Warren Buffett: Bank of America
It's been a tough year for all banks, but Bank of America (BAC) was the institution that many investors felt was in the most danger of needing life support. Enter Warren Buffett.
Buffett's $5 billion investment in Bank of America is a giant loss so far. The stock is down 21% since the deal was announced on August 25, 2011, even after an initial Buffett bounce of 9%. In the mid $5 range, it's a far cry from the $7.14 price on which he has the option to buy up to 700 million shares. Even with a 6% dividend yield that would give Buffett's Berkshire Hathaway (BRKA) $300 million a year, the investment is still in the red.
Of course, Buffett doesn't invest for the short-term. Time could be on his side, just like it was when he invested in Goldman Sachs (GS) during the height of the 2008 meltdown. From that $5 billion lifeline, Buffett generated a $649 million profit, a return of 13%, after Goldman bought back Buffett's investment in March 2011.