Think of the transaction as a bet. If Team A is playing B and you think Team A is going to lose. You approach a bookie and ask him to find someone to bet against you. If they can find someone who thinks Team A is going to win, should they be obligated to tell them that you think Team A is going to lose? If they agree with you and make a bet for themselves that Team will lose should they have to tell the other bettor that the bookie is making a bet and not some other bettor.
The argument Buffett is making it does not matter who is making the bet, what matters is that two parties made a bet with a sincere difference of opinion about who would win the game.
Except you’ve neglected to mention the 10% dividend that’s being paid on the original $5b investment. That’s $500 million a year. Or, as one news article pointed out, about $900 a minute. Just sayin’
I’m not understanding your point. Why would I mention the dividend on the preferred stock? It has nothing to do with the point I am making. The Berkshire investment was $5 billion of preferred stock paying a 10% dividend. It had an equity kicker of the warrants. It’s flat out wrong to act like they simply have a debt investment when in reality they have both a near debt instrument along with equity upside. Clearly his stake is not more like a loan since it has significant equity upside potential. The New York Times is flat out wrong.
You’re exactly right, and so is Warren Buffett. Unless the SEC is withholding some evidence, I don’t really see where they did anything wrong. It seems like a very strange thing to bring such an obviously week charge. Especially when I imagine that there were probably actual real legitimate charges that could be brought against Goldman. There have been rumors of them frontrunning for years. I’m sure there are instances where they have traded on insider information when they should have a Chinese wall between the different segments. Further, I still think they likely committed some crimes in their actions with SemGroup.