Why Bank of America's Shares Surged on Wednesday
Shares of Bank of America (NYSE: BAC) were up 2% on Wednesday after the bank announced that Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) had exercised its right to purchase 700 million shares of the bank's common stock.
As Bank of America explained in a press release issued Tuesday, Berkshire Hathaway's right to purchase the stake came from the conglomerate's $5 billion investment in the bank's preferred stock in 2011. With that deal, which helped to buttress Bank of America's fortunes at the nadir or its post-financial crisis troubles, Berkshire acquired warrants to buy the shares for $7.14 each.
Warren Buffett, the chairman and CEO of Berkshire Hathaway. Image source: The Motley Fool.
Source: Fool.com
