Warren Buffett's conglomerate held the warrants since a deal in 2011, when he invested $5 billion in preferred shares of Bank of America, which at the time was struggling with large legal bills in the aftermath of the subprime lending crisis. The preferred shares paid 6 percent annually, or about $300 million.
But Bank of America raised its dividend to 48 cents a share annually after the Federal Reserve gave it the go-ahead in June. That was just what Berkshire was waiting for. At 48 cents, the dividend on the common shares pays about $336 million annually.
Berkshire's agreement was to convert the warrants to Bank of America shares at $7.14 each. The shares closed Tuesday at $23.58, meaning Berkshire's paper profit on the stake is about $12 billion.