Muckety
 
 
 
 
 

Warren Buffett investing $5 billion in Goldman Sachs

By Laurie Bennett

September 24, 2008 at 9:00am

Has Warren Buffett seen the bottom of the free-falling market?

Buffett, who generally knows a deal when he sees one, announced yesterday that his company, Berkshire Hathaway, would invest $5 billion in beleaguered Goldman Sachs.

Buffett had avoided investment in the troubled financial sector, saying the situation could worsen.

With the Goldman Sachs investment, “Buffett is saying he’s confident,” Brad Hintz, an analyst at Sanford C. Bernstein & Company, told The New York Times.

Warren Buffett
Warren Buffett

The Times called the news “a classic Buffett play,” because Goldman Sachs is an established institution with a well-known brand and a depressed stock price. Company shares have dropped by half over the past year.

In a statement, Buffett said Goldman Sachs “has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance.”

The deal gives Berkshire Hathaway preferred stock, at $115 per share.

As the Wall Street Journal notes today, Buffett is a friend of Byron Trott, head of Goldman Sachs’ Chicago office. Earlier this year, Trott brought Buffett into Mars Inc.’s acquisition of Wm. Wrigley Jr. & Co. Both Berkshire Hathaway and Goldman Sachs were investors in the deal.

It was unclear, the Journal reported, whether Trott also played a role in the Goldman Sachs deal.

Investors closely follow Buffett’s every move, so his interest in Goldman Sachs was seen by many as a ray of light in otherwise cloudy skies.

The announcement came after a day of dramatic hearings on Capital Hill, where Treasury Secretary Henry M. Paulson Jr. and Fed Chairman Ben S. Bernanke pushed their $700 billion plan to save the financial sector.

Buffett told CNBC today that the Goldman Sachs deal was predicated on his confidence that Congress would approve the bailout.

Buffett also praised Paulson and recommended that the next president keep him in the job for another year.

Follow Muckety on Twitter Tweet This! Share on Facebook

Click here to sign up for the Muckety Newsletter

 Read related stories: Business  

0 Comments

  • There are no comments yet, be the first by filling in the form below.

Leave a Comment

The relationship map to the left is interactive.
• Solid lines are current relations. Dotted lines are former relations.
• Expand items with + signs by double-clicking or by selecting multiple items in the map and pressing the "e" key.
• Move an item in the map by clicking and dragging.
• You can also delete items, separate boxes and save maps. Right-click on the map or select Map Tools for these options.
• Find out more about an item in the map by right-clicking on the item and choosing Information about...
• View map color key.
• This interactive map requires Flash player.


Become a fan of Muckety on Facebook

  • Search for stories
      
    Special Features

Follow Muckety on Twitter Follow Muckety on Twitter
Muckety has no direct connection to most of the people or organizations listed on these pages.
We are unable to forward personal messages or provide personal contact information.
We make every effort at Muckety to ensure that our data is correct and timely. However, relationships are in constant flux and we cannot guarantee accuracy. If you come across incorrect or outdated information, please let us know by email.
© 2017 Muckety LLC