Buffett on His Goldman Investment: 'I'd Absolutely Do It Again'
And while Berkshire takes center stage this weekend, it's still hard to draw attention away from Goldman Sachs (GS), currently facing a Securities and Exchange Commission fraud investigation into its mortgage-related securities. Even Buffett himself acknowledged with his signature chuckle that he expected to be flooded with questions about the controversial investment bank.
In late 2008, Buffett invested a whopping $5 billion in Goldman, purchasing a block of "perpetual" preferred shares in the bank. His move during the depths of the financial meltdown was seen as a major vote of confidence in the U.S. economy and financial system.
"Misreporting" on Abacus
Earlier this week, my colleague James Altucher presented 10 questions that he'd like Buffett to answer, including whether Buffett would make the same decision now on Goldman if he was aware of the headline risk associated with their derivatives structuring. So I decided to put Buffett to the test.
Buffett was unwavering in his response: "Oh, I'd absolutely do it again. It's a great investment and a great institution, and we're collecting $500 million a year on a $5 billion investment.... That's not a bad deal."
Berkshire's CEO said there has been "misreporting" on the nature of the Abacus deal at the center of the SEC fraud investigation into the bank, according to The Wall Street Journal. Buffett noted the Abacus deal is no different from a standard bond-insurance transaction and shouldn't reflect poorly on Goldman.
Buffett seemed unfazed by how the SEC investigation would affect his Goldman investment: "I have no worries about collecting that dividend. I have no worries about our warrants being worth money. So I would do it all over again. No question about it!"