On August 28, Berkshire Hathaway became the largest shareholder of Bank of America by exercising its right to acquire 700 million shares. The warrants gave Berkshire the ability to buy the shares at $7.14 a share and they are now trading at $23.58.

The warrants were issued coming out of the 2008 recession when Bank of America had bought Countrywide Financial one of the biggest issuers of subprime mortgages. After the company failed (billions were written off) the shares were low and Berkshire stepped in to offer confidence in Bank of America. The management cleaned up the balance sheets and has raised its dividend. Berkshire will collect $336 million in dividends from B of A.

In addition to the 6.6 % holding in B of A; Berkshire Hathaway group holds 10% of Wells Fargo; and since one of the deputy portfolio managers is on the board of JP Morgan Chase Reuters deduced it has a large holding in the company.

Linking to dividend paying stocks, the recession although very painful to millions of people is the greatest way to achieve wealth through time and patience. The key is doing your homework and knowing which companies have the best opportunities to stay in business and grow when somewhat normal times come back. In the case of Mr. Buffett he tripled his investment in 4 years and through the dividends the cost of holding the shares will be less every year. These opportunities are much easier in the recession or downturn, but the important thing is you need to be prepared so when it happens or when you can see the light at the end of the tunnel, it is time to buy and hold and reap the benefits.

There are more questions than answers, till the next time – to raising questions.