Buffett Watch

On the eve of Warren Buffett's investment (of Goldman Sachs (GS) and General Electric) anniversary, we will take a look if he is been successful in selecting the stocks or has he lost the touch?

Berkshire Hathaway Inc. made two major investments in the year 2008 , GS - September and GE - October. He loaned $5 billion and $3 billion, respectively, that pays a 10% return. As part of the deal, Buffett also received warrants that allow him to purchase 43 million shares of Goldman Sachs at a strike price of $115 a share and 135 million shares of GE at a strike price of $22.25.

Yesterday, GE shares closed Thursday at $15.97 a share (a 29% discount to price at which Buffett can exercise his warrants), leaving the warrants out of the money for now.

On the other hand, GS profit would be worth about $8 billion, would he exercise the right, at the current market price of $178.99 a share.

In a newspaper interview Warren Buffett said he has no plans to soon exercise Berkshire Hathaway Inc's warrants to buy $5 billion of GS stock, although he could make a big profit by doing so.

"We will hold the warrants. Every instinct in my body tells me that we will want to hold those warrants until they're very close to their expiration date. The preferred pays us the dividend and the warrants are going to make us the money."

Class A shares of Berkshire Hathaway closed at $99,850 and Class B at $3,261.

So which script is fundamentally strong to buy GE or GS?? Post your comments...