Berkshire Hathaway’s annual meeting on Saturday is bound to be crowded again this year in the wake of the company’s first stock split and its acquisition of America’s second-largest railroad. And shareholders are likely to ask tough questions about Berkshire’s investment in Goldman Sachs.
“It’s going to be big. I’m sure it’ll be a record,” Buffett said about the crowd. But Berkshire’s chairman and CEO declined to discuss any possible discussion topics ahead of the May 1 meeting. Buffett’s investment bank of choice, Goldman Sachs, is facing civil fraud charges and scrutiny in Congressional hearings.
Berkshire holds a significant stake in Goldman, and Buffett has praised the company’s performance during the Great Recession, so he’s sure to face questions.
Berkshire bought $5 billion (Rs 22,000 crore) worth of Goldman Sachs’ preferred shares in the fall of 2008 in exchange for 10 per cent interest and warrants to convert those shares into common stock at $115 per share anytime up to the fall of 2013. Goldman shares were selling for about $160 (Rs 7,050) on Thursday.
Shareholder Howard Alter said he’ll be interested to hear what Buffett thinks about Goldman, but he’s comfortable with the deal because of its favorable terms and because the Goldman shares can be sold anytime.
“It does look like a very smart investment,” said Alter, who is managing partner of New Jersey investment firm Roundview Capital.
Berkshire also has been in the new for its role in Congressional discussions about financial reform legislation and proposed rules for derivatives, though it’s not clear what role it played.