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Warren Buffett's Berkshire Hathaway now Bank of America's top shareholder

Berkshire is now the largest shareholder in the second- and third-largest US banks

Reuters 

Warren Buffet
Warren Buffet

Warren Buffett's Hathaway Inc has become Corp's largest shareholder by exercising its right to acquire 700 million at a steep discount, more than tripling an investment it made six years ago.

is now the largest shareholder in the second- and third-largest U.S. banks, with stakes roughly 6.6 percent in and 10 percent in & Co, according to Reuters data.

It also has an interest in JPMorgan Chase & Co, the largest U.S. bank, where Todd Combs, one Buffett's deputy portfolio managers, is a director.

on Tuesday said exercised warrants to acquire its for roughly $7.14 each, well below their closing price $23.58, down 14 cents from Monday. The announcement was made after U.S. markets closed.

To pay for the shares, swapped $5 billion preferred stock it had bought in August 2011.

Its new common are worth roughly $16.5 billion, giving a roughly $11.5 billion paper profit.

owns more than 90 businesses such as the Geico car insurer, Dairy Queen ice cream and the BNSF railroad.

Buffett has run the Omaha, Nebraska-based conglomerate since 1965. The billionaire turns 87 on Wednesday.

The swap was made possible by America's decision in June to boost its dividend 60 percent, after the Charlotte, North Carolina-based lender passed a Federal Reserve "stress test" its ability to navigate tough markets.

It also vindicates Buffett's confidence in Chief Executive Brian Moynihan, who accepted his money when the was only midway through cleaning up balance sheet and litigation issues tied to the U.S. housing and financial crises.

"In 2011, we welcomed Hathaway as a shareholder, and we appreciate their continued support now as our largest common shareholder," Moynihan said in a statement on Tuesday.

will collect $336 million annual dividends from America, more than the $300 million generated by the preferred stock. It also receives close to $800 million annual dividends from

Some Berkshire's other large equity investments are American Express Co , Apple Inc , Coca-Cola Co and Kraft Heinz Co .

 

(Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)

First Published: Wed, August 30 2017. 08:46 IST
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