Warren Buffett: “Don’t ask the barber whether you need a haircut.”
Warren Buffett does not trust Investment Bankers. I am not surprised. One of the world's savviest investor has a low opinion of Investment Bankers. So should we.
We have see what they did to investors, shareholders & the public during the housing crisis among other debacles.
The article (courtesy The Guardian) has this to say:
Goldman Sachs decided to sell nearly half its holding, while Manhattan hedge fund Tiger Global increased its sell-off from 3m to 23m shares. Those most likely to have seen the analysts' forecasts may have decided that the shares were unlikely to enjoy the customary day-one surge, seen when Google and the professional networking site LinkedIn went public. Basically, for those in the know, at $38 a share Facebook was a "sell".
As you can see GS decided to sell out while probably encouraging their clients to buy!
Of course, investor who bought at $38 or higher are to blame as well. The ratios were outrageously high.
In Kenya, we have the case of SIB benefitting from a less than savoury deal on the Kenya Airways Rights Issue. Here is some interesting reading!
The Flying Rip-off
The late to the party Parliament to probe KQ Rights Issue
As outlined in this article, the perverse incentives for SIB to make sure the Rights Issue went through even if the deal hurt existing shareholders. The Board of Directors failed in it's duty to protect existing shareholders.
If I had to replace the entire Board of Directors of KQ with Warren Buffett, I would do it in a fraction of a heartbeat.
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