Anytime Warren Buffett speaks, it's worth listening. That's especially true for people interested in bank stocks, given that his company, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), has accumulated an enormous portfolio of ownership stakes in some of the nation's leading banks.

Wells Fargo (NYSE: WFC) is one of those banks. Berkshire Hathaway owns 10% of it, making Buffett's company the bank's biggest shareholder.

Over the past year, Buffett has voiced displeasure with a scandal that came to light last September at Wells Fargo, saying the bank made a "terrible mistake." The Consumer Financial Protection Bureau revealed at the time that thousands of Wells Fargo employees had opened up to 2 million unauthorized accounts for customers, oftentimes without the customer's approval or knowledge.

But Buffett has also made it clear that Berkshire Hathaway wouldn't abandon the bank. In a CNN interview last year, Buffett said that Wells Fargo's now-former CEO John Stumpf is a "very decent man" who "made a hell of a mistake" in not dealing with the scandal more aggressively. Buffett went on to say that Wells Fargo is an "incredible institution" and that he wasn't planning on selling a single share of it.

Fast forward to today, and Buffett has doubled down on his commitment to the nation's third biggest bank by assets. Here's an exchange from an interview of Buffett this week by CNBC's Becky Quick:

Quick: [Wells Fargo CEO] Tim Sloan just came out recently and said that because of a third-party review there will be more negative headlines. Buffett: What you find is that there's never just one cockroach in the kitchen. That's what used to terrify me about Salomon Brothers is what they'd find after the first one. Anytime you put the focus on an organization that has hundreds of thousands of people working for it, you may very well find that it wasn't just the one that misbehaved that you found out about. And of course it was more than just one in Wells Fargo's case. Quick: Are you comparing Wells Fargo to Salomon? Buffett: I'm comparing the shock of a huge financial institution that all of the sudden people view in a different light. And once you put a spotlight and start looking at everything, you're likely to find something additional. Quick: Is that enough to concern you about your ownership of its shares? Buffett: Not in terms of the long-term investment, no. It's a terrific bank, as is Bank of America. There were some things that were very wrong done there but they are being corrected.

This is a vote of confidence that Wells Fargo needs right now, as the company continues to repair its image in the wake of its sales scandal.

To Quick's point, moreover, things could very well get worse at Wells Fargo before they get better. The bank announced last week that it would soon release the results of a third-party review of its retail practices, which could cause more negative headlines.

But Buffett is taking the long view. He sees these issues as temporary troubles, after which Wells Fargo will be able to get back to doing what it has done for 165 years: focusing on the nuts and bolts of banking.

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John Maxfield owns shares of Bank of America and Wells Fargo. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.</s>(Reuters) - Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) has become Bank of America Corp’s (BAC.N) largest shareholder by exercising its right to acquire 700 million shares at a steep discount, more than tripling an investment it made six years ago.

FILE PHOTO - Berkshire Hathaway CEO Warren Buffett visits the BNSF booth before the Berkshire Hathaway annual meeting in Omaha, Nebraska, U.S. on May 6, 2017. REUTERS/Rick Wilking/File Photo

Berkshire is now the largest shareholder in the second- and third-largest U.S. banks, with stakes of roughly 6.6 percent in Bank of America and 10 percent in Wells Fargo & Co (WFC.N), according to Reuters data.

It also has an interest in JPMorgan Chase & Co (JPM.N), the largest U.S. bank, where Todd Combs, one of Buffett’s deputy portfolio managers, is a director.

Bank of America on Tuesday said Berkshire exercised warrants to acquire its shares for roughly $7.14 each, well below their closing price of $23.58, down 14 cents from Monday. The announcement was made after U.S. markets closed.

To pay for the shares, Berkshire swapped $5 billion of Bank of America preferred stock it had bought in August 2011.

Its new common shares are worth roughly $16.5 billion, giving Berkshire a roughly $11.5 billion paper profit.

Berkshire owns more than 90 businesses such as the Geico car insurer, Dairy Queen ice cream and the BNSF railroad.

Buffett has run the Omaha, Nebraska-based conglomerate since 1965. The billionaire turns 87 on Wednesday.

The swap was made possible by Bank of America’s decision in June to boost its dividend 60 percent, after the Charlotte, North Carolina-based lender passed a Federal Reserve “stress test” of its ability to navigate tough markets.

It also vindicates Buffett’s confidence in Bank of America Chief Executive Brian Moynihan, who accepted his money when the bank was only midway through cleaning up balance sheet and litigation issues tied to the U.S. housing and financial crises.

“In 2011, we welcomed Berkshire Hathaway as a shareholder, and we appreciate their continued support now as our largest common shareholder,” Moynihan said in a statement on Tuesday.

Berkshire will collect $336 million of annual dividends from Bank of America, more than the $300 million generated by the preferred stock. It also receives close to $800 million of annual dividends from Wells Fargo.

Some of Berkshire’s other large equity investments are American Express Co (AXP.N), Apple Inc (AAPL.O), Coca-Cola Co (KO.N) and Kraft Heinz Co (KHC.O).</s>Warren Buffett's Berkshire Hathaway Inc has become the largest shareholder of Bank of America Corp by exercising its right to acquire 700 million shares at a steep discount, more than tripling an investment it made six years ago.

REUTERS: Warren Buffett's Berkshire Hathaway Inc has become the largest shareholder of Bank of America Corp by exercising its right to acquire 700 million shares at a steep discount, more than tripling an investment it made six years ago.

Bank of America on Tuesday announced the exercise of the warrants, which gave Berkshire the right to buy the bank's shares for about US$7.14 each. Bank of America shares closed down 14 cents at US$23.58 on Tuesday.

The announcement was made after U.S. markets closed.

The exercise gives Berkshire a roughly 6.6 percent stake in the second-largest U.S. bank, based on an increase in the number of Bank of America shares outstanding, Reuters data show.</s>Warren Buffett's Berkshire Hathaway Inc <BRKa.N> has become the largest shareholder of Bank of America Corp <BAC.N> by exercising its right to acquire 700 million shares at a steep discount, more than tripling an investment it made six years ago.

Bank of America on Tuesday announced the exercise of the warrants, which gave Berkshire the right to buy the bank's shares for about $7.14 each. Bank of America shares closed down 14 cents at $23.58 on Tuesday.

The announcement was made after U.S. markets closed.

The exercise gives Berkshire a roughly 6.6 percent stake in the second-largest U.S. bank, based on an increase in the number of Bank of America shares outstanding, Reuters data show.</s>Warren Buffett became Bank of America’s largest shareholder on Tuesday in a deal that made him billions.

A Berkshire Hathaway Inc. investment that began in 2011 translated into 700 million shares Bank of America Corp. stock by the end of the day. Berkshire Hathaway is now the biggest shareholder in both the second- and third-largest U.S. banks, with 10 percent stakes of Wells Fargo & Co and 6.6 percent of Bank of America.

“In 2011, we welcomed Berkshire Hathaway as a shareholder, and we appreciate their continued support now as our largest common shareholder,” Bank of America Chief Executive Brian Moynihan said in statement, Reuters reported.

The iconic CEO’s move involved the exchange of $5 billion in preferred stock for common shares.

The Wall Street Journal estimated the deal as netting $13 billion in profits.

“The swap was made possible by Bank of America’s decision in June to boost its dividend 60 percent, after the Charlotte, North Carolina-based lender passed a Federal Reserve ‘stress test’ of its ability to navigate tough markets,” Reuters reported.</s>Warren Buffett’s Berkshire Hathaway Inc. officially became the biggest shareholder of Bank of America Corp. on Tuesday, notching billions in gains on the bank’s recovery from the financial crisis.

Bank of America BAC, -0.59% said Berkshire BRK.A, +0.02% BRK.B, -0.04% exercised warrants to buy 700 million of its shares at below-market prices, a deal that ties back to a crisis-era investment. The move makes the famous stock picker’s firm the largest shareholder of the second and third largest U.S. banks — the third being Wells Fargo & Co. WFC, -0.41% — while also providing a vote of confidence for Bank of America stock.

“Berkshire is going to keep every share for a very long time,” Buffett said in an email to the Journal Tuesday.

Berkshire’s exercise of the warrants, along with dividends the company has received on Bank of America preferred stock, brings its paper gain on its investment in the bank to around $13 billion.

An expanded version of this report appears on WSJ.com.</s>Billionaire investor Warren Buffett, who came to the aid of a struggling Bank of America back in 2011 with a $5 billion investment, has turned that into a paper profit of more than $11 billion after exercising his right to buy 700 million shares of the bank's common stock at a bargain-basement price.

After Tuesday's market close, Bank of America confirmed in a press release that Buffett's Berkshire Hathaway had exercised its warrants to buy 700 million of the bank's common stock at $7.14 per share, a steep discount to the bank's Tuesday's closing price of $23.58. The purchase was made with preferred shares Berkshire acquired through its investment in the bank in August 2011.

The deal makes Buffett's Berkshire the largest shareholder of Bank of America.

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"In 2011, we welcomed Berkshire Hathaway as a shareholder, and we appreciate their continued support now as our largest shareholder," Bank of America CEO Brian Moynihan said in a statement.

Buffett's 700 million shares cost him $5 billion to acquire, based on the deal terms set six years ago. The value of those shares at Tuesday's close were roughly $16.5 billion, which translates into a tidy paper gain, or profit, of $11.5 billion.

More: 5 Warren Buffett quotes can make you a better investor

Back in June, Bank of America passed two rounds of so-called bank "stress tests" held by the Federal Reserve, which cleared the way for the bank to boost its annual dividend by 60% to 48 cents per share. That dividend boost prompted Berkshire to exercise its share warrants before they expired in 2021.

Buffett, in his annual letter to shareholders this spring, said publicly that if Bank of America hiked its annual dividend above 44 cents a share before 2021 that Berkshire would exercise its option to buy the 700 million shares of BofA stock.

Berkshire's $5 billion investment back in 2011 in the bank's preferred shares paid an annual dividend of 6%. It also gave Buffett the right to buy $5 billion in Bank of America common stock at $7.14 by 2021.

More: Warren Buffett says Berkshire could get $9 billion tax break from Trump

At the time of the deal announced in 2011, when the bank was dealing with legal issues following the mortgage crisis, Buffett had said in a statement: "I am impressed with the profit-generating abilities of the franchise and that they are acting aggressively to put their challenges behind them."

Bank of America's stock has risen 209% since Buffett's $5 billion investment made on Aug. 25, 2011. Buffett's stake in Bank of America is now roughly 6.5%.</s>Warren Buffett's Berkshire Hathaway Inc. officially became the biggest shareholder of Bank of America Corp. on Tuesday, notching billions in gains on the bank's recovery from the financial crisis.

Bank of America said Berkshire exercised warrants to buy 700 million of its shares at below-market prices, a deal that ties back to a crisis-era investment. The move makes the famous stock picker's firm the largest shareholder of the second and third largest U.S. banks -- the third being Wells Fargo & Co. -- while also providing a vote of confidence for Bank of America stock.

"Berkshire is going to keep every share for a very long time," Mr. Buffett said in an email to the Journal Tuesday.

Berkshire's exercise of the warrants, along with dividends the company has received on Bank of America preferred stock, brings its paper gain on its investment in the bank to around $13 billion.

Berkshire bought preferred shares in the bank in 2011 when the lender sorely needed to shore up investor sentiment. Bank of America's share price was slumping as investors grew worried about potentially billions of dollars in legal claims and fines related to the crisis.

Mr. Buffett helped change the market's perception with the investment and by calling the bank "well led."

The $5 billion deal also included warrants for Berkshire to buy 700 million shares of Bank of America common stock for $7.14 apiece.

At the time, the strike price was slightly above where Bank of America's shares were trading. Now, it is now far below the current price of $23.58 a share.

"In 2011, we welcomed Berkshire Hathaway as a shareholder, and we appreciate their continued support now as our largest common shareholder, " Bank of America Chief Executive Officer Brian Moynihan said in a statement.

The terms of the initial investment were expensive for Bank of America. The preferred stock paid a chunky 6% annual dividend, or $300 million a year.

Mr. Buffett said earlier this year that Berkshire planned to make the switch in its Bank of America stake if the bank could increase its annual dividend to 44 cents a share from 30 cents a share. That is because a common-stock dividend of 44 cents would pay Berkshire more than the $300 million that the preferred stake provides annually.

In June, the Charlotte, N.C., bank received permission from the Federal Reserve as a part of the annual "stress test" process to boost its per-share dividend to 48 cents a year.</s>Warren Buffett's Berkshire Hathaway Inc has become Bank of America Corp's largest shareholder by exercising its right to acquire 700 million shares at a steep discount, more than tripling an investment it made six years ago.



Berkshire is now the largest shareholder in the second- and third-largest U.S. banks, with stakes of roughly 6.6 percent in Bank of America and 10 percent in Wells Fargo & Co, according to Reuters data.



It also has an interest in JPMorgan Chase & Co, the largest U.S. bank, where Todd Combs, one of Buffett's deputy portfolio managers, is a director.</s>Warren Buffett's company is now Bank of America's largest shareholder.

Bank of America said Tuesday that Berkshire Hathaway had exercised its warrants to buy 700 million shares of the bank. Berkshire received the warrants in 2011 when Buffett invested $5 billion in the bank.

The shares, which are worth roughly $16.5 billion today, give Berkshire control of about 6.5 percent of the bank based in Charlotte, North Carolina.

Berkshire had been receiving $300 million a year in interest on its preferred shares. Buffett decided to trade that for common shares because Bank of America is now paying a dividend of 48 cents per share annually.

Buffett's Omaha, Nebraska-based conglomerate is also a major shareholder in Wells Fargo, American Express and Goldman Sachs.
Berkshire Hathaway Inc has become the largest shareholder of Bank of America by exercising its right to acquire 700 million shares at a steep discount, more than tripling an investment it made six years ago. Bank of America on Tuesday announced the exercise of the warrants, which gave Berkshire, controlled by Warren Buffett, the right to buy the bank’s shares for about $7.14 each. Bank of America shares closed down 14 cents at $23.58 on the same day.