When I first read this morning that Warren Buffett had invested $5 billion in Bank of America, I was puzzled. I didn't know how Buffett could figure out the costs of likely mortgage repurchases from securities issued by Countrywide/Bank of America.
I thought perhaps that Buffett had hired an army of analysts to go through the securities and figure out their value. But Nicholas Santiago (h/t Yves Smith) has the more likely explanation:
I thought perhaps that Buffett had hired an army of analysts to go through the securities and figure out their value. But Nicholas Santiago (h/t Yves Smith) has the more likely explanation:
3. Warren Buffett has made a career of investing in troubled companies for the sake of the economy. The last time he made an investment such as this one was back in 2008 with Goldman Sachs Group Inc.(NYSE:GS). It is important to remember that Goldman Sachs was bailed out by the tax payer in what was called the TARP program. Buffett knows that the U.S. taxpayer will bail him out if he is wrong and Bank of America stock does go belly up.[Disclosure: I own a few shares of Berkshire-Hathaway B-shares].
