Carson Perspective: Berkshire Hathaway lifelines aid major players, profit Omaha’s oracle
March 31, 2013
Billionaire Warren Buffett profitably rescues major players when they get caught short. Last week he boldly consolidated a lucrative post-recession holding that resulted.
The Oracle of Omaha's conglomerate, Berkshire Hathaway, took an altered stake in Goldman Sachs, the mega-investment bank he helped rescue from potential problems after Lehman Brothers went bankrupt in 2008 and the not-so-great Great Recession ramped up.
Goldman, then teetering on the brink of an abyss along with others, turned to Buffet and his billions.
Fast forward to the present. Buffett's nifty move garnered him 2 percent of Goldman Sachs' stock. The Wall Street Journal nailed the news on the revised Berkshire-Goldman deal.
"Leave it to Warren Buffett to find a way to get hold of 10 million Goldman Sachs Group Inc. shares without handing over a penny," it reported.
Some five years ago, Berkshire provided Goldman a $5 billion lifeline. Buffett got preferred stock yielding a gaudy 10 percent, plus warrants with rights to buy 43.5 million shares at below-market price. In the revision, he opted for fewer shares without another dime's outlay. Goldman closed the week at $147.15 per share. Do the math.
So why analyze this in Northern Nevada, a place in which no Goldman Sachs investment banker has been seen since the last one came to Stateline to relax and gamble?
Because Buffett's conglomerate did a similar $3 billion deal to aid General Electric Co. GE has GE Capital, as well as manufacturing, and grabbed a lifeline as the recession hit back then. There is a GE plant in the Carson Valley just south of Carson City.
Berkshire also did another $5 billion lifeline deal in 2011 with Bank of America, which was still resuscitating itself then. It has more than a few commercial banks in Nevada.
In addition, it's also a good lead-in to asking that area Berkshire Hathaway stockholders heading to Nebraska for Buffett's annual meeting on May 4 contact me at the above e-mail address. This columnist/reporter is going, too, and wants to interview Nevada shareholders there in an effort to provide appealing Nevada Appeal coverage.
Back on the city beat, next week's Carson City government landscape includes a Board of Supervisors meeting at 8:30 a.m. Thursday in the Community Center's Sierra Room and a Parks and Recreation Commission session in the same room at 5:30 p.m. Tuesday.
Supervisors may OK a pact for sharing of Sheriff's Office space with some state troopers, take a final step toward purchasing the Business Resource Innovation Center building, and appoint a member to the Redevelopment Authority Citizens Committee. The commission is expected to hear testimony on bringing the State Fair here.
John Barrette covers Carson City government and business. He can be reached at email@example.com.