Jump to content

Buffett wanted to buy Lehman Before Bankruptcy - just in


Recommended Posts

A board member sent me the letter on the weekend.  It looked like it was a draft, and they had not actually come to a full agreement or anything.  There was talk that Buffett kicked the tires on Lehman, but there was no offer or agreement.  Cheers!

Link to comment
Share on other sites

A board member sent me the letter on the weekend.  It looked like it was a draft, and they had not actually come to a full agreement or anything.  There was talk that Buffett kicked the tires on Lehman, but there was no offer or agreement.  Cheers!

 

Yeah.  Warren has said that he took a look at Lehman, but was not as much interested in Lehman as Lehman was interested in being rescued by BRK.  As Lehman's condition deteriorated, Warren's interest cooled.  This is a spin on old news.

Link to comment
Share on other sites

The following article that appeared on the Motley Fool a couple of years ago has some details on why Buffett turned Lehman down: http://www.fool.com/investing/general/2010/03/15/revealed-why-buffett-turned-lehman-down.aspx

 

One excerpt:

The letter is ready to go, Mr. Chairman

Furthermore, Buffett found it odd that Lehman had prepared a draft letter to Lehman employees announcing a deal -- complete with deal size and price -- the day before he and Fuld had even spoken over the phone. Odder still, Fuld didn't know the genesis of the letter, and it appears that he never even saw the draft.

 

It appears this letter is old news.

Link to comment
Share on other sites

The following article that appeared on the Motley Fool a couple of years ago has some details on why Buffett turned Lehman down: http://www.fool.com/investing/general/2010/03/15/revealed-why-buffett-turned-lehman-down.aspx

 

One excerpt:

The letter is ready to go, Mr. Chairman

Furthermore, Buffett found it odd that Lehman had prepared a draft letter to Lehman employees announcing a deal -- complete with deal size and price -- the day before he and Fuld had even spoken over the phone. Odder still, Fuld didn't know the genesis of the letter, and it appears that he never even saw the draft.

 

It appears this letter is old news.

 

 

Very interesting article. Clears things right up, too.

 

Thank you for sharing it.

 

 

Link to comment
Share on other sites

Was that him refusing to buy Lehman, or was Paulson just telling him about investment banks needing cash?  I remember the scene, but can't remember exactly what was said other than him telling his grandkids "They always think it's important!".  Cheers!

Link to comment
Share on other sites

Didn't they have a scene in Too Big To Fail with Warren @ Dairy Queen getting a call from the Treasury Secretary Paulson and Warren declined to buy Lehman as he was giving his grandkids a couple of cones?

 

Am I remembering that right?

 

Testimony this week in the Gupta trial describes a very similar scene in connection with the finalization of the deal to buy the GS preferreds, but Paulson wasn't described as being involved.

Link to comment
Share on other sites

From what I read in TBTF, Fuld called Buffett to talk about a possible deal. Buffett mentioned off the bat that he would want a minimum of 9.5% preferred securities, and at-the-money warrants, and that only if he felt comfortable after doing his DD. Fuld felt that was an outrageously expensive and leaned against the idea. Later, Buffett went through the 10-k and found way too many questionable items that he opted against a deal on any terms.

Link to comment
Share on other sites

Here is the story from the examiners report :

 

Buffett was surprised that Lehman had prepared a draft letter announcing the deal, because he never got close to a deal with Lehman.

Buffett took it as a negative that Fuld suggested that Lehman executives were not willing to participate in a significant way. Second, Buffett did not like that Fuld complained about short sellers. Buffett thought that blaming short sellers was indicative of a failure to admit one’s own problems.

 

...

Buffett was concerned that Fuld had not been forthcoming about the issue. The problems Buffett saw in the 10‐K along with Fuld’s failure to alert Buffett to the issue in Japan cemented Buffett’s decision not to invest in Lehman.

 

http://myinvestingnotebook.blogspot.ca/2012/05/what-really-happened-with-lehman.html

 

If you want the source documents, it starts on page 664 http://www.jenner.com/lehman/

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...