Warren Buffett, Star of 2008
2008 wouldn’t be a year to remember with all the financial turmoil if it didn’t include atleast one or two big mentions of Warren Buffett making deals. For Buffet being advantageous during any dilemma is his primary asset. Three major deals stand out for Buffett this year.
The 78 year old sage made deals with Goldman Sachs (GS), General Electric (GE), and perhaps unbeknown to some investors his three months work with Constellation Energy Group (CEG) left him sitting high and mighty.
Buffett gave Goldman Sachs $5 Billion in return for preferred shares that pay 10% interest annually and warrants to buy more within the next five years if so desired. The deal struck with General Electric was nearly identical with a $3 Billion investment paying out the same 10% and warrants to buy at $22 a share.
Buffett’s work with Constellation Energy was far more impressive though.
From today’s MarketWatch:
Buffett and his MidAmerican Energy are walking away from a three-month, $4.7 billion pursuit of the nation’s biggest energy producer, Baltimore-based Constellation Energy Group (CEG). Buffett dropped out last week after surrendering to Electricite de France which stepped into the process late and now is buying part the company for $4.5 billion.
Surrendering to the French? That doesn’t sound very American and it certainly doesn’t sound like Warren Buffett.
But hold your truffles. Buffett isn’t exiting a loser. He’s walking away with about $1 billion in goodies, including: a 10% stake in Constellation and $600 million in cash and fees. Buffett also stands to get his initial $1 billion investment in Constellation back in a year. That means he’ll have made about 20% on his investment for three months work.
That, people, is one heck of a rip cord.
We couldn’t agree more.
Source:
It’s a wonderful life
David Weidner
MarketWatch, December 23rd, 2008
