Skip to comments.Goldman Sachs to receive $5 billion Buffett investment (Berkshire Hathaway has $5B option for 5 yrs)
Posted on 09/23/2008 4:15:44 PM PDT by NormsRevenge
NEW YORK (Reuters) Goldman Sachs Group Inc (GS.N) on Tuesday said it will receive a $5 billion investment from Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N), a vote of confidence for the Wall Street bank from perhaps the world's best-known investor.
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 at $115 per share, exercisable within five years.
Goldman also said it plans to sell at least $2.5 billion of common stock. It announced the offerings after earlier this week announcing it would become a bank holding company, enabling it to accept deposits, and killing the investment banking model that has dominated Wall Street for decades.
"This is a marriage of two incredibly intelligent, attractive partners," said Michael Holland, a money manager at Holland & Co in New York. "Buffett is saying about the top management of Goldman Sachs that they're distinct and different from their competitors. and it's a vote of confidence which is gold plated. You don't get better than this."
Shares of Goldman rose $10.65, or 8.5 percent, to $135.70 in after-hours trading following the announcement. They rose $4.27, or 3.5 percent, to $125.05 in regular trading.
"Goldman Sachs is an exceptional institution," Buffett said in a statement. "It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance."
(Excerpt) Read more at news.yahoo.com ...
” .. a vote of confidence which is gold plated. You don’t get better than this.”
It has been a breeder house for gubamint for years.
A good investment as things stand today.
The usual is happening. The smart vultures are cherry-picking the tasty bits left on the carcass, and Uncle Sugar will get to buy up the dead stuff that’s left with our tax money.
As a commercial bank, things will be different for Goldman. The tax-me-more, abortion promoting, off-the-rack-suit wearing oracle generally has good investment instincts however.
So, Berkshire gets a 10% dividend yield and 5 years of warrant coverage, and we get to pay a premium for their cr***y paper for which they have already collected underwriting fees. This “bailout” keeps looking worse and worse.