What does Buffett see in Goldman Sachs bank?

Hook N. Sinker · Sep 23, 2008

Quote from Daal:

lending money at 10%plus a free option with protection from the fed

I agree with Daal. Goldman Sachs is a bank now. It is protected by the FED. Berkshire gets preferred stock that pays 10 % dividend. Berkshire also gets warrants to purchase $5 billion of common stock with a strike price of $115 per share, exercisable at any time in five years. I calculate the warrant can buy about 43,478,260 shares. There is a built in profit on the warrants of about US $ 200 million but that can change with stock price.

Warren Buffett has experience with banks. I am reading on the web that Mr. Buffett has investments in Bank Of America, U.S. Bancorp, and Wells Fargo and Company.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0Rfcqk5UR60&refer=home

drsteph · Sep 23, 2008

Quote from bgp:

absolutely nothing .

bgp

Concur. Curiouser & Curiouser.

Waiting for the first bloke to jump ship to somewhere else.

Where is James Cayne these days, anyway?

I hear paraguay is nice this time of year.

bgp · Sep 23, 2008

yes yes mr. buffet has interests in different banks and has not consulted me once about buying into them and thats why he's underwater right now. :mad:

i'm also looking for someone to polish his shoes.

bgp

PocketChange · Sep 23, 2008

Seems like he has negotiated a special deal for the safest place in the world to park his cash.

Fed guarantee.
10% dividend
Note callable without penalty at any time
Warrants and Options.
5 Million 5 year Options at 115???
Thats another 500M.

Better than FDIC... his own personalized GSIC with 5B coverage and 10% interest.

I'm sure every bank in the world would pony up for this deal...

simon1080 · Sep 23, 2008

I think in the long term its worth it for Goldman as they would gain major investor confidence.

Take it as if it was a multi year advertising deal!

Gringinho · Sep 23, 2008

Quote from Cutten:

Nothing to do with buying into the best investment bank in the world at a steep discount then?

Wouldn't you be more compelled to act if you could kill two birds with one stone?

Of course you can apply Occam's razor ... but that doesn't mean there only has to be one single contributing factor.

crgarcia · Sep 23, 2008

Quote from Cutten:

Nothing to do with buying into the best investment bank in the world at a steep discount then?

AMEN.

If I had to invest all my money in only a single stock for the long term, GS would be my first choice, without doubt.

KeithOmalley · Sep 23, 2008

Quote from Cutten:

If you have to ask, you ain't never gonna know.

I dont know that is why i ask. SO if GS needs to borrow money Long term is there intrest rate 10%?.
does this mean that the rate they pay on borrowing money will be going up? Borrowing costs to GS is like Fuel cost to AMR

trackstar · Sep 23, 2008

Quote from PocketChange:

Seems like he has negotiated a special deal for the safest place in the world to park his cash.

Fed guarantee.
10% dividend
Note callable without penalty at any time
Warrants and Options.
5 Million 5 year Options at 115???
Thats another 500M.

Better than FDIC... his own personalized GSIC with 5B coverage and 10% interest.

I'm sure every bank in the world would pony up for this deal...

thats insane.

QQQBALL · Sep 23, 2008

Quote from Hook N. Sinker:

I agree with Daal. Goldman Sachs is a bank now. It is protected by the FED. Berkshire gets preferred stock that pays 10 % dividend. Berkshire also gets warrants to purchase $5 billion of common stock with a strike price of $115 per share, exercisable at any time in five years. I calculate the warrant can buy about 43,478,260 shares. There is a built in profit on the warrants of about US $ 200 million but that can change with stock price.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0Rfcqk5UR60&refer=home

Buffet strructured a deal like this b/f.. was it AMEX or saloman bros?