Page 24 - Bank of America E Teaching Note

At the time of Buffett’s $5 billion investment there were
two ways of looking at it. The first was that it was not an

investment but rather a loan where Buffett was bailing

out Moynihan and BofA. This caused some investors to
question Moynihan’s credibility as an effective CEO.

On the other hand, the second way of looking at it was by

looking at Buffett and his modus operandi. The prism
Buffett applies often allows him to form his investment

decisions based on what he perceives happening long

term.

Looking at diagrams 1 and 2 there is an emerging,

positive, long-term balance between BofA’s expenditures

and resources with the final year showing an increase of
almost $4 billion in its revenue.

Moynihan has achieved this revenue and income growth

by focusing on the customer whilst cutting expenditures
especially those devoted to selling. Moynihan has thus

achieved a good fit between strategic health and financial

health.