Berkshire buying $5 billion stake in Goldman Sachs

[Dover]

Source: AP

OMAHA, Neb. -
Warren Buffett's Berkshire Hathaway Inc. is investing at least $5 billion in Goldman Sachs Group Inc.

The announcement Tuesday from Goldman involves preferred stock that carries a dividend of 10 percent.

Berkshire also will receive warrants to purchase $5 billion of Goldman's common stock with a strike price of $115 per share. The shares are exercisable at any time for a five-year term. Goldman's shares closed at $125.05 Tuesday, up $4.27...>



Read more: http://www.forbes.com/feeds/ap/2008/09/23/ap5462119.html

[kirby]

1. No wonder Buffett said the 'I would do the same thing' re: the bailout! n/t

[CountAllVotes]

2. ok, only another $6,995,000,000 to go

come on guys! Pony up!!! :evilgrin:

:kick:

[GreenPartyVoter]

3. LOL Have some pocket lint.

[lapfog_1]

4. Warren might be a "good guy" (one of Obama's advisers)

but he also knows a gravy train when he sees one.

When the bailout occurs and Goldman unloads it's trash for our cash, Warren's $5B is going to double in value... so of course he wants to make another $5B.

At least, at some point in the future, hopefully it will end up in the Bill and Melinda Gates Foundation or something... and that it does some good in the world.

But make no mistake, that's OUR money he is making a profit on.

And one more thing. Warren doesn't bet unless he knows the outcome of the wager already... the bailout is going to happen.

[Pale Blue Dot]

5. This must be why futures are suddenly going throught the roof.

I figured that there had to be a reason.

http://www.bloomberg.com/markets/stocks/futures.html

[Hissyspit]

6. Buffett to Invest $5 Billion in Goldman

Source: Reuters

Buffett to invest $5 billion in Goldman
By Jonathan Stempel
30 minutes ago
NEW YORK (Reuters) - Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N) will invest $5 billion in Goldman Sachs Group Inc (GS.N), in a major boost for the Wall Street bank from perhaps the world's best-known investor. "It's a vote of confidence which is gold plated," said Michael Holland, a money manager at Holland & Co in New York. "You don't get better than this."

Shares of Goldman rose 6.5 percent following the announcement, while Standard & Poor's 500 futures gained 16 points.

Berkshire will buy $5 billion of perpetual preferred stock that carries a 10 percent dividend. It also will receive warrants to buy $5 billion of common stock, or 43.5 million shares, at $115 per share, within five years, which could give it a roughly 9 percent stake in Goldman.

Goldman also plans to sell at least $2.5 billion of common stock in a public offering. The company averaged 448.3 million common shares outstanding in the quarter ended Aug 29. Shares of Goldman had fallen 50 percent from their record set last Oct 31, as credit markets tightened and investors worried about the viability of U.S. investment banks. On Sunday, Goldman said it would become a bank holding company, enabling it to accept deposits and killing the investment bank model that dominated Wall Street for decades.

Read more: http://news.yahoo.com/s/nm/us_goldmansachs_buffett5

[jpak]

7. Let's see - former Goldman Sachs CEO now Treas. Sec. with a cool trillion to bail out Goldman Sachs

without ANY OVERSIGHT WHATSOEVER

Yup - Buffett sees "opportunity"...

:puke:

[Blue State Bandit]

8. Buffett's Berkshire betting $5 billion on Goldman

Source: AP

OMAHA, Neb. (AP) -- One of the world's shrewdest dealmakers is betting $5 billion of his investors' money that the U.S. financial system is not about to collapse.

Warren Buffett's Berkshire Hathaway Inc. said Tuesday it investing at least $5 billion in Goldman Sachs Group Inc., a huge vote of confidence for one of the survivors of the credit crisis that felled two of its investment banking peers.

In addition to buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock. Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering.




Read more: http://biz.yahoo.com/ap/080924/goldman_sachs_berkshire.html

---

In the words of http://www.dailykos.com/story/2008/9/24/0503/20339/876/608325">understandinglife, "Paulson & Bush BUSTED"!

Game.

Set.

Match.

Championship.

NO BAILOUT.

If some financial institution wants a tax payer dollar then that tax payer gets equity and full shareholder rights.

Anything less is ROBBERY.

Warren Buffett has exposed Bush, Paulson and all the rest of the neoconsters for what they are - GANGSTERS.

Warren Buffet just made my Christmas card list!

[curious one]

9. He knows there is no crisis and getting valuable stock for cheap.

[Blue State Bandit]

11. He knows that if the "Bailout" don't work...

it will effect his portfolio across the board.

It's a risky investment according to his track record. But it makes sense.

Somebody over at Kos called him a "Bottom Feeder". While I do see how this is an applicable tag here, I have to remind those who would go there, that "Bottom Feeders" clean the tank of the excess shit.

So if this gamble works, and his coat-tails are big enough, I could care less if he makes a buck off of it. `Cause at least he made an honest buck out of it. And punked the Norquist http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4073835&mesg_id=4073835">"Starve the Beast" crowd.

[Blue State Bandit]

10. Darn. Beaten to the punch.

Kudos to Hissyspit!

[Ex Lurker]

12. best news I've heard all week n/t

[Duer 157099]

13. But maybe he's just betting that there WILL be a bail out?

I can see this either way, that he thinks the request for bail was a ruse, or he knows it will happen.

I guess either way he wins, so yeah, it's smart money.

[JDPriestly]

18. I'm with you. He just wants to have his hand out when the government

starts giving money away.

[Blue State Bandit]

19. No one's believes this is not a business...

decission by Buffet. Even if this is a risky investment in comparison to Buffet`s MO, such an altruistic motive is classic Buffet.

If the entire economy collapses, it would be bad accross the board for more than just the financial sector, and would begin to cut away at other sectors open to investment (already happening).

This move builds confidence in the market place, hense, it will pay off beyony this single investment by proxy.

Buffet just greased the wheels.

In comparison to the $700 billion price tag being haucked by Paulson and Bernanke on the Hill, this may look like a drop in the bucket. But I would ask that you keep one thing in mind.

Once the Morgan Stanley and Goldman Sachs see that no free hand-outs are forth comming, they will right themselves. This move by Buffet both facilitates and exposes they're ability to re-capitalize with minimal interference.

There is a precedence here. Sweden in '92 went through a simular situation.

But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=2&oref=slogin&oref=slogin">NYTimes

NO BAILOUT
WITHOUT
DEBT PAID
AND
TIME SERVED!!



Eat that Herman Munster/Hank Paulson!

[nolabels]

20. Or just a large tax write off

The freaking billionaire throw and play with money like it was their toys and mostly they don't lose the majority of the time.

My rule of thumb is never play ball with someone out of your league because they often play by other rules :shrug:

[On the Road]

14. Goldman is Not Exposed Like Lehman

or some of the other failing institutions were. The stock price suffered from being in the same troubled industry group.

I bought some Goldman late last week. Cramer is also recommending it.

On the other hand, no one is buying JP Morgan Chase. They're likely to be the next to go belly up and things stand.

[MidwestTransplant]

15. Chase is FAR from likely to go under. As likely as GS. Citi is more tenuous than both.

[On the Road]

21. It Could be --

you may have followed the industry for longer.

I haven't looked at the numbers closely, but there has been speculation about JPM's precarious position in derivatives for at least five years. For example:

http://moneycentral.msn.com/content/P31234.asp
http://www.gold-eagle.com/editorials_02/chapmand061302.html

None of the dire predictions have come to pass. However, unless JPM has changed its holdings a lot, it's the kind of thing that could trigger sudden and massive problems.

[Dorian Gray]

17. I think you mean Morgan Stanley?

JP Morgan Chase hasn't really suffered through the problems as of late.

[JDPriestly]

16. NO BAILOUT. THE WHOLE THING IS A HOAX.

The U.S. government should refinance the mortgages on 99-year mortgages at the Fed rate and tighten credit qualification requirements on new mortgages. You will soon see the end of \ the hemorrahging of the mortgage industry. Prices on houses now on the market will level out to reasonable amounts. Available rentals will increase, and more people will take rentals until they have saved enough for a down payment (the normal way to buy a house).

Although lots of people have these sub-prime mortgages, there are lots and lots of people like us who don't have them, who bought our homes years ago and are paying our reasonable monthly mortgage payments on time with no problem. There are also lots of young people who have been unable to enter the current market because they did not trust sub-prime mortgages but can't otherwise afford the overpriced properties.

Get the people who are facing foreclosure to stay in their houses on 99-year mortgages. Tighten the regulation on the mortgage industry and, in a reasonable amount of time, the crisis will abate. Our economy has a lot of problems, but this real estate crisis is, I think, way exaggerated. Here in our area of L.A. there are houses for sale and the house behind us was foreclosed. But the market was in a lot more trouble in the first half of the 1990s. Also, there were reasons for the foreclosure of the house behind us beyond just the sub-prime mortgage. The person living in the house had received threatening notes in his mailbox for no apparent reason other than some anonymous person did not like him. Just why I do not know. Also, the person had a girlfriend into whose house he moved. His house was foreclosed. But really, in our area out here, there haven't been that many foreclosures.

The economy is in bad shape because of the lack of good jobs and opportunities, but the bail-out would not help that at all.

No bail-out. We have to make that clear to all the world.