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Technology Warren Buffett's Berkshire Hathaway raked in more than $3 billion from its Goldman Sachs bailout

09:24  19 may  2020
09:24  19 may  2020 Source:   msn.com

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Warren Buffett ' s Berkshire Hathaway has netted more than $ 3 billion from its billion bailout of Goldman Sachs in 2008. The famed investor' s company received a 0 million premium for its preferred stock, .2 billion in dividends, and at least .4 billion from selling most of its stock in

Warren Buffett ' s Berkshire Hathaway raised its stake in Goldman Sachs by 21% to 13.2 million shares during the second quarter. It ' s total position in the firm is now worth more than $ 3 billion Berkshire ' s position in Goldman began in the wake of the financial crisis when it invested billion

Warren Buffett wearing glasses: AP Images © AP Images AP Images
  • Warren Buffett's Berkshire Hathaway has netted more than $3 billion from its $5 billion bailout of Goldman Sachs in 2008.
  • The famed investor's company received a $500 million premium for its preferred stock, $1.2 billion in dividends, and at least $1.4 billion from selling most of its stock in the bank last quarter.
  • Buffett celebrated the deal's attractive terms, particularly the dividend, at Berkshire's annual meeting in 2010.
  • "It's been pointed out that our preferred is paying us $15 a second," he said. "So as we sit here, tick, tick, tick, tick, that's $15 every tick."
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Warren Buffett's Berkshire Hathaway has scored at least a $3 billion return from its $5 billion bailout of Goldman Sachs after selling most of its remaining shares in the bank last quarter.

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Warren Buffett ' s Berkshire Hathaway raised its stake in Goldman Sachs by 21% to 13.2 million shares during the second quarter. It ' s total position in the firm is now worth more than $ 3 billion , assuming it has NOW WATCH: More : Warren Buffett Berkshire Hathaway Goldman Sachs Apple.

Warren Buffett ' s Berkshire Hathaway sold off 84% of its stake in Goldman Sachs during the first quarter, according to a regulatory filing. It redeemed those shares in 2011, with Berkshire making a profit of $ 3 .7 billion .

The famed investor's company handed the funds to the investment bank in 2008 at the height of the financial crisis. In exchange, it received $5 billion in preferred stock paying a 10% annual dividend, as well as warrants enabling it to buy 43.5 million of Goldman's common shares at $115 each at any point in the ensuing five years.

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Buffett celebrated the deal's lucrative terms at Berkshire's annual shareholder meeting in 2010.

"Every day that goes by that Goldman does not call our preferred is money in the bank," he said, referring to Goldman's having to pay Berkshire a $500 million yearly dividend until it bought back the company's shares.

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In September 2008, Warren Buffett ’ s Berkshire Hathaway conglomerate invested billion in Goldman Sachs in response to Goldman ’ s need to raise The Oracle of Omaha understood that his investment was more than a shot in the arm for the investment bank. “When I made that investment

Warren Buffett has stepped into faltering economies to help prop up teetering companies in the past, and made out pretty good by buying low in times of distress. At the moment, Buffett and Berkshire are losing money quickly on the airlines. So far, Berkshire Hathaway has seen its holdings in Delta

"It's been pointed out that our preferred is paying us $15 a second," Buffett continued. "So as we sit here, tick, tick, tick, tick, that's $15 every tick."

"I don't want those ticks to go away," he added. "I just love them. They go on at night when I sleep."

The ticks eventually stopped when Goldman redeemed Berkshire's shares in March 2011, paying a 10% premium, or $500 million, for the privilege. The bank ultimately paid about $1.2 billion in dividends to the conglomerate.

Goldman also renegotiated the warrants in 2013, effectively allowing Berkshire to exercise them for free in exchange for a much smaller stake in the bank. Buffett's company received 13.1 million shares, giving it a roughly 3% stake in the bank, worth about $2.1 billion at the time. Under the original terms, it would have become the bank's largest shareholder.

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Warren Buffett ’ s Berkshire Hathaway has dumped the bulk of the stake in Goldman Sachs that it acquired in the depths of the financial crisis, a regulatory filing revealed on Friday night. Berkshire said it had sold more than 10m shares in Goldman in the first quarter, a holding that was worth

This included dumping 84% of Berkshire ’ s stake in Goldman Sachs Group Inc. and reducing its When it comes to banks, Berkshire itself is looking more and more like one as it sits on an Playing It Safe. Warren Buffett is having Berkshire Hathaway exit some equity investments and allowing cash

The size of Berkshire's stake in Goldman fluctuated between 11 million and 19 million shares over the next few years. Buffett seems to have finally come to a decision: Berkshire cut its holding by more than a third, to about 12 million shares, in the fourth quarter of 2019, then slashed it by more than 80%, to fewer than 2 million shares, last quarter.

Assuming Berkshire broke even on its purchases and sales of Goldman stock up to the end of December — and it sold the 10 million shares at $135 each, the bottom of Goldman's share-price range last quarter — it has cashed out about $1.4 billion from stock sales.

Combined with the $500 million premium for its preferred stock and the $1.2 billion in dividends, that's a total return of more than $3 billion on Berkshire's $5 billion investment. Moreover, the company still held 1.9 million Goldman shares at the end of March, worth another $340 million at the bank's current stock price.

Goldman may not be paying Buffett $15 a second anymore, but the investor won't be too displeased with the deal's 60%-plus return.

Read more: 'We have a depression on our hands': The CIO of a bearish $150 million fund says the market will grind to new lows after the current bounce is over — and warns 'a lot more pain' is still to come

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