Tuesday, September 23, 2008

BRK + GS: You heard it here first

As I predicted last week, Goldman Sachs turned to Warren Buffett for additional liquidity.

While it's not an outright purchase, Buffett did agree to invest $5 billion in cash...considering Goldman has a market cap of around $50 billion, that's a pretty significant stake.

And Warren got a sweet deal too...perpetual preferred shares that pay a 10% dividend, callable at a 10% premium, plus a 5-year warrant to purchase $5 billion of common at $115/share (Goldman closed at $125, and was up to $138 in after-hours trading).

Of course, as my wife pointed out as I was crowing over my powers of prognostication, "So did you buy any Goldman? Did we make money?"

Damn. Would have been nice to pick up some Goldman calls when it was at $90/share!

2 comments:

Paul said...

no, no, no my friend, ** I said Buffett would invest in GS in the comments!, YOU said he would buy them ;) (as to your wife's comment, where that loan I also asked for?)

good call.

Paul

Anonymous said...

Great call Chris... however as (I think ) Warren Buffett said in one of his annual reports - there are no prizes for predicting rain, only for building the ark .. should have act'ed on this one... :)