Wednesday, September 24, 2008

Good news for Goldman

...but what about everyone else?

That's the question David Geffen asks in the Wall Street Journal MarketBeat column:

The Berkshire Hathaway Inc. chairman [Warren Buffet] has thrown down with his first investment in the battered financial sector since the crisis began, with a $5 billion stake in Goldman Sachs.

It’s notable, though, that Mr. Buffett’s stake is in perpetual preferred shares, which pay a whopping 10% dividend, and Berkshire also receives warrants giving it the right to buy $5 billion of common stock at $115 a share.

The stake is large, but it’s a bit of a hedge, giving Mr. Buffett protection for his investment with little risk...
The warrants would enable Buffet to buy up to $5 billion in common stock at $115 a share (Goldman shares are trading around $130).

That's a variation on my theme below - note that Buffet is supporting Paulson's plan, a plan that would not give the American people any equity stake in the bailed-out firms, but as for himself he is getting lots of equity. Lots.

Buffet's being careful with his money; why won't Hank Paulson take equal care of ours?

posted at 8:29:00 AM by Neil

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