Author Topic: GS, GE and BAC warrants on balance sheet  (Read 6018 times)

benchmark

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Re: GS, GE and BAC warrants on balance sheet
« Reply #10 on: December 07, 2012, 08:34:35 AM »
In fact, the GE warrants are priced at $22.25, so they show nearly $1 billion in profit from the $3 billion loan.  Very nice return indeed given the 10% interest.  Assuming GE's pricing holds up, it will be interesting to see if BRK buys and holds the stock (perhaps hoping for dividend growth) or sells the options.  GS options have hovered around par.  That will be interesting to watch over the next 10 months or so.

I remember that BRK sold/trimmed GE common -- maybe it's not Buffet's doing.


valueinvesting101

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Re: GS, GE and BAC warrants on balance sheet
« Reply #11 on: December 07, 2012, 12:36:40 PM »
Here is the link for agreement:
http://www.sec.gov/Archives/edgar/data/70858/000119312511232422/dex11.htm

Checkout 13. Adjustments and Other Rights. Page 7 onwards.

Yeah those warrrants can build very big position in BAC for Berkshire. 700 million warrants but at strike of 7.14( $7.142857 to be precise) with dividend adjustments expiring in 2021. WEB really killed it.

txlaw

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Re: GS, GE and BAC warrants on balance sheet
« Reply #12 on: December 07, 2012, 01:19:37 PM »
The amazing thing is that over the next decade or two, BRK's position in BAC (after WEB exercises the warrants) will likely start to creep up towards the 10% limit, as BAC buys back their stock. 

This could possibly be the best "WEB stamp of approval" investment that BRK ever makes!

gfp

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Re: GS, GE and BAC warrants on balance sheet
« Reply #13 on: December 07, 2012, 01:27:04 PM »
Here is the link for agreement:
http://www.sec.gov/Archives/edgar/data/70858/000119312511232422/dex11.htm

Checkout 13. Adjustments and Other Rights. Page 7 onwards.

Yeah those warrrants can build very big position in BAC for Berkshire. 700 million warrants but at strike of 7.14( $7.142857 to be precise) with dividend adjustments expiring in 2021. WEB really killed it.

So can you quote language from that section that says the warrant strike price adjusts with ordinary dividends?  I don't see it.  Do you?

Rabbitisrich

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Re: GS, GE and BAC warrants on balance sheet
« Reply #14 on: December 07, 2012, 02:15:17 PM »
I think that you are right. On the BAC Warrants thread, I thought that Buffett had copy and pasted the A warrant language, but it seems like ordinary cash dividends actually means ordinary cash dividends. Good catch.

jay21

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Re: GS, GE and BAC warrants on balance sheet
« Reply #15 on: March 20, 2013, 12:57:07 PM »
Found this interesting in the 10-K

Other investments:
                                          

Preferred stocks
         $    11,860                Expected duration                                                                          10 years
                           Discount for transferability restrictions and subordination          97 basis points

Common stock warrants
              3,890                Discount for transferability and hedging restrictions                  19%


So BRK is valuing the preferred with a ~1% discount which would compound over 10 years and marked down their warrants by 19%.  So that's some extra value imo.
@jay_21_