Warren Buffett's Bank of America 2011 deal
TL;DR
On August 25, 2011 — with Bank of America's stock at multi-year lows amid lingering post-Crisis litigation and capital concerns — Berkshire Hathaway invested $5 billion in BAC preferred stock paying a 6% annual dividend plus warrants to purchase 700 million common shares at $7.14 exercisable for 10 years. The deal was negotiated privately, announced before market open, and BAC stock immediately rose ~25% that day. Six years later (August 2017) Berkshire exercised the warrants at a paper gain of ~$13B and BAC became a top-3 common-stock holding. The deal is one of the cleanest examples of Buffett's "structured private investment" template, joining Goldman Sachs (2008), General Electric (2008), Dow Chemical (2009), and Heinz (2013).
The August 2011 BAC deal sits in the same lineage as Berkshire's 2008 Goldman Sachs and General Electric crisis-era preferred-plus-warrants packages. All three were structured the same way: a senior preferred dividend (protected, contractual, 6-10% yield) paired with long-dated warrants on the common (optionality on the recovery, free if structured into the preferred conversion). The pattern lets Berkshire deploy capital at crisis-period valuations while structurally limiting downside via the senior preferred. The BAC deal is the cleanest single example because the BAC warrants were the largest in absolute share count (700M) and held for the longest before exercise (~6 years).
The structure (August 25, 2011)
The deal had three components:
- $5 billion cumulative perpetual preferred stock — 6% annual dividend ($300M/year), cumulative, callable at $5B + 5% premium
- Warrants for 700 million BAC common shares at $7.14 strike — exercisable for 10 years (through August 2021); Berkshire could exercise by paying $5B cash OR by surrendering $5B of the preferred stock
- Announcement timing — pre-market on Aug 25, 2011; BAC opened up ~25% on the news
BAC stock was trading at approximately $6.30-$7.00 at the time of the deal. Book value per share was approximately $20. The warrants struck near at-the-money on a stock priced at ~35% of book value — the structural asymmetry is what made the deal work for Berkshire.
The thesis (in Buffett's own words)
From Berkshire's 2011 annual letter + Buffett's 2011-2012 CNBC interviews:
- Cleanup mostly done — Buffett argued the bulk of BAC's post-Crisis legal liability (mortgage-related litigation, Countrywide acquisition baggage) was either provisioned for or already settled. The market was over-pricing residual tail-risk.
- Earnings power preserved — BAC's underlying franchise (consumer banking + wealth management + investment banking) would generate $20B+/year normalized earnings once the cleanup completed
- Capital ratios sufficient — BAC had sufficient Tier 1 capital to absorb remaining losses without dilutive secondary offering, despite market fear of one
- Brian Moynihan's management — Buffett publicly praised Moynihan's execution on cost reduction + non-core divestments + legal settlements
- Patient capital advantage — Berkshire could hold for 10 years if needed; that's longer than the warrant exercise window. No forced sale risk.
The 2017 exercise + 13F debut
By mid-2017 BAC stock had risen to approximately $24-25. The warrants' intrinsic value was ~($25 − $7.14) × 700M = ~$12.5B (excluding time value). On August 2, 2017 Berkshire announced it would exercise all warrants by surrendering the $5B preferred stock as payment.
Berkshire's Q3 2017 13F filing was the first 13F to disclose the BAC common-stock position (~679 million shares — slightly under the 700M warrants because Berkshire had been receiving BAC dividends in additional preferred shares which translated to slightly different total share count post-conversion). BAC immediately became Berkshire's second-largest equity position behind only Wells Fargo at that time.
Position evolution 2017-2024 (full 13F trail)
Reconstructable from sequential 13F-HR filings on SEC EDGAR (Berkshire CIK 1067983):
- Q3 2017 — Initial common-stock disclosure: ~679M shares (~$16B at quarter-end)
- Q3 2018 — Berkshire added an additional ~250M shares during 2018 → ~877M total
- 2019-2020 (Q3) — Continued modest accumulation to peak ~1.03B shares by Q3 2020
- 2020 (Q4) — First trim — sold ~50M shares as part of broader Berkshire bank-sector rebalancing (also exited Wells Fargo, Goldman Sachs, JPMorgan during this window)
- 2021-2023 — Position relatively stable at ~1.03B shares
- 2024 — Significant trim across Q2/Q3/Q4 — reduced from ~1.03B to ~~700M shares (back to roughly the original warrant-derived position)
Despite the 2024 trim, BAC remained one of Berkshire's top-3 equity holdings into 2025. Cumulative cash distributions back to Berkshire from the BAC position (preferred dividends 2011-2017 + common dividends 2017-2024 + 2020 + 2024 sale proceeds) substantially exceed the original $5B investment.
Return profile
Original investment: $5B (August 2011). Preferred dividends 2011-2017: ~$1.8B cumulative ($300M/year × ~6 years). Warrant intrinsic value at exercise (Aug 2017): ~$12.5B. Subsequent common-stock appreciation + dividends 2017-2024: ~$10-15B incremental on the unsold portion + dividends.
Total cumulative return on the $5B 2011 investment over ~13 years: approximately 5-7×. The trade ranks among the highest-IRR Berkshire investments of the past two decades, on par with the 2008 Goldman Sachs deal and significantly above most pure common-stock positions over the same period.
Comparison to the 2008 Goldman + GE preferreds
Berkshire's 2008 Goldman Sachs deal ($5B preferred + warrants at $115 strike, redeemed 2011) and 2008 General Electric deal ($3B preferred + warrants at $22.25 strike, redeemed 2011) used the same template but resolved differently:
- GS warrants — exercised by Berkshire 2013, ~$2B paper gain
- GE warrants — exercised by Berkshire 2013, modest gain — GE recovered slower than GS
- BAC warrants — exercised 2017, ~$12.5B paper gain — the largest of the three by a wide margin because BAC held the warrants for longer and converted at a higher percentage gain over strike
Reading the position today
BAC remains a top-3 Berkshire common-stock holding as of late 2025, though substantially smaller than at peak (700M shares vs 1.03B at peak). Each quarter going forward, Berkshire's 13F-HR on EDGAR will disclose any further changes — whether the trim continues toward zero, holds at ~700M, or re-accumulates.
See also Buffett's Coca-Cola trade and Buffett's Apple position — three trades that together represent the foundation of modern Berkshire equity-portfolio history.
Our view
The BAC 2011 deal is the cleanest single example of Buffett's "structured private investment" template, refined across Goldman 2008, GE 2008, Dow 2009, BAC 2011, and Heinz 2013. The pattern: a senior preferred dividend (contractual, protected, mid-single-digit yield) paired with long-dated common-stock warrants (asymmetric upside, free if you held the preferred). For an investor at Berkshire's scale with permanent capital, the template works during financial-crisis windows when the issuer has emergency capital needs and structurally limited counterparty options.
For HoldLens tracking purposes, BAC remains one of the most-watched lines in Berkshire's quarterly 13F. Any further trim or re-accumulation will show up in our Buffett dossier within ~6 weeks of the underlying quarter close.
The 13F filings + Form 4 trail for this position are catalogued on our sister site: secfilingdex.com/learn/13f.
Foundational reading on concentrated value investing
The Buffett canon plus the deeper texts on long-duration positioning.
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Not investment advice. Historical analysis from SEC Form 13F-HR + DEF 14A proxy disclosures + Berkshire Hathaway 2011-2024 annual reports + Bank of America 2011-2017 8-K filings disclosing the original deal terms + 2017 warrant exercise. Methodology.
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Six historical trades reconstructable from SEC EDGAR alone. Each essay traces the trade through 13F + Form 4 + DEF 14A filings.
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Berkshire's 2016-onward AAPL accumulation — largest equity position in firm history.
Scion Capital's 2005-2008 subprime CDS trade — ~489% net return.
Pershing Square's 2012-2018 multi-year activist campaign.
September 16, 1992. The single-day macro trade that broke the Bank of England.
1997-2023 hold + board seat — the canonical long-duration value position.
2013-2016 long-side activism — public letter to Tim Cook, ~$2B realized gain.
See live tracked-manager holdings on HoldLens
Warren Buffett dossier — full Berkshire 13F holdings + every change since the Q3 2017 BAC common-stock disclosure. Sister property cataloging every SEC form: SecFilingDex.