OMAHA, Neb. – Berkshire Hathaway CEO Warren Buffett declared his support for Goldman Sachs Group Inc. CEO Lloyd Blankfein on Saturday, and said he has no plans to sell his company’s stake in the bank.
Buffett and Berkshire vice chairman Charlie Munger praised Goldman before a crowd of about 40,000 at Berkshire’s annual shareholder meeting. Both executives said they’re happy with Blankfein’s leadership and said they don’t view the Securities and Exchange Commission’s civil fraud charges against Goldman as a strike against him.
“There’s really no reason to think about somebody else running Goldman,” Buffett said when asked whether someone besides Blankfein should be leading the investment bank. The charges filed April 16 have raised questions about Blankfein’s tenure.
Buffett previewed his company’s first-quarter earnings report at the meeting at Omaha’s Qwest Center. He said Berkshire rebounded from last year’s first-quarter loss and earned $3.6 billion as the economic recovery began and Berkshire absorbed Burlington Northern Santa Fe railroad.
The full report will be released Friday. In the first quarter of 2009, Berkshire lost $1.5 billion.
Buffett has been one of Goldman’s biggest supporters before and since the SEC filed its civil lawsuit against the bank. The government charged that the investment bank misled investors about a deal involving complex mortgage-related investments that later plunged in value.
During questioning by shareholders, Munger noted that the SEC vote to file the charges was 3 to 2. He said that if he had been a member of the SEC, he would have voted against the suit.
On Friday, Goldman stock plunged 9 percent on reports that the Justice Department had opened a criminal investigation of Goldman.
Buffett said Berkshire’s $5 billion of preferred stock in Goldman is a good investment because it generates 10 percent interest a year. He said the investment includes warrants that can convert the preferred shares into regular stock at $115 a share, a discount from Goldman’s current price of $145.20.
“We love this investment,” Buffett said.