Aswath Damodaran - NYU expert on valuation - provides a really great analysis of the Berkshire Hathaway - Bank of America deal that I blogged on yesterday. Aswath values the options at around $3 billion which means that Buffet got the preferred stock for only $2 billion. At that price the yield is around 15%! My own back of the envelope calculations came in around $8-9 billion for the deal - so basically, BAC shareholders just handed Buffet a nice gift of around $3 to $4 billion dollars.
Aswath concludes that this probably wasn't a good deal for BAC and I'm inclined to agree with his analysis - paying about $4 billion for the Buffet seal of approval seems pretty high.
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