Who a company's biggest shareholders are says a lot about the company itself. This is why investors in Bank of America (NYSE:BAC) can rest easy, as Warren Buffett's Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) is the Charlotte, N.C.-based lender's biggest stakeholder. Kind of.

You'd be excused for not knowing this. Scan through Bank of America's largest investors, and Berkshire's name is nowhere to be found. The list is dominated instead by companies like Blackrock (NYSE:BLK), a New York-based asset manager that controls 5.1% of the bank's outstanding common stock.

The reason Berkshire doesn't show up is because it doesn't hold Bank of America's stock outright. Its position consists rather of warrants, which give the Buffett-controlled conglomerate the right to purchase a predetermined amount of stock at an agreed upon price within a specific amount of time. Specifically, Berkshire can buy 700 million shares of Bank of America for $7.14 each at any time before now and 2021.

It probably goes without saying, but this isn't your typical arrangement. The underlying deal dates back to 2011, when Bank of America's stock plunged to $5 per share, leaving analysts and investors to fear for the banking behemoth's life. Buffett made an offer at the time to invest $5 billion in the bank as a show of support in exchange for an equivalent amount of preferred stock. The warrants were merely icing on the cake.

Fast forward to today, and it's clear Berkshire has done quite well for itself. At today's price, it has an unrealized gain of $6.5 billion on the warrants alone; and that excludes Berkshire's $5 billion preferred stake which yields 6%. On top of this, once exercised, the warrants will officially make Berkshire the largest shareholder in Bank of America.

Why does this matter? On a positive note, it means that Bank of America's investors are in good company. Who better to agree with on an investment than Warren Buffett? On a less optimistic noted, however, these warrants are also a ticking time bomb that will cause considerable dilution once exercised. The net result? This just goes to show that in investing, as in most other things, there's no such thing as a free lunch.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.