Warren Buffett spoke about Goldman Sachs on Thursday from Sun Valley while attending the Allen & Company conference. The Oracle of Omaha indicated he would be exercising his right to buy $5 billion in Goldman stock in 2013, an option he was awarded in 2008 when he extended a $5 billion life-line to the ailing investment bank. Buffett also noted he’d like questioned Goldman Sachs CEO Lloyd Blankfein to remain as the top dog at the vampire squid.
Buffett will continue to benefit from his $5 billion investment in Goldman Sachs during the financial crisis. The deal included warrants with a strike price of $115 per share to be exercised at any time for a five year term. In conversation with DealBook, the Oracle of Omaha said “we’ll wait till the last month or two, before their [2013] expiration.”
With Goldman stock trading around $135, Buffett’s Berkshire Hathaway’s option would be worth about $900 million today. The Oracle, it seems, has a positive outlook for the Vampire Squid. (Read Gold, Banks On The Agenda For Billionaires Soros, Paulson In Q1).
Buffett has profited handsomely from his investment $5 billion, life-saving investment in Goldman Sachs in late 2008 as markets were falling off a cliff. On April 18, the investment bank repaid Berkshire Hathaway, Buffett’s investment firm, its principal payment of $5 billion plus a one-time preferred dividend of $1.64 billion, based on a 10% yearly-dividend that brought in about $500 million a year, according to Trade The News.
Buffett also spoke of the company’s questioned CEO, Lloyd Blankfein. Blamed by many for having tarnished the bank’s reputation, after repeated investigations by the SEC over its practices during the downfall of the U.S. housing market, Blankfein has been under heavy pressure to resign. (Read Goldman Playing Oil Like A Fiddle: Calls Bullish Structural Shift).
“I want him to stay,” Buffett told reporters, adding that he didn’t think rumors Blankfein was stepping down were substantiated. “I’ve seen nothing to indicate [he’s quitting] myself, and I don’t want him to,” explained Buffett.
The world’s former richest man, currently third behind Carlos Slim Helu and Bill Gates, spoke about social media and confessed he’s clueless as to what to make of multi-billion valuations being slapped on to tech and online start-ups.
Asked by DealBook about the staggering valuations of companies like Facebook, Groupon, Zynga, and LinkedIn, Buffett said “a few of them will be worth enormous amounts, [but] I don’t know which ones.” Adding he isn’t “the guy to ask about that,” Buffett said the felt the companies that “[figure] out something that somebody wants that they don’t know they want now” were the best positioned to succeed. (Read: Bullish On Japan: Rosenberg Joins Buffett In Calling Crisis An Opportunity). Read More
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