Buffett to invest in General Electric

Warren Buffett is all over the place these days. He was busy investing at Constellation Energy and Goldman Sachs. Now, he’s investing at GE — $3 billion at that. Judging by his market timing approach, it does seem assets are cheap enough that he’s willing to step in and take a risk.

But one must note, as is his usual wont, he is not taking equity. He is getting preferential treatment — literally. As with previous investments in troubled institutions like USAir, Salomon Brothers and, most recently, Goldman Sachs, Warren Buffett is getting preferred shares.

Nice deals, but usually not ones available to the likes of you and me. It’s a good thing GE is selling shares to the general public. I reckon, with Buffett in for $3 billion, these shares will sell like hot cakes.

General Electric Co said on Wednesday it would sell $3 billion of preferred shares to Warren Buffett’s Berkshire Hathaway Inc, with another $12 billion in common shares going to the public.

The news erased some of the decline in GE shares earlier in the day and left the stock down 3 percent at $24.74 in afternoon trading on the New York Stock Exchange. The stock fell as low as $23.09 on Wednesday.

The company expects to price the offering before the market opens on Thursday.

“GE is the symbol of American business to the world,” Buffett said in a statement. “I am confident that GE will continue to be successful in the years to come.”

The U.S. conglomerate’s current market capitalization stands at about $235 billion. Its stock has lost about 34 percent of its value so far this year as investors worried about deteriorating profits at its GE Capital finance arm.

“The economic environment remains volatile,” said GE chairman and chief executive Jeff Immelt in a statement. “However, the company’s performance remains on track with the earnings guidance we provided last week for 2008.”

GE last week warned that its 2008 profit could fall as much as 12 percent.

Sources
GE says Buffett to invest $3 billion in shares – Reuters
GE Announces Common Stock Offering – CNBC