When Warren Buffett wrote a check for $5 billion from the treasury of Berkshire Hathaway and sent it to Charlotte so that Bank of America could beef up the amount of capital on its balance sheet, he negotiated the right to create a special warrant class so that he could purchase 700,000,000 shares of Bank of America at a price of $7.14 at any time he desires before September 2021. Obviously, it is an intelligent practice to wait until the last moment to purchase the shares—why assume the risk of a devastating financial crisis in August 2021 if you can avoid it?—so the degree of success for Buffett will be measured based on how much above $7.14 Bank of America’s stock price happens to be in September 2021.
If I had to take a ball-park swing at Bank of America’s value six years out, I would assume book value growth … Read the rest of this article!
There are some big value investment entities that have allocated a substantial percentage of their investable assets to investment in Wells Fargo (WFC) stock. Most notably, Warren Buffett has allocated 8.89% of Berkshire Hathaway’s stock investment portfolio to the mega-sized California bank. Elsewhere, New England Asset Management has allocated 21.16% of its portfolio to Wells Fargo, and other investment houses have done the following: Edgepoint Investment Group (8.26%), Theleme Partners (36.70%), Rothschild Wealth Management UK (10.53%), Magnolia Group (37.88%), Joseph Weiss LLC (23.67%), American Assets (23.14%), PM Capital (8.92%), DPM Capital (11.12%), Harbor Island Capital (11.31%), FSI Group (11.10%), and so on. In addition, Seth Klarman’s Baupost Group has devoted 6% of its assets to Wells Fargo and Charlie Munger’s Daily Journal has a huge chunk of Wells Fargo that was purchased at $8 per share (the absolute low) during the financial crisis.
Outside of Berkshire Hathaway, Alphabet, Apple, and … Read the rest of this article!