Why would he not distribute all of his estate to his children? Because he wants to leave large amounts to his many charities.
What does Warren Buffett say about saving money? ›
One of Buffett's most famous quote is, “Do not save what is left after spending; instead spend what is left after saving.” This is the key to prioritizing savings. If you save first, then you will be able to eradicate the problem of not having sufficient amount of funds to save at the end of the month.
How to get rich according to Warren Buffett? ›
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- Never Rely on Only One Income Source. ...
- Focus on Investments That Contribute to Positive Cash Flow. ...
- Learn as Much as You Can. ...
- Invest In Yourself. ...
- Shift Your Perspective About Money. ...
- Be Frugal Even While Building Wealth. ...
- Bottom Line.
What is Warren Buffett known for? Warren Buffett, known as the "Oracle of Omaha," is an American businessman and philanthropist, widely considered the most successful investor of the 20th century. He has amassed a personal fortune of more than $60 billion by defying prevailing investment trends.
Why is Warren Buffett so good at investing? ›
Influence of Benjamin Graham
Known as the father of value investing, Graham's philosophy of looking for undervalued stocks with intrinsic worth became the cornerstone of Buffett's investment strategy. Buffett not only absorbed Graham's teachings but also worked directly with him, which honed his approach to investing.
