Tuesday 6 December 2016

Warren Buffett's Berkshire cuts stake in crisis-era Goldman Sachs

Published 16/11/2015 | 14:57

Warren Buffett, chief executive officer of Berkshire Hathaway Inc., speaks at a Detroit Homecoming event the Center for Creative Studies in Detroit, Michigan, U.S., on Thursday, Sept. 18, 2014. Photographer: Jeff Kowalsky/Bloomberg
Warren Buffett, chief executive officer of Berkshire Hathaway Inc., speaks at a Detroit Homecoming event the Center for Creative Studies in Detroit, Michigan, U.S., on Thursday, Sept. 18, 2014. Photographer: Jeff Kowalsky/Bloomberg

Warren Buffett's Berkshire Hathaway has reduced its stake in Goldman Sachs Group Inc by 13 percent during the third quarter, paring a successful investment it made during the height of the global financial crisis.

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In a U.S. Securities and Exchange Commission filing, Berkshire said it owned 10.96 million Goldman shares worth about $1.9 billion as of Sept. 30, down from 12.63 million shares worth $2.64 billion three months earlier.

Buffett told CNBC television also on Monday that he cut the Goldman stake, and sold shares in longtime holding Wal-Mart Stores Inc, to help fund Berkshire's $31.7 billion takeover of aerospace parts maker Precision Castparts Corp .

Buffett has long expressed a preference that Berkshire own whole companies instead of individual stocks. The Omaha, Nebraska-based company has close to 90 operating units including the BNSF railroad, Dairy Queen ice cream and Geico insurance.

A Goldman spokesman was not immediately available for comment. Buffett also told CNBC he was not selling stocks as a result of Friday's attacks in Paris.

Goldman turned to Buffett for support a week after Lehman Brothers Holdings Inc went bankrupt, prompting Berkshire to buy $5 billion in preferred stock plus warrants to purchase $5 billion of shares at $115 each.

After Goldman redeemed the preferred stock, the warrant portion was restructured to let Berkshire acquire a smaller number of shares in a cashless transaction.

The change was disclosed in a U.S. Securities and Exchange Commission filing detailing Berkshire's $127.4 billion U.S. stock portfolio on Sept. 30.

Wells Fargo & Co remained Berkshire's biggest stock holding, worth roughly $24.1 billion, followed by Kraft Heinz Co at $23 billion.

H.J. Heinz Co's purchase in July of Kraft Foods Group Inc transformed Berkshire's 52.5 percent stake in Heinz into a 26.8 percent stake in Kraft Heinz.

Among other changes in the quarter, Berkshire increased its investments in cable TV operator Charter Communications Inc and automaker General Motors Co.

It reported a 59.32 million share stake in AT&T Inc, which bought Berkshire investment DirecTV during the quarter.

Monday's filing did not disclose who made which investments.

Smaller investments are often made by Todd Combs and Ted Weschler, who may eventually succeed Buffett as Berkshire's chief investment officers. Larger investments, such as Goldman and Wal-Mart, are typically Buffett's.

Buffett, 85, has run Berkshire since 1965.

Reuters

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