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Berkshire Hathaway Inc. Message Board

  • axpkocop axpkocop Aug 6, 2014 12:15 PM Flag

    BAC Raises Dividend to 20 Cents

    But the eliminated their $4 billion share repurchase program. Not so good for Berkshire but BAC shareholders are pleased.

    I'm currently long both companies.

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    • Bought some in IRA #1-net cost about 15.24/share.

    • Well Berkshire can convert now if they want, but they'd have to spend $5 billion to do so which is a lot for a $140 million dividend. Its very unlikely that they would do that because in my opinion its much more favorable to transfer the 6% BAC preferred to settle the cost of exercising the warrants. The BAC preferred may not be redeemed by Bank of America for 5 years due to the recent agreement but its my understanding that Berkshire retains the right to transfer the preferred stock to exercise its warrants. Of course, that would be transferring $300 million pretax for only $140 million in dividends so theres little incentive to do it for the time being. I think it would take a 50 cent dividend or redemption of the preferred stock to get berkshire to convert prior to 2021.

 
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