Bloomberg News

Buffett Calls Goldman Preferred Deal ‘Peanuts’ for Berkshire

May 05, 2012

Warren Buffett, chairman of Berkshire Hathaway Inc., tours the vendor floor during the Berkshire Hathaway annual shareholders meeting in Omaha. Photographer: Daniel Acker/Bloomberg

Warren Buffett, chairman of Berkshire Hathaway Inc., tours the vendor floor during the Berkshire Hathaway annual shareholders meeting in Omaha. Photographer: Daniel Acker/Bloomberg

Warren Buffett said his deals to inject $8 billion in Goldman Sachs Group Inc. (GS:US) and General Electric Co. (GE:US) were “peanuts” compared with longer-term bets his Berkshire Hathaway Inc. (A:US) made with stock picks and acquisitions.

“Those deals have not been key to Berkshire,” Buffett said of the 2008 investments in Goldman and GE. “They’re not remotely as important as buying Coca-Cola stock.”

Buffett bought $5 billion of preferred shares in Goldman Sachs and $3 billion in GE at the depths of the credit crisis, earning a 10 percent annual coupon and getting warrants to acquire stock in the firms. The companies have since redeemed the preferred stock, while Berkshire continues to reap dividends from more enduring investments, such as the purchase of railroad Burlington Northern Santa Fe.

“The values in Berkshire that have been accumulated by some special security transaction are really just peanuts compared to buying businesses like Geico, or Iscar or BNSF,” he said today at his annual meeting in Omaha, Nebraska. “It’s not a key to Berkshire’s future.”

Buffett accumulated a stake in beverage maker Coca-Cola (KO:US) Co. for about $1.3 billion from 1988 through 1994 and the holding is now valued at more than $15 billion. He has also acquired businesses like car insurer Geico and Israel’s Iscar Metalworking Cos.

To contact the reporters on this story: Noah Buhayar in Omaha at nbuhayar@bloomberg.net; Hugh Son in New York at hson1@bloomberg.net.

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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Companies Mentioned

  • GS
    (Goldman Sachs Group Inc/The)
    • $186.49 USD
    • -1.40
    • -0.75%
  • GE
    (General Electric Co)
    • $26.29 USD
    • 0.07
    • 0.29%
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