Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is set to earn $2 billion through Goldman Sachs Group Inc (NYSE:GS) warrants bought during the 2008 financial crisis, while the federal government was scrambling to stabilize the financial system.
Warren Buffett’s investment in 2008
During 2008, Goldman Sachs Group Inc (NYSE:GS) turned to Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) to bolster capital and shore up market confidence when shares plunged after the Lehman Brothers’ collapse. Warren Buffett, Berkshire’s chairman and chief executive officer, invested $5 billion for a preferred holding and got warrants to buy $5 billion of stock for $115 a share.
Earlier in May, Warren Buffett had indicated Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s bets on Goldman Sachs Group Inc (NYSE:GS) and General Electric Company (NYSE:GE) helped bolster Berkshire’s reputation as the ‘800-number when there is really sort of panic in the markets’.
During 2008, Warren Buffett also agreed to invest $3 billion in General Electric Company (NYSE:GE) and got warrants expiring October 16 of this year. During the first quarter, Warren Buffett struck a deal to provide for cashless exercise of those contracts.