Berkshire Invests In Golman Sachs
It looks as if Warren Buffett has found some value in Goldman Sachs (GS). Berkshire announced today that it has made a $5 billion investment in Goldman perpetual preferred stock.
Per the WSJ.com: "The $5 billion preferred shares pay a 10% dividend and can be bought back by Goldman at a 10% premium. The warrants give Mr. Buffett the right to buy $5 billion worth of Goldman stock at $115 a share, which is 8% below Goldman's closing share price on Tuesday of $125.05. At Goldman's current $50 billion market capitalization, exercising those warrants would give roughly Mr. Buffett 10% of the company."
It has been quite a week for Goldman; from a huge drop in its stocks price, to becoming a bank holding company, and now the Buffett investment. Hopefully this deal will mark the begining of some much needed stability in the financials.
