Is Bank Of America Buffett's Next IBM-Level Mistake?

9/26/17

About a month ago, Warren Buffett exercised his preferred stock warrants and became Bank of America's (NYSE: BAC) largest common stockholder. As I outlined, his public statements and the mechanics of his transaction showed that he believed Bank of America still has room to grow.

However, Warren Buffett isn't always right. The most glaring example is Warren Buffett's long-term and extensive investment in IBM (NYSE:IBM), which in recent years has fared so badly that even is starting to give up on the company.

ChartIBM data by YCharts

The fact that Buffett has chosen Bank of America to be his next major investment, with over $17.5 B (or 700 M shares) now in personal stock and his indications that he intends to hold it for a while, is particularly interesting because Bank of America does not appear to be especially poised for growth compared to other large financial institutions.

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