OT: Buffett buys $3B of GE today. He has been sitting on a lot of cash for a long time, and been unwilling to add to his investments. For instance, Home Depot and Lowes are now at prices much lower than when he initially bought, but he hasn't added to his position. In the last month, though, he is suddenly showing a willingness to buy.
Buffett got a good deal, the same 10% dividend he'll get from Goldman Sachs.
This is the second time Buffett bought after I did. For years, I invested in Clayton Homes, a small mobile home manufacturer. Then Berkshire Hathaway bought the whole company.
GE also announced they were going to raise cash by offering more common shares. This, after buying back many shares for many years, at prices much higher than today. Is their motto: "Buy high, sell low"?
Article:
GE Raises $15 Billion; Buffett Gets Preferred Stake
Oct. 1 (Bloomberg) -- General Electric Co. plans to offer $12 billion in common shares and billionaire investor Warren Buffett's Berkshire Hathaway Inc. will buy $3 billion in preferred shares as GE bolsters its cash cushion amid volatile markets.
Buffett's stake will pay an annual 10 percent dividend and is callable after three years at a 10 percent premium, Fairfield, Connecticut-based GE said today in a statement. Buffett also gets warrants to buy $3 billion of common stock with a strike price of $22.25 a share for five years.
The offering and stake will let GE accelerate the plan Chief Executive Officer Jeffrey Immelt announced last week to bolster its finances amid volatile financial markets. Buffett, 78, last month bought $5 billion in Goldman Sachs Group Inc. preferred shares to show faith in the investment banking company.
``GE is the symbol of American business to the world,'' Buffett said in the statement. ``I have been a friend and admirer of GE and its leaders for decades. I am confident that GE will continue to be successful in the years to come.''
GE on Sept. 25 reduced its annual profit forecast for the second time this year and suspended its stock buyback, shifting capital to protect its dividend and AAA credit rating, the highest available, as volatility in credit markets reduced profit at its finance arm.
GE earlier today said it has been able to sell corporate paper and fund operations without tapping bank lines, seeking to quash speculation that led to a surge in its credit default swaps and a slump in the stock.
bloomberg.com |
