Berkshire buying $5 billion stake in Goldman Sachs

Wednesday 24th September, 12:47 PM JST

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3 Comments

helloklitty at 12:43 AM JST - 25th September

From the Stansberry and Associates Digest

Over the last three years, Goldman Sachs reported net income totaling $19.6 billion. On the basis of these "profits," the managers took their bonuses and their glory as Wall Street's smartest investment bank. Meanwhile, Goldman produced no net cash flow. In fact, cash flow over the last three years is negative $93.6 billion. There's a $113.2 billion disparity between the amount of cash the company produced from operations and the amount of profits it claimed via its accounting. Even when you factor in all of the returns from its investments (which produce negative operation cash flow), you still end up with a net negative number... –$800 million. I've got no doubt that Goldman has the world's smartest accountants. In fact, I wonder how many of them used to work at Enron...
rajakumar at 04:49 AM JST - 25th September

Warren buffet more deep in Goldman Sachs,good.

More joint ventures more infinite gain.

Buffet/Goldman Sachs must avoid mistakes and the folly of greed, as done in mistakes of enron,AIG,fannie,freedie and lehman.

All companies/nations should learn more from toxic debt greed mistakes and avoid these kind of mistakes that make all kind of woes.
helloklitty at 07:39 AM JST - 25th September

More from Stansberry:

Buffett received a security worth about $3.2 billion in exchange for his $5 billion investment in a high-yielding preferred stock. His net exposure is only $1.8 billion. On this capital at risk, he's getting paid $500 million per year. That's a 27.7% annual return. And he may eventually end up owning 10% of the company.

What's Buffett's risk? Well, thanks to the government bailout, he probably doesn't face any.

I've watched Buffett carefully for nearly 15 years. And this is probably the best deal I've ever seen him get, which tells me Goldman was in even worse shape than I'd imagined. (See our discussion of this in the mailbag, below.) As Buffett proves time and time again, there are big advantages to holding cash and waiting for inflection points in the market.