Warren Buffett will appear live on CNBC's Squawk Box Monday morning for his first interview after meeting with over 40,000 shareholders at this weekend's Berkshire Hathaway annual meeting.
Buffett is scheduled to join co-anchor Becky Quick in Omaha for one hour starting at 8 AM ET on May 3.
When he sat down with Becky on the Monday morning after last year's 'Woodstock for Capitalists,' he told us the U.S. economy was "very slow" and "getting slower." (Read the transcript and watch the video clips .)
This year, we'll be listening to hear if his Berkshire Hathaway subsidiaries are giving him any evidence the recession is really over and a recovery is underway, as the latest economic numbers from the government seem to suggest.
Current Berkshire stock prices:
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For Warren Buffett, it's a matter of simple fairness: "If the restaurant only gets paid for an 8-ounce steak, they don't want to give you the 12-ounce one."
Democrats in the Senate aren't buying what Warren Buffett's Berkshire Hathaway is selling.
We're not hearing it directly from Warren Buffett's lips, but it's pretty close. He's not worried about Berkshire Hathaway's $5 billion investment in Goldman Sachs. And it sounds like he has doubts about the government's recently revealed fraud case against Goldman.
Berkshire director and long-time friend Thomas Murphy tells Bloomberg he spoke with Buffett by telephone after the SEC announced its lawsuit last Friday, April 16. It is accusing Goldman Sachs of fraud for failing to disclose conflicts of interest in subprime mortgage securities it sold in 2007 to investors who wound up losing $1 billion.
In a Bloomberg video clip , Murphy is interviewed by Betty Liu about Buffett's reaction to the suit:
MURPHY: Well, he has to see what's going to happen on it, but I think he has great confidence in Goldman, and he knows it's very sophisticated people on both sides.
LIU: Did he say anything more? Did he say anything more about the investment? Did he say that ...
MURPHY: He's not concerned with the investment at all. You know, Goldman is going to be able to pay it back and they're going to be paying 10 percent interest and they (Berkshire) have the option on five million (dollars worth of Goldman) shares at 115 (dollars per share.) That's pretty good. Wish I had it.
LIU: And did he sound at all concerned?
MURPHY: No, not at all. I don't think it's that significant a deal as far as Berkshire is concerned.
Murphy backs Goldman's contention that both sides knew what they were doing in the CDO deal at the heart of the SEC's complaint. "The people on the other side, I am told, and I am not a pro on this at all, are very sophisticated buyers or sellers."
Bloomberg notes that Murphy's son is a former Goldman partner.
Berkshire's warrants to buy Goldman shares have a current value of about $1.8 billion, down over $1 billion in the wake of the SEC's suit.
Goldman current stock price:
Separately, the Wall Street Journal reported this morning that government investigators believe a Goldman Sachs director, Rajat Gupta, improperly told hedge fund billionaire Raj Rajaratnam about Buffett's 2008 investment in Goldman, before it was announced publicly.
I have a great job. Where else would I get an email from Candy Spelling's "people" asking me to come interview her at her 56,500 square foot home?
Spelling, widow of famed television producer Aaron Spelling ("Charlie's Angels", "Love Boat" etc.), has been trying to sell 'The Manor' for a year. She's asking $150 million, which makes it the most expensive home on the market in the world.
Mrs. Spelling figures CNBC's global audience might include potential buyers. She'd like to get the word out.
I just wanted to see the inside of this house. I did. Wow.
For such a large house, you don't feel completely overwhelmed inside. Rooms flow into one another, and they've been decorated to give it a homey feel.
"It's just too big for one person," Spelling told me, in what may be the biggest understatement in real estate history.
Goldman Sachs, this last Friday was shocked to find themselves at the end of litigation from the SEC that they had misled investors about complex securities sold to investors.
Internal e-mails were cited as the federal government charged Goldman Sachs with playing loose with the rules. The merits of these charges will be determined in the weeks to come but, for now, it's important to take a look at the lesson one can learn from this latest turn in the financial crisis.
The key lesson from the headlines over the last 24 months (including last week) is that the buyer must be acutely aware of any assets risk/return characteristics and not trust an institution or a rating agency to watch out for their best interests.
Due diligence is required when choosing investments and just because an asset is touted as safe or guaranteed, investors should conduct independent research to determine the merits of the asset.
No matter what you are told by anyone (ANYONE) you need to be comfortable with the assets you invest in. Understand and ask questions. Demand disclosure. Don't assume those selling products or strategies necessarily have your best interests in mind.
After all, if it was such a great deal wouldn't they be keeping it for themselves rather than selling it? Be skeptical and look carefully before you leap.
Goldman Sachs is a firm that is decisive and smart. They certainly did suffer their share of troubles in the financial downturn (the interest paid to Warren Buffet on his investment is not cheap).
Goldman, as it was pointed out on Friday, lost money on the asset in question. We should be not too quick to judge without seeing all the facts. Guilt must be proven first. But, regardless of the outcome of the litigation, the lesson remains: be careful. Be skeptical and careful as an investor.
As investigations go on for years (into many financial institutions), we will see that a lack of oversight resulted in losses for investors. And this reality, despite the false promise of safety from regulators, underscores the importance of that great consumer truth; buyers beware. It's your money and only you are the ultimate guardian over your net worth.
Ronald Reagan once said, “trust but verify." This held true for the Soviet Union and this is the same lesson investors should embrace as they invest their hard earned savings. Trust but verify.
Government investigators believe a Goldman Sachs director improperly told Galleon Group hedge fund founder Raj Rajaratnam that Warren Buffett's Berkshire Hathaway would be making a $5 billion investment in Goldman in September of 2008, according to a report this morning in the Wall Street Journal.
Warren Buffett can't be happy today that the SEC is charging Goldman Sachs with fraud .
First, the value of Goldman warrants held by Berkshire Hathaway has dropped by a little over $1 billion in just 24 hours, as the common stock plunged almost 13 percent to close at $160.70 today on the news.
They still have a current value of $1.987 billion, so he remains "in the money" on those warrants. Today's loss is just on paper. Buffett has said he plans to keep the warrants until close to their expiration in 2013, so there's time for the stock to make up the day's drop.
And no matter what the common stock does, Berkshire still gets 10 percent a year on the $5 billion it loaned Goldman in September of 2008, at the height of the credit crisis. (It received the GS warrants as part of that deal.)
But money is one thing. Reputation is another.
Buffett is more closely associated with Goldman than any other Wall Street firm.
The $5 billion loan came with his personal vote of confidence . In the press release announcing the deal, he called Goldman an "exceptional institution."
And last month on Squawk Box , he defended the firm against critics who see it as a prime example of 'greed' on Wall Street.
QUICK: Would you still, given the political backlash, buy into this company, own stock, be associated with it and do you think it's a fair rap?
BUFFETT: Yeah. No, no, you're right. I mean, they're going to rewrite Genesis and have Goldman Sachs offering the apple, I mean, pretty soon. But no, I feel--I feel good about their business prospects. I mean, it is a--it's a very, very strong, well-run business.
Goldman rejects today's SEC charges as "completely unfounded in law and fact" and a court will have to decide if there's proof of any wrongdoing.
But Buffett's sterling reputation for integrity is very important to him.
It seems to me that it must be uncomfortable, at least, for him to see SEC charges brought against Goldman.
It will be interesting to hear what he has to say about today's developments when he answers questions at Berkshire's annual shareholders meeting in Omaha two weeks from tomorrow.
Before Berkshire Hathaway split its Class B shares earlier this year, paving the way for their addition to the benchmark S&P 500 stock index, there weren't a lot of Wall Street analysts following the stock. Both the Class A and Class B shares were too expensive, on a per share basis, for most investors.
Now Wall Street is paying more attention.
Today, Barclays Capital has started coverage of the Berkshire Bs with a rating of "equal weight." I expect several other firms will also start covering the stock in the months to come.
Analyst Jay Gelb has set his price targets about nine percent higher than Friday's closes. He sees the Class A shares rising to $132,000 (from Friday's $121,050) and the Class B shares hitting $88 (up from Friday's $80.49).
Gelb says Berkshire's operating earnings seem to be "stalled" amid weakness for insurers in general. He expects only slight gains this year and next.
He also worries that the "Buffett premium" in Berkshire's stock price won't survive Buffett's eventual departure as CEO, but he says Buffett "probably has enough time to set his succession plan in motion to minimize disruption."
Gelb says MidAmerican Energy Chairman David Sokol, seen by many as a leading candidate for the BRK CEO post, would do well in the job.