The guy usually gets a call from financial institutions when they desperately need a) lots of capital and b) credibility.
Here’s a quick list of notable institutions that have contacted Buffet looking for a pump, when they needed help, off the top of my head.
Lehman Brothers
Goldman Sachs
Long Term Capital Management
Solomon Brothers
Now maybe I’m jumping to conclusions here. This list is not particularly long and there could be plenty of times when perfectly sound financial institutions have requested he make an investment.
But usually when I hear of Buffet making ventures into the financial sphere, it’s to gobble up obscene deals put together by completely desperate corporate managers who really need a hail mary.
So what does this say about where Bank of America was/is?
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Just another day in Margaritaville.
Whups, wrong Buffet.
It say’s level 3 is gunning for asset impairment.
now that the dog and pony show is on,when do we get to see the elephants
It means what it means. Out of those names, Buffet put money into Solomon and Goldies, while the rest he walked away from.
I’ll excuse the Solly deal because the Buffer was trying to manage the place and he fucked it up, however he didn’t lose any money on it in the end. He did well with Goldie.
So I really don’t know your point. He hasn’t lost any money playing this game and the firm has come good in he end of those he’s backed.
My point hasn’t anything to do with Buffet’s investments in financial institutions. He’s done perfectly well in the investments he’s made.
My real point is that when financial institutions start calling Buffet, it’s usually because they are in deep trouble.
Be specific. What do you mean “in deep trouble” in this case?
It doesn’t really appear they are short of capital in any way. the Buffet deal is too small to be significant in any way.
I have no idea, exactly. In the instance of Lehman, they were going bankrupt and needed to save shareholders. Same with LTM.
Goldman just needed a big investment to shore up confidence so they didn’t slide too far.
Solomon had some internal legal problems Buffet wasn’t aware of, and they ended up getting sued heavily.
The one constant there though is that Buffet doesn’t commit to deals, especially with financial types, unless he makes out like a bandit at the get go.
You don’t call him unless you have to.
Buffet sold his soul to the devil a year or 2 ago. He no longer gets my respect. He’s morphed from a brilliant investor into some pseudo-gov-entity.
Barry Ritholz’s take:
Make no mistake about this: Warren Buffett just saved Bank of America’s bacon.
A few items leap out this announcement:
1) BoA needed both capital and a reputation reboot. Buffett provided a little bit of both.
2) This gives lie to the claim that BofA needed no money
Counter argument — this was about the stock slide, not the capital structure, which remains opaque.
3) The fine print will be revealing of the specifics of the terms, but I am curious as to how this compares to the deal cut with Goldman Sachs (GS) and GE.
4) Buffett met with Obama a few days ago; I wonder what was discussed in THAT meeting.
5) Investors are cautioned that unless you are buying on the same terms as the billionaire, you are making a very different bet than he is.
No, BAC needed the see the stock price fall stop. They don’t need more capital
$5 Billion is a show, it’s nowhere near the level they needed if it was true.