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Buffett invested $5B into GS. That made a lot of investors excited. Should individual investors buy GS now? As much as I have admired Buffet and also being a long term BRK.A shareholders, I do not think that individual investors should jump into GS at this time. Why? Very simple, you will not get the same deal as Buffet.
Here is the deal:
1. Buffett will buy $5B worth of prefered shares, with a 10% dividend. Goldman can buy back those shares at any time, but GS must pay 10% premium. This is a very nice deal.
2. Buffett has the option in the next five years to purchase an additional $5 B of common stocks at $115 apiece. Now, Buffet does not have to buy it if it goes under $115, but if it goes above it, hey, that will be another good deal.
After this deal, for now, Buffett has about 10% ownership in the firm.
As individual investors, before you jump into GS shares now, you better ask yourself, can you get such kind of good deal? The answer is an obviously no.
Also, when Buffett makes a move, his time frame is like, forever. He would not care if GS goes back to 80 again. As individual investors, can you substain the pain? And it's been many times that, after Buffet made an purchase, the stock he picked went down before it turned around again.
I believe that, individual investors will be able to buy GS at a better price than now. I will be patiently waiting.
Here is the deal:
1. Buffett will buy $5B worth of prefered shares, with a 10% dividend. Goldman can buy back those shares at any time, but GS must pay 10% premium. This is a very nice deal.
2. Buffett has the option in the next five years to purchase an additional $5 B of common stocks at $115 apiece. Now, Buffet does not have to buy it if it goes under $115, but if it goes above it, hey, that will be another good deal.
After this deal, for now, Buffett has about 10% ownership in the firm.
As individual investors, before you jump into GS shares now, you better ask yourself, can you get such kind of good deal? The answer is an obviously no.
Also, when Buffett makes a move, his time frame is like, forever. He would not care if GS goes back to 80 again. As individual investors, can you substain the pain? And it's been many times that, after Buffet made an purchase, the stock he picked went down before it turned around again.
I believe that, individual investors will be able to buy GS at a better price than now. I will be patiently waiting.
keep up the good work!