Speculation is surrounding the stock market that Warren Buffett may have earned $1.4 billion in one day because of his $5 billion investment in Bank of America. Oh, and did we mention that his $5 billion investment was just made today? Bank of America shares were up 9 percent in early afternoon trading Thursday after Buffett’s announcement via Berkshire Hathaway. The stock market has been all a flurry these last few weeks and Buffett’s announcement and hefty check will surely create a commotion for months to come.
Other financial institutions also benefitted as Citigroup and Morgan Stanley also saw an increase of more than 3 percent for its shares. Despite Buffett’s investment, BofA’s stock is still down more than 40 percent year-to-date, according to CNN. Beginning on Thursday morning, the bank’s stocks were already up 26 percent after opening. In years past, Buffett has attempted to bail out other major enterprises during the beginning of the financial downturn; take for instance, Berkshire Hathaway’s investments in Goldman Sachs and General Electric.
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CNN also writes that Berkshire Hathaway is buying preferred stock that pays a 6 percent annual dividend, which is a far cry from what the average investor might ever expect to see. While Buffett’s investment may seem like a ploy to invest back into the bank, finance officials are telling others to hold tight and to keep in mind that BofA’s mortgage issues will still reside.