BAC/BRK deal
- Thread starter atticus
- Start date
Why didn't he buy 700 million shares of common? Because he doesn't believe there will be no capital raise. He's saying there will either be a capital raise or not; bankrupcty is not going to happen.
He's effectively got a a free call option on there being no capital raise.
He's effectively got a a free call option on there being no capital raise.
About as much as Stalin was a Capitalist.
He got warrants for GS at 115 a few years ago too. Hows that working out for him?
Wasn't the Goldman deal just before the '08 collapse the last time Buffet did something like this?
Great. He didn't pay for the warrants and made like a billion dollars on his preferreds and got paid back his principal. He's long goldman delta with goldman's money.
He's a model for reputation value. CEO's love to sell their companies to him because he doesn't interfere with them and troubled businesses will give him deeply discounted equity so they can count him a shareholder.
He is out on the stock he bought, he made 33% in 30 months on the GS deal, 40% in 36 months on the GE deal. Plus he still holds the warrants on both, good until 2013 22.5 on GE and 115 on GS.
Pretty nice investments, makes his returns, gets out, so has no risk and still has tons of pontential to the upside.
5yr
There is no risk here for Berkshire, and no chance of Buffet losing money on this deal. Obama and Buffet had a private meeting three days ago and the fix is in. Buffet will shore up confidence in BAC and Obama will bailout that investment if needed. Same exact situation as with GS in 2008.