janbil

Will Berkshire Lose Its Triple-A?

You made an error when you referred to BRK book value: "which was $118 billion as of June 30 and is surely significantly lower now, given the degree to which Buffett's investments in the likes of Goldman Sachs (GS) have eroded."

Berkshire did not buy GS or GE common stock but instead bought preferred shares which are paying 10%. He also received a "lottery ticket" known as warrants. He has the option to exercise them over a certain period of time. If the stock price is not above the strike price, they are worthless. But if the stock price is above...then its all gravy.

Buffett was getting less than 2% on $8 billion while he was waiting to do something with it. When he bought the preferred shares (GS+GE) he received 10%...end result: BRK will net an additional $640 million per year (2% - 10% = 8%) * $8 billion) REGARDLESS of where GS or GE trade.

So once again, can you tell me how Buffett's investment in GS or GE "eroded BRK's book value?"