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Buffett's general MO is to find distressed or other undervalued companies and offer a large chunk of money, negotiating very favorable terms. Take their deal w

Buffett's general MO is to find distressed or other undervalued companies and offer a large chunk of money, negotiating very favorable terms. Take their deal with Bank of America, wherein they received preferred stock which paid 6% annual dividend (so they end up higher up the capital structure than the common) as well as a dilutive warrant to purchase 700M shares of common stock at a strike price of about $7 at any time until 2021 (currently at 29.49) The article answers why the deal went sour: > Coming so soon after that cash infusion, Buffett’s attempt to take a stake in Uber while it was on the rocks may have been too late to squeeze favorable terms from the company. Buffett probably couldn't get the type of deal he wanted, mostly because they were able to secure cash independently.

duxup 8y ago
>Take their deal with Bank of America, wherein they received preferred stock which paid 6% annual dividend (so they end up higher up the capital structure than the common) as well as a dilutive warrant to purchase 700M shares of common stock at a strike price of about $7 at any time until 2021 (currently at 29.49) Damn 6% and more stock at a discount.... DAMN.
taneq 8y ago
> Buffett's general MO is to find distressed or other undervalued companies and offer a large chunk of money, negotiating very favorable terms. Are there other viable strategies for a large investor? I can't imagine it's a very good plan to pay market value for shares in companies that are already currently very successful. By definition you're buying "at the top".
- probe 8y ago
  I think Buffett et all are betting Uber is not “at the top” and still has significant room to grow. If new investors are buying at a 62B (recent tender offer), they’re expecting some level of increase over the next 18 months and when Uber goes public.
- pg314 8y ago
  Buffett bought 75 million Apple shares last quarter, paying market price for a very successful company. His investment philosophy is based on making the distinction between the market price of something and its intrinsic value, and looking for discrepancies between the two [1]. [1] https://www8.gsb.columbia.edu/articles/columbia-business/superinvestors https://www8.gsb.columbia.edu/articles/columbia-business/sup...
- sumedh 8y ago
  > that are already currently very successful. That is typical Buffett, invest in proven successful companies. About buying at the top, maybe Buffett sees that Uber still has long way to go up. Based on history, he is usually right.

duxup 8y ago

>Take their deal with Bank of America, wherein they received preferred stock which paid 6% annual dividend (so they end up higher up the capital structure than the common) as well as a dilutive warrant to purchase 700M shares of common stock at a strike price of about $7 at any time until 2021 (currently at 29.49) Damn 6% and more stock at a discount.... DAMN.

taneq 8y ago

> Buffett's general MO is to find distressed or other undervalued companies and offer a large chunk of money, negotiating very favorable terms. Are there other viable strategies for a large investor? I can't imagine it's a very good plan to pay market value for shares in companies that are already currently very successful. By definition you're buying "at the top".

probe 8y ago
I think Buffett et all are betting Uber is not “at the top” and still has significant room to grow. If new investors are buying at a 62B (recent tender offer), they’re expecting some level of increase over the next 18 months and when Uber goes public.
pg314 8y ago
Buffett bought 75 million Apple shares last quarter, paying market price for a very successful company. His investment philosophy is based on making the distinction between the market price of something and its intrinsic value, and looking for discrepancies between the two [1]. [1] https://www8.gsb.columbia.edu/articles/columbia-business/superinvestors https://www8.gsb.columbia.edu/articles/columbia-business/sup...
sumedh 8y ago
> that are already currently very successful. That is typical Buffett, invest in proven successful companies. About buying at the top, maybe Buffett sees that Uber still has long way to go up. Based on history, he is usually right.