BAC???

[gunther]

Think the bottom is in and nowhere to go but up or at risk of bankruptcy and common shares going to zero??

[bgsisco]

No bankruptcy but I bet it will hang around 4-7 for a few years.

[userpick]

With Buffett committing $5,000,000,000 I feel pretty safe in saying it will rise drastically. One would think, anyway...

[HawgWild]

With Buffett committing $5,000,000,000 I feel pretty safe in saying it will rise drastically. One would think, anyway...

When did Buffett buy in? I was thinking that this was over a year ago. Or, was that another banking stock?

[userpick]

When did Buffett buy in? I was thinking that this was over a year ago. Or, was that another banking stock?

I want to say that was in august, but I'm not positive. I know it was $6.19/share when he bought in, so he's definitely lost money in it already. But the past few days has been promising. Started the week around $5 and already up to around 5.50. Hopefully that trend continues. Remember, just a few years ago it was over 50/share.

[OldPoop]

I want to say that was in august, but I'm not positive. I know it was $6.19/share when he bought in, so he's definitely lost money in it already. But the past few days has been promising. Started the week around $5 and already up to around 5.50. Hopefully that trend continues. Remember, just a few years ago it was over 50/share.

Our tax dollars will most likely bail out BAC and Buffet (if he actually put his own money into it).

[userpick]

Our tax dollars will most likely bail out BAC and Buffet (if he actually put his own money into it).

Either way, 5 billion and Buffett's name in the same sentence is generally an encouraging sign. All of the experts say it was tremendously stupid, so that makes me feel even better about it. But it's definitely a risk.

[Kleinhaus]

I want to say that was in august, but I'm not positive. I know it was $6.19/share when he bought in, so he's definitely lost money in it already. But the past few days has been promising. Started the week around $5 and already up to around 5.50. Hopefully that trend continues. Remember, just a few years ago it was over 50/share.

Buffet didn't buy $5 billion in common stock.  He bought $5 billion in preferred stock.  There is a huge difference.  Preferred stock is essentially a hybrid instrument with properties of both stocks and bonds.

http://dealbook.nytimes.com/2011/08/25/buffett-to-invest-5-billion-in-bank-of-america/

Under the terms of the deal, Berkshire will buy $5 billion of preferred stock that pay a 6 percent annual dividend, and receive warrants for 700 million shares that it can exercise over the next 10 years. Bank of America has the option to buy back the preferred shares at any time for a 5 percent premium.

He is getting a much better deal than holders of common stock.

[userpick]

Buffet didn't buy $5 billion in common stock.  He bought $5 billion in preferred stock.  There is a huge difference.  Preferred stock is essentially a hybrid instrument with properties of both stocks and bonds.

http://dealbook.nytimes.com/2011/08/25/buffett-to-invest-5-billion-in-bank-of-america/
He is getting a much better deal than holders of common stock.

I understand that, but do you think he would invest 5 billion dollars if he didn't think the company was on its way up?

[Kleinhaus]

I understand that, but do you think he would invest 5 billion dollars if he didn't think the company was on its way up?

I don't think it has as much to do with his expected performance of the company as him understanding how the FED discount window works.  Kind of inline with OldPoop, he just knows the system (and frankly the people who run it) and is betting on John Q. Taxpayer to backup his "investment".

BAC's acquisition of Merrill Lynch has turned into a financial and legal nightmare.  I would be weary of them personally .. unless you are an insider and a billionaire.   

[userpick]

I don't think it has as much to do with his expected performance of the company as him understanding how the FED discount window works.  Kind of inline with OldPoop, he just knows the system (and frankly the people who run it) and is betting on John Q. Taxpayer to backup his "investment".

BAC's acquisition of Merrill Lynch has turned into a financial and legal nightmare.  I would be weary of them personally .. unless you are an insider and a billionaire.   

haha you caught me...