Goldman Sachs Is A Good Bet
By Zacks Investment Research on September 24, 2008 | More Posts By Zacks Investment Research | Author's Website
Perhaps more than any living person, Berkshire-Hathaway’s (BRK-A) Warren Buffett embodies the “when he talks, people listen” cachet of the old E.F. Hutton ads. Today, Buffett announced his firm is purchasing at least a $5 billion stake in elite Wall Street investment firm Goldman Sachs (GS). Reportedly, warrants to purchase another $5 billion of GS common stock have also been secured by Berkshire.
Predictably, this has had a favorable affect on Goldman shares in the pre-market, up over 2% before the opening bell. This comes just days after Treasury Secretary Henry Paulson has announced a federal bailout program to rescue hard-bit Wall Street firms, of which Goldman is one on a lesser level than many of its peers.
In fact, Paulson was former chairman of Goldman Sachs, as was Clinton Administration Treasury Secretary Robert Rubin, who now appears to be a main financial advisor of presidential candidate Barack Obama. Buffett’s move seems to directly acknowledge the importance such a close proximity with former Goldman brass will have on which companies will most benefit from the Wall Street bailout.
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