Everyone was surprised a year ago, when Buffett bought US$ 5 bn of Goldman Sachs preferred stock. This is after Lehman Brothers had just collapsed and Wall Street was yet to recover from the shocks. Moreover, Buffett's past involvement with bankers like Salomon Brothers had turned out to be time consuming affair.
But then, he rarely misses on a good deal, even if there is a tsunami of bad news all around! The next day Buffett had said, "The price was right, the terms were right, and the people were right." He also secured a margin of safety from the terms of contract - a 10% dividend and also the right to buy US$ 5 bn of common stock at a strike price of US$ 115 per share.
A year later, his decision has turned out be correct! Investment in Goldman has made Buffett's Berkshire Hathaway richer by US$ 3 bn in twelve months! Given the current share price of Goldman Sachs at US$ 183, the warrants alone are worth US$ 3 bn ((US$ 183 - US$115)*45 m warrants). Of course, the warrants were not available to the ordinary investor in the US. But then, all he needed to do was buy the common stock to comfortably outperform the broader market. Easier said than done! Don't you wish that there is a Buffett in everyone of us?
But then, he rarely misses on a good deal, even if there is a tsunami of bad news all around! The next day Buffett had said, "The price was right, the terms were right, and the people were right." He also secured a margin of safety from the terms of contract - a 10% dividend and also the right to buy US$ 5 bn of common stock at a strike price of US$ 115 per share.
A year later, his decision has turned out be correct! Investment in Goldman has made Buffett's Berkshire Hathaway richer by US$ 3 bn in twelve months! Given the current share price of Goldman Sachs at US$ 183, the warrants alone are worth US$ 3 bn ((US$ 183 - US$115)*45 m warrants). Of course, the warrants were not available to the ordinary investor in the US. But then, all he needed to do was buy the common stock to comfortably outperform the broader market. Easier said than done! Don't you wish that there is a Buffett in everyone of us?
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