Archives - Business: Page 34
Author: Thrty2Mars (Wed Jun 28, 2006 10:21 am)
Title: The Oracle of Omaha Strikes Again
Warren Buffet, known to many in the financial circle as the Oracle of Omaha, recently announced he will be giving $30 billion to the Gates Foundation. This is the single largest gift anyone has ever given away. The intriguing aspect of his philanthropic gesture is its effect on the stock price of Berkshire Hathaway (where Buffet is currently CEO). Oh, by the way, he currently has a 38% stock in ownership there. The $30 billion will be disbursed to the Gates Foundation over a period of 5 years. This will relieve the downward pressure on Hathaway stock prices due to the fact that Gates is required to give away only 5% of the gift each year according to U.S. law. Approaching 75 years of age, Buffet had been searching for an appropriate area to channel his money without severely damaging the Hathaway stock price. His move will only allow for a minimal sell-off of stock each year and only pertains to stock B. The two types of stock in Berkshire Hathaway are A (which is 30 B shares) and B which has 1/200th of the weight in voting rights. In other words, B shares won't have nearly the same effect on the stock price, or his ownership rights for several years. At 75 though, how many more years of ownership will he even need? Genius.