And so Warren Buffett has made Goldman Sachs look like a bunch of muppets. Now Goldman Sachs has always made its money by buying low and selling high. Enter Warren Buffett who has shown them how to do it properly.
Matt Wirz tells us in The Wall Street Journal that Goldman loan traders unloaded hundreds of millions of dollars of leveraged loans at a loss last year in anticipation of the US Government bringing in new regulatory restrictions. The leveraged loans, Goldman decided, were too risky. Wirz then writes: "Details of one trade in particular have recently caused a stir in the market. In November, Goldman sold about $85 million of loans in troubled newspaper publisher Lee Enterprises Inc. LEE +3.51% Goldman sold the debt at about 65 cents on the dollar, having bought it months before at around 80 cents, resulting in a loss of at least $13 million. The buyer: a unit of Warren Buffett's Berkshire Hathaway Inc., BRKB +1.28% according to several people familiar with the matter. Mr. Buffett has since made a tidy paper profit on the loans, which are now worth about 82 cents on the dollar."
Of course, Buffett and Goldman Sachs go back a long way and he is always coming out on top. Back in 2008, the investment bank sold $5 billion of preferred stock to Buffett. Buffett was in effect lending Goldman Sachs the money. And Buffett ended up making $3 billion out of that deal.
So Buffett is continuing to make money. Goldman Sachs meanwhile is losing more revenue than any of the other banks.