OMAHA, Neb. May 1 Warren Buffett on Saturday launched a strong defense of Berkshire Hathaway Inc's (BRKa.N) (BRKb.N) $5 billion investment in Goldman Sachs Group Inc (GS.N).
Speaking at Berkshire's annual meeting, Buffett said he did not hold against Goldman the U.S. Securities and Exchange Commission's civil fraud lawsuit alleging the bank hid from investors that securities backing a risky debt transaction were chosen by Paulson & Co, a hedge fund firm betting the securities would lose value.
Berkshire in September 2008 obtained $5 billion in Goldman preferred shares, which throw off $500 million in annual dividends, plus warrants to buy an equal amount of common stock. Goldman can buy back the preferreds at 110 percent of face value.
"We love the investment," Buffett said. He said "I do not hold against Goldman the fact at all" that the SEC sued, and that it did not fall "within my category" where reputational issues would call into question the Berkshire investment.
"If it leads to something more serious, then we will look at the situation at that time," he said.