A Very Expensive Berkshire/Goldman Deal

Wednesday, September 24, 2008 | 09:00 AM

If you missed last night's discussion on the "vote of confidence" deal from Warren Buffett, you are missing the big picture. Go read:  Berkshire to GS: "I Got $5 Billion, but Its Gonna Cost Ya."

The headline writers of both the NYT and the WSJ missed the numbers involved:

NYT: Buffett Deal at Goldman Is Seen as a Sign of Confidence

WSJ:  Move by Famed Investor's Is Seen as a Vote of Confidence in Crisis-Stricken Banking System

Doug Kass goes last night's analysis one better, and notes that using a Black Scholes produces a valuation of $2.8 billion dollars for the warrants. That makes the effective yield over 20% on the preferred purchase.

As we noted last night, this is terrific for Buffett, who smelled blood in the water. Its a tough deal for Goldman, who were a) obviously in a bind for capital; and 2) smart enough to learn from Lehman Brothers mistakes.

Wednesday, September 24, 2008 | 09:00 AM | Permalink | Comments (48) | TrackBack (1)
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» When in doubt, loot! from Newshoggers.com
By Fester: TPM has the Republican Study Committee 'proposal' to 'bail-out' the stock market. And it is a doozy as it is a complimation of supply sider masteurbatory fantasies that have no connection to any reality that is not the [Read More]

Tracked on Sep 24, 2008 1:21:06 PM


But But he also said to CNBC:

"...But he also made it very clear that he would not have bought anything right now if he wasn't confident Congress will do the "right thing" and approve the financial bailout proposal put forward by Treasury Secretary Henry Paulson.

He compared the urgency of passing a bailout with American's decision to go to war after Pearl Harbor was attacked in 1941.

Yeh Mr. Buffett if you like betting on bailouts & Bazookas -- GS is right! But if you want to invest in brains: MSFT and technology would have been a better play

Posted by: Nihilism | Sep 24, 2008 9:19:11 AM

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