Warren Buffett often gets investment opportunities that mere mortals can’t attain. Still, sophisticated investors could have picked up a few pointers earlier this year, when Buffett cashed in $5 billion worth of Bank of America preferred shares.
In 2011, when Bank of America was struggling under the weight of problems related to the financial crisis, Buffett stepped up to help it with a $5 billion cash infusion. But his holding company, Berkshire Hathaway, took the stake in preferred stock. Preferred shareholders, earn a bond-like dividend—often, though not always, a higher dividend than owners of “common” stock can get.
