- Warren Buffett is one of the world's richest people and a prolific investor in everything from banks, to candy, to trains.
- Here are eight of the Oracle of Omaha's most profitable investments to date.
Warren Buffett is widely considered to be the best investor of all time, and for good reason. Since he took control of Berkshire Hathaway, the company has generated annualized returns of nearly double those of the S&P 500, mainly on Buffett's sound ability to make great investment deals.
With that in mind, here are eight examples of investments, acquisitions, and other deals that Warren Buffett has made over the years that have worked out especially well.
SEE ALSO: Warren Buffett needs help figuring out what to do with $109 billion in cash
1. A bet on brains that paid off
In the aftermath of the financial crisis, Buffett decided to invest $5 billion into investment banking giant Goldman Sachs. a move that Buffett referred to as a "bet on brains."
Buffett received $5 billion in Goldman Sachs preferred stock, as well as warrants to buy 43.5 million shares of the bank's common stock for $115 anytime before October 2013. Goldman ultimately ended up buying back the preferred stock for $5.64 billion and receiving over 13 million shares of Goldman, essentially for free -- the value of the difference between the stock's then-current price and strike price of Buffett's warrants.
2. How Berkshire became Bank of America's largest shareholder
Arguably Buffett's savviest deal in recent history was his post-crisis Bank of America investment.
In 2011, Buffett decided to purchase $5 billion worth of Bank of America preferred stock with a 6% dividend, which came with a nice little sweetener. Buffett also negotiated the right to buy 700 million shares of the bank's common stock at any time before September 2021 for just $7.14 per share. At the time, the warrants were technically worthless -- the bank's stock traded for less than this amount.
However, fast-forward to mid-2017 and the bank's share price had more than tripled. Not only that, but Bank of America's dividend had increased to more than Berkshire was receiving from its preferred stock. So Buffett used his warrants to exchange his preferred stock for 700 million shares, becoming Bank of America's largest shareholder. As of this writing, the investment has resulted in a gain of more than $14.2 billion in just over six years.
3. Did the Oracle of Omaha foresee the mortgage crisis?
Investors who haven't followed Buffett for more than a couple of decades are often surprised to learn that government-backed mortgage agency Freddie Mac was once a major Buffett stock.
Buffett bought shares of Freddie Mac in 1988 for $4 per share and enjoyed a total return of more than 1,500% as the stock soared to $70 over the next decade. However, Buffett sold virtually all of Berkshire's Freddie Mac stake by 2000, after he noticed that the company was taking unnecessary risks to keep delivering double-digit earnings growth. Today, Freddie Mac trades for about $3 -- less than Buffett originally paid nearly 30 years ago.
See the rest of the story at Business Insider