These 9 hedge fund managers, some of the biggest Bank of America shareholders, just got a bit of a double-edged reward.They’ve made millions this morning, after shares of Bank of America have been on the rise ever since Warren Buffett announced that he’s investing $5 billion in the firm. But the deal could end up stinging shareholders a bit if Buffett exercises the option to buy 700 million shares, an option he now has as part of the deal.
There’s another thing to remember too.
Most Bank of America investors lost a lot of money in Bank of America this year. The stock has been down 50% recently since the beginning of the year.
However one look at how Goldman Sachs’ stock performed after Buffett’s similar “good faith” investment in the company shows that its likely they will earn much if not all of their investment back and more, depending on when they bought in. Buffett invested in Goldman in September 2008. The stock jumped 14% in the four days after the investment, then it fell 62% though mid-November, according to WSJ. It later rallied 270% from mid-November to October 2009.
The point is, these 9 hedge fund managers stuck with Bank of America, and it looks like it’s starting to pay off.