Perpetual preferred shares. He essentially bought a never-maturing bond with a killer interest rate and huge pre-payment penalty. And paid for it with cash from the short-put positions he ran through the very same firm. The warrants are a "whatever" icing on the cake. He will most likely make out like a bandit on this deal even without them.
He is a crooked Son of bitch. He owns 20% of moodys? All he had to say is that Moodys would not allow subprime loans to turning into top rated investment bonds. Instead talking about raising taxation he should have had the decency to stop the subprime mess. (if moodys did not do rating of these crooked bonds I apologize.)
Warren Buffet owns shares. He does not run the companies whose shares he owns. He buys businesses whose management he trusts to do a good job. He is a true American hero. Mark
what kind of 20% owner would exercise no control? I suspect he owned it so he could get an idea of what kind deals were being done. You think he took no advantage of his position as 20 percent owner? It is possible he new nothing... but I highly doubt it.
For the most part, Buffet does not buy stock in companies so he can take over the firm. He buys good management and allows them to continue doing what they do. I suspect that when he saw AAA ratings on that junk, he assumed it was truly AAA rated. Don't forget that the other ratings agencies also rated it AAA. I'm not saying that Moody's was not a scumbag operation. I'm just defending Buffet's position - and I can only guess what that should be. But jail? You think he should go to jail when Bernie Madoff gets to live in his penthouse? You think he is a criminal? Mark
Do you see the irony of you calling Buffett, the guy who was #1 on the Forbes 2008 list of the world's billionaires, a poser from your parents' basement when you can't even spell his name?
Buffet can afford to be sanguine about those short puts. Someone else will be in charge of unwinding that position. Meanwhile, as noted above, he is getting 10% on the proceeds. At a favorable tax rate. Even assuming no compounding, he will turn the $4 bill into $10 or so by the time the puts expire. Of course, if GS blows up, he has a problem.
Just thought, I would clear this up. It is my contention that if Buffett was aware that moody's was turning bags of subprime loans into top rated bonds. and 2 he did nothing to stop it. I would say that he is the worlds greatest hypocrite, and one of its biggest dirtballs. Would that be criminal? I do not know it depends on the fiduciary duties Moodys may have had and whether as an owner he should be compelled to stop the breach.
Here's another thought: What if Buffet knew so such thing; What if you are letting your political beliefs get in the way; What if you cannot stand the fact that this old guy is so well respected and you are tearing him down for no valid reason; What kind of dirtball does that make you? Mark
The old son of bitch - has always been arrogant. His comments on taxes and socialism were hypocritical. His comments about traders were disgusting to me. If he owned Moodys - what are the chances his "oracleness" did not know about the rating moody's was bestowing on subprime mortgages. Unless there is a law against his knowing... not know would seem to be a breach of his duty to his shareholders. How would the worlds greatest investor not know? I think the onus is on him to prove he was ignorant.