Warren Buffett invested $5 billion in the investment bank Goldman Sachs during the 2008 financial crisis.
Announced on September 23, 2008, the deal gave Berkshire Hathaway $5 billion of Goldman Sachs perpetual preferred stock carrying a 10% annual dividend. Berkshire also received warrants to buy up to $5 billion of Goldman common stock at $115 per share for a five-year term.
The investment came just after Goldman Sachs became a bank holding company, as markets were shaken by the collapse of Lehman Brothers and the broader credit crisis. Buffett’s commitment supplied capital and signaled confidence in Goldman’s management and business franchise when financial institutions were under intense pressure.
A frequent confusion is counting the preferred-stock investment and the warrant together. The direct investment was $5 billion; the additional $5 billion referred to the potential value of common stock Berkshire could buy through the warrants. Goldman later redeemed Berkshire’s preferred shares in 2011.