Message Font: Serif | Sans-Serif
No. of Recommendations: 2
I see no such potential???

You're sort of right, but sort of wrong, I think.

You can reverse engineer something Buffett probably thinks about GS stock price, but not its value now, its value 5 years from now. Presumably Buffett wouldn't have bothered getting the warrants as part of the deal unless he thought it probable that GS trades over $115 5 years from now.

So we CAN conservatively claim a probability of $115 or higher for GS 5 years from now, at least in Buffett's then opinion.

So at $75 per GS today, you could figure a probability of 50% return in 5 years or which is 9% CAGR.

Now Buffett's "margin of safety" was a pile of preferred paying 10%. The individual making the GS purchase now on this reasoning has no comparable kicker, seems to me.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.