Warren Buffett Invests Five Billion Dollars In Goldman Sachs
Warren Buffett, CEO of Brookshire Hathaway, has made several major investments in companies that, on the surface, did not seem like a wise decision. However, Buffett’s decisions have paid off making him the second wealthiest person in the United States. Today we will look at one of the Buffett’s investments, Goldman Sachs.
Large Infusion of Capitol For Goldman Sachs
In September of 2008, Goldman Sachs received a $5 billion dollar infusion of capital from Berkshire Hathway, an investment firm that Warren Buffett took control of in the early sixties. Buffett currently is CEO of the firm. As part of this agreement, Goldman Sachs will also be selling common shares of its stock, in hopes of raising $2.5 billion dollars. Actually, Goldman Sach’s common stock offering increased from $2.5 billion dollars to $5 billion dollars offering in common stock, based on its share stock price which rose to $123 dollars a share after the Brookshire Hathaway deal was announced.
What the Brookshire Hataway Deal Means For Goldman Sachs and Warren Buffett
Today Warren Buffett investment in Goldman Sachs gave the company the strength to continue on and prosper. This was at a time in 2008, when many investment banking companies went out of business. Goldman Sach’s stock valve after the deal has jumped approximately 60% since the Brookshire Hathaway’s deal in 2008. The deal gave Goldman Sachs the ability to preserve and generate well over $10 billion dollars in revenue.
In the original deal in 2008, Berkshire bought $5 billion dollars of shares of stock in Goldman Sachs. After Goldman Sach’s financial issues, Goldman bought back the shares of stock from Berkshire. It was definitely a win-win for both companies. However, in addition to Berkshire getting back it’s $5 billion dollars back, Berkshire/Buffett made an additional $1.6 billion dollars on this deal.