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Becky Quick Transcript of Comments With Buffett on BAC Deal


Parsad
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Here is Becky Quick's comments on her call with Buffett this morning. 

 

...I ASKED HIM WHY NOW AND HE SAID HE THINKS IT'S BETTER THAN ANYTHING ELSE THAT I CAN THINK OF AT THE TIME. HE ALSO SAID THAT IT'S VERY LIKELY THAT OVER TEN YEARS, THAT THEY DO EXERCISE AND OWN ALL OF THOSE WARRANTS, THAT THEY TURN THEM INTO SHARES. AT THAT POINT, IF SHARES OUTSTANDING EXISTS AS THEY DO TODAY, THEY'D OWN SIX AND A FRACTION OF PERCENT OF THE COMPANY. SO IT'S A MASSIVE INVESTMENT THAT HE'S THINKING OVER THE NEXT DECADE HE'D BE MAKING IN BANK OF AMERICA. I HEARD YOU ALL EARLIER POINT OUT THAT THIS IS SOMETHING HE'S DOING WHILE INVESTING IN WELLS FARGO. HE POINTED OUT HE THINKS WELLS AND BANK OF AMERICA HAVE TWO BEST DEPOSIT FRANCHISES IN THE UNITED STATES. HE DOES SAY THAT BANK OF AMERICA HAS SIGNIFICANT PROBLEMS IN THEIR PAST, BUT THEY'RE WORKING THEIR WAY THROUGH THEM. HE ADMITS THIS IS NOT SOMETHING THAT'S GOING TO BE RESOLVED IN A WEEK, MONTH, VERY LIKELY EVEN IN A YEAR, BUT THIS IS REMINISCENT OF SOME THINGS HE'S DONE IN THE PAST. YOU LOOK WHEN HE'S MADE MAJOR, MAJOR INVESTMENTS, IT WAS WHEN AMERICAN EXPRESS BACK IN THE 1960s. IT WAS WHEN AMERICAN EXPRESS HAD BIG PROBLEMS, TOO. IT WAS THE SALAD OIL SCANDAL...

 

...BUT I ASKED HIM WHY NOW AND HE SAID IT'S BECAUSE THE STOCK HAS COME DOWN SO MUCH RECENTLY, BANK OF AMERICA HAS GONE DOWN A LOT RECENTLY. AND HE SAYS HE THINKS BANK OF AMERICA IS CERTAIN TO BE AROUND OVER THE LONG-TERM. HE ALSO SAYS BY THE WAY, THAT THIS IS A VOTE OF CONFIDENCE. NOT ONLY IN BANK OF AMERICA, BUT ALSO IN THE COUNTRY. AND LISTEN TO THIS, HE SAYS ALL THOSE PEOPLE WHO THINK THE WORLD IS GOING TO END. I THINK THEY'RE WRONG...

 

...HE SAYS THIS IS LIKE GOING BACK TO HIS YOUTH WHERE NOT ONLY AMERICAN EXPRESS, WHERE HE GOT IN BACK IN THE 1960s, BUT THEN WITH GEICO BACK IN 1970. GEICO WAS IN TROUBLE, TOO. I BELIEVE BECAUSE OF SOME ACCOUNTING ISSUES. HE BOUGHT INTO THAT COMPANY, TOO AND BOUGHT A MAJOR STAKE AT THAT POINT, BUT IT'S THE IDEA OF BUYING INTO THE COMPANIES THAT LOOK LIKE THEY ARE IN TROUBLE, TAKING SOME MAJOR BETS AND BUYING BIG INTO THEM. THIS IS REMINISCENT OF SOME OF THE DEALS HE'S DONE IN THE PAST...

 

http://www.cnbc.com/id/44207362

 

Cheers!

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...I ASKED HIM WHY NOW AND HE SAID HE THINKS IT'S BETTER THAN ANYTHING ELSE THAT I CAN THINK OF AT THE TIME. HE ALSO SAID THAT IT'S VERY LIKELY THAT OVER TEN YEARS, THAT THEY DO EXERCISE AND OWN ALL OF THOSE WARRANTS, THAT THEY TURN THEM INTO SHARES. AT THAT POINT, IF SHARES OUTSTANDING EXISTS AS THEY DO TODAY, THEY'D OWN SIX AND A FRACTION OF PERCENT OF THE COMPANY. SO IT'S A MASSIVE INVESTMENT THAT HE'S THINKING OVER THE NEXT DECADE HE'D BE MAKING IN BANK OF AMERICA.

 

What? But Munger told me this is only a tiny investment? Also, Buffett is in it mainly for the 6% coupon, Munger and given2invest made that very clear! 6% is the best he can get in this market, the warrants are just an extra... Right?  ::)

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