Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

Buffet Rapes the minority shareholder and is seen as a hero

Reply
john_1
Super Contributor
10% Div yield on prefered stock- Means that he gets paid x 10 their current div ahead and before any existing share holder...then an opption to buy in 5 years time at todays prices...Yeah right....So he gets a further 5 billion paid in half by the company and he only takes ownership if we Make it through this mess...And This is the deal the best placed Investment Bank is willing to accept. Then you must know just how deap down the rabit hole we are and just how big this problem could get.
0 Kudos
14 REPLIES 14
Not applicable
I think that he had to pay at a price which was $2 more, and the price only shot up the following day
0 Kudos
Vano
Regular Contributor
John, your post re-inforces my opinion that The american financial problems are just in their infancy. Finacial stocks are going to tank, gold is going to fly. OMO.
0 Kudos
Not applicable
The good news is that Buffet expects that we'll have bounced off the bottom within 5 years. The other good news is that he expects GS to stay solvent. The reason for this might either be that it is a fundamentally sound business, or that Treasury Secretary Henry Paulson (former GS CEO) will not let the company fail lest his creative accounting be audited.
0 Kudos
Not applicable
Where is Zapiro when you need him? Paulson pinning her down, Buffet unbuckling...
0 Kudos
Jim_Bean
Regular Contributor
HEHEHE ... Some Investment Banks are more equal than others!!! Only in the US ~ the land of the free and "democracy"
0 Kudos
john_1
Super Contributor
Although he would be pinning "him" down over a barrel me thinks.
0 Kudos
louisg
Super Contributor
Buffett the capitalist...shock and horror. We all enjoy the fruits of capitalism. Why can't Buffett? He's playing by the rules isn't he?
0 Kudos
john_1
Super Contributor
Hey the mans a gueniussss but my point is if the best placed investment Bank in US of A ...with all its sharp minds and MBA's is accepting this kind of deal...then we came even closer to a total banking system wipe out then we think. And I will be putting a little cash quitely under the matress while capital hill dilly dallies.
0 Kudos
Not applicable
1. The stock is simply preferred and has no ownership qualities. Credit notes for GS were yielding more than 10%. Credit notes should typically yield less than preferred stock. 2. The options have an exercise price of $115 which was about the price when the deal was struck 3. Now that GS has Buffet and his reputation on board they can raise the additional $5 Billion ordinary capital they wanted to at a premium to the stock price. This is in stark contrast to the massive discounts the other investment banks had to offer stock at and even MS raised capital at what I believe was a 20% discount. Thus the deal was very expensive for GS but they may easily recoup that when they raise capital with the public and other institutions. Fantasic deal for Buffet tho, and it's all because of his rep and cash capital, which he built and thus he has earned deals like these.
0 Kudos
louisg
Super Contributor
John perhaps the reason why the sharp minds and MBA's agreed to such a deal was to save whatever was left of their OWN wealth. This is not the first financial crisis and will certainly NOT be the last.OPPORTUNITY presents itself at such times. In the long term (15-20years plus)this crisis is just another blip.
0 Kudos
Not applicable
Their "OWN" wealth?? Seeing as the employees are paid largely in stock what is it that they are trying to save exactly??!
0 Kudos
louisg
Super Contributor
0 Kudos
Not applicable
So guess if they trying to save the last 20-30% of their stock holdings its not exactly bad for the minority shareholder then...?
0 Kudos
louisg
Super Contributor
The alternative is to perhaps lose it all. I guess most people would rather try to salvage what they can.
0 Kudos