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Berkshire Hathaway Inc. Message Board

  • huntergroupcc huntergroupcc Mar 26, 2013 1:00 PM Flag


    Looks like the old man stole GS lunch money and Boa also.

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    • This amendment of the deal was very good for GS too. GS suffers no share dilution (they were going to have to issue about 43.5 million shares with all of those warrants being issued)... due to GAAP rules, this amended deal is not going to cause the massive dilution. In addition, Berkshire isn't going to exercise all those warrants, and then dump them immediately on the market to cash out (for what would currently be a 1.4 billion dollar cash profit)... instead, BRK is going to get a number of shares equal to the cash profit that BRK would have made. Finally, GS NEEDS (yes, actually needs at this point) the Warren Buffett "Halo Effect"... him being a 'long term investor' in GS is a huge help for GS with the public and potential clients. As GS continues to recover from the financial crisis and tries to rebuild its reputation, Buffett provides a lot to them for it.

      This approach did not pan out well with the GE investment (it is trading for only about a dollar over the strike price)... but I do suspect that Berkshire will not be interested in getting about 10% of BAC for 5 billion dollars... they will likely look to do a similar deal and get a few percent of the company with no cash.

      Mr. Buffett pulled off yet another good deal for Berkshire... but this was a win-win. GS is quite fortunate to have gotten this amendment to the original deal.

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