Warren Buffett Can Make a $12 Billion Profit From His $5 Billion Investment

By Tomi Kilgore Markets MarketWatch Pulse

Warren Buffett is a great example of how the rich get richer, as his Berkshire Hathaway Inc. can make a quick $12 billion with the $5 billion he invested nearly 6 years ago, a 240% gain. And that doesn't include interest. Berkshire said earlier Friday that it will exercise warrants to buy 700 million Bank of America Corp. common shares at $7.142857, for $5 billion. At current prices, with the stock trading up 0.9% at $24.53, the stake would be valued at $17.17 billion. Berkshire had acquired the warrants in August 2011 as part of its deal to invest $5 billion in Bank of America by purchasing 6% preferred stock, at a time when the bank was struggling in the aftermath of the financial crisis. The stock had tumbled 45% in a year, and had hit a 3 1/2-year low a day earlier. Berkshire said it would use the $5 billion it used the $5 billion in preferred stock to pay for its common stock purchase. Bank of America's stock has soared 83% over the past 12 months, while Berkshire shares have climbed 17% and the S&P 500 has rallied 15%.

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