Goldman Sachs Pays Back Buffett His $5.5 Billion
Billionaire investor Warren Buffett received a $5.5 billion check from Goldman Sachs, repaying an investment Buffett made in Goldman at the height of the financial crisis, CNBC learned Monday.
In September of 2008, the CEO of Berkshire Hathaway and longtime Goldman Sachs client bought $5 billion in preferred stock in Goldman and received warrants to buy $5 billion of its common stock.
At the time, Buffett's investment was a sign of confidence in the bank and helped to boost its stock price. It was also a smart investment by the "Oracle of Omaha," as the preferred shares paid a hefty 10 percent dividend.
Buffett told CNBC the check consists of $5 billion to buy back the 50,000 preferred shares he aquired, plus a $500 million dividend. Buffet continues to hold warrants to buy 43,478,260 shares of the New York-based bank.
The warrants, which can be exercised over the next two and a half yars, have a strike price of $115. With Goldman trading at about $152.97, Buffett stands to make a hefty profit from the warrants as well. Get real-time Goldman quotes here.
Goldman announced it would buy back the preferred shares in March, after passing its latest stress test. It said it would take a charge of $2.80 a share in the first quarter to cover the costs of the buyback.
In comments to CNBC Monday, the firm said that "Berkshire Hathaway's September 2008 investment in Goldman Sachs was a major vote of confidence in our firm, and we are very appreciative of it."