Brad Ferris

Has Buffett Lost His Mind?

I think its a simple situation of Buffett realizing the worth of a well run company and having little problem overpaying (by today's standards) for future earnings that will be much higher than today's. He has shown this ability time & time again because he rationalizes his purchases different than most investors. BNI is a very good company, but don't except 30% returns for the next 10 years; it's not that type of company. What it will offer is a very good operating foundation for BRK to diversify out of so much insurance and consumer products companies. Essentially someone has to ship all that Coke, Kraft Dinner and JNJ Baby Shampoo :)

Goldman Sachs: Buffett's the Milkman and He Always Delivers

I don't see GS stock declining from here for a number of reasons. They have incredible intellectual capital despite the problems that the industry is facing at this time. Do they have massive exposure? Yep. Will they look to decrease that exposure promptly? Yep.

If the warrants are worthless than why on earth would Buffett had demanded them? GS didn't simply say, "Hey WEB....here are some warrants we're throwing in for free." This was part of the package that BRK offered and likely wasn't something negotiable. BRK is getting a dividend which is accounted for in the MoS calculated for the transaction. Buffett buys for the long-term and isn't concerned with making a quick buck.

While there's risk in any investment my belief is that Buffett again will come out in the end just fine. He is taking substantially less risk than other individuals (say SWF's) when they've placed large equity injections into companies and the long-term downside risk to GS is much less, IMO, than many of the other banking institutions in the US.