In the fall of 2013, investment bank Goldman Sachs will soon have a brand-new top 10 shareholder.
As of the time of this writing, Warren Buffett is currently on pace to hold nearly 2% of Goldman Sachs stock all thanks to the incredible value of the warrants he holds in the investment bank.
Berkshire Hathaway and Goldman Sachs are currently in the process of amending the agreement that they have from the investment Warren Buffett made when the financial crisis was at its worst. Buffett’s warrants are currently sitting in an excellent position, and they are worth around $1.4 billion to him today if he decided to cash them in to own shares of Goldman Sachs.
Under the new agreement, Berkshire Hathaway is not going to get the difference in dollars, but they will receive the difference in stock and this is going to put them in line to earn 9.3 million shares if they made the deal based off of Monday’s closing price. If the deal were done at that point, Goldman Sachs would have given up 1.9% of their shares as part of this agreement.
Having nearly 2% of Goldman Sachs would put Warren Buffett in the number nine shareholder position of Goldman Sachs, we learned according the FactSet.
At the time of this writing, the Goldman shares were even rallying in premarket trading, and this puts Buffett and Berkshire in an even better position.
When the deal was originally made, these warrants gave Buffett the ability to buy 43.5 million shares of the company at $115 per share. Goldman rose to $125 per share in September of 2008, but then the stock tumbled to below $50 per share during the fall.
Since that time, Goldman Sachs shares are currently worth $147.80 and they’re up 1.2% in premarket trading. That would tack on another $73 million to Warren Buffett’s already substantial investment.
Under the new agreement, this change is going to take place on October 1, which is the date that the original pact was set to expire.
Also, Berkshire Hathaway and Warren Buffett are no longer going to hold any warrants, but they are instead going to get equity without the need to put up any more funds in order to get shares.