Warren Buffet's Infusion of Equity in Bank of America (BAC)

The past few weeks there's been a lot of speculation and uncertainty regarding the financial markets, globally. This has created quite a bit of volatility on the New York Stock Exchange (NYSE). Financial stocks have been leading a lot of this volatility in the market. Analysts say that this is due to the uncertainty and global financial instability. Well, now enter Warren Buffet.

Who is Warren Buffett? Well only one of the wealthiest men in the world, according to Forbes list of wealthiest people. Warren Buffet is a U.S. business man. He's been frequently referred to as the "Oracle of Omaha" with relation to his style of investing. He was born in Omaha Nebraska - it doesn't get more American than that!

On Thursday, August 25th 2011, Warren Buffett announced that he would be investing $5 billion into Bank of America (NYSE:BAC). This sent Bank of America stocks surging up almost 10%.  According to the deal Bank of America will issue 50,000 shares of preferred stock valued at $100,000. In return, Buffett will sit back and earn a 6% dividend annually on this investment. This definitely seems somewhat steep for Bank of America considering bank-to-bank loan rates are almost nearly 0%.

What does this mean for Warren Buffett? Well he's probably sealed his position on the 2012 list of the wealthiest people. A 6% dividend annually is certainly a great investment in these rough financial times. For Bank of America - this means they've got some capital. Although just recently the CEO of Bank of America, Moynihan, mentioned they wouldn't need any capital to "rebuild". However, an insurgence of capital such as this certainly adds credit to Bank of America and certainly will help strengthen its value.

This seems to be a common move by Buffett. He's known recently for investing in both GE, General Electric, and Goldman Sachs at an even heftier cost of 10% annually. The investments from the "Oracle of Omaha" certainly come with an expensive price tag.

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