Berkshire Hathaway set to become Bank of America's largest investor

Berkshire Hathaway CEO Warren Buffett yells

Berkshire Hathaway CEO Warren Buffett yells"Go big red!, the Nebraska Cornhuskers chant prior to the Berkshire annual meeting in Omaha Thomson Reuters

If the company were to exercise the warrants instead of waiting until just before their expiration in 2021, Berkshire would be able to net a profit of about $12 billion and also become the bank's biggest shareholder, according to reports. That is because a common-stock dividend of 44 cents would pay Berkshire more than the $300 million that the preferred stake gives the firm annually. The bank's board approved the repurchase of $12 billion in common stock during the period from July 1, 2017, through June 30, 2018, up from $5 billion on the current year's capital plan.

In addition to now being the largest shareholder in Bank of America, Berkshire Hathaway is also the largest shareholder of Wells Fargo.

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Since Bank of America is raising its annual dividend rate to $0.48, Berkshire can increase its income stream from its investment by $36 million per year by making the cashless exchange.

Buffett, 86, criticized the Republican plan last month at the annual meeting of his conglomerate, Berkshire Hathaway Inc.

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While Omaha, Neb. -based Berkshire (BRK.A), still holds shares of AmEx, Coke and IBM, they would be bumped from the top four spots by Apple Inc. Buffett bought his shares for around $7.14 in 2011.

The move came after Bank of America's decision Wednesday to raise its annual dividend by 60% to 12 cents a quarter. (AAPL) and Bank of America Corp. That initial BAC purchase included 700 million common share warrants, which dictated Buffett could buy the shares at a paltry $7.14 each - less than 1/3 of BAC's Thursday closing price of $24.32.

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This will make Berkshire the biggest shareholder of lender. The 57-year-old lawyer has worked to restore the bank's relationships with shareholders after years of large mortgage fines and losses stemming from the bank's crisis-era purchases of Countrywide and Merrill Lynch.

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