Two of Buffett's core principles were fulfilled by the deal:
- Get paid by your investments. The key part of the deal was $5 Billion of preferred shares which will earn 6% interest. Even if the stock market closes, Bank of America will send $300 Million a year to Berkshire Hathaway.
- Buy good management, cheap. You may have a different opinion of the BoA management, but Buffett thinks it is top notch. He got a great price as well. Part two of the investment was warrants (an option) to buy 700 Million shares at $7.14 each. With the book value of BoA around $22, Buffett got them at a fire sale discount of about 68% off.
While rescuing a massive bank with $5 Billion of liquidity may be beyond the reach of the average investor, those two principles are not. Find well run companies and only buy them at a discount. Getting a dividend is just cream on top!