Buffett to Make About $4B on Goldman (GS) Bet During Financial Crisis
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Goldman Sachs (NYSE: GS) isn't all bad. Just ask Warren Buffett.
Buffett stands to make about $4 billion on an investment in Goldman Sachs dating back to the height of the financial crisis, roughly five-years back.
In the deal, Buffett's Berkshire Hathaway (NYSE: BRK-A) received warrants for the right to buy 43.5 million Goldman shares at an exercise price of $115 per share. Buffett will convert the warrants as the difference between the warrants' exercise price and the closing price of Goldman stock over the last 10 trading days to October 1st, which was about $164.38. At that price, Buffett will be entitled to 13.1 million Goldman shares, making him the sixth-largest external investor at the bank. Total value of the stock is about $2.15 billion.
Goldman also paid Buffett $500 million per year on the preferred shares, which the firm repurchased at the premium in March 2011.
Shares of Goldman are up in early trading Tuesday.
Buffett stands to make about $4 billion on an investment in Goldman Sachs dating back to the height of the financial crisis, roughly five-years back.
In the deal, Buffett's Berkshire Hathaway (NYSE: BRK-A) received warrants for the right to buy 43.5 million Goldman shares at an exercise price of $115 per share. Buffett will convert the warrants as the difference between the warrants' exercise price and the closing price of Goldman stock over the last 10 trading days to October 1st, which was about $164.38. At that price, Buffett will be entitled to 13.1 million Goldman shares, making him the sixth-largest external investor at the bank. Total value of the stock is about $2.15 billion.
Goldman also paid Buffett $500 million per year on the preferred shares, which the firm repurchased at the premium in March 2011.
Shares of Goldman are up in early trading Tuesday.
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