- Berkshire Hathaway, led by celebrity investor Warren Buffett, has made a $2.7 billion bet on Paramount in 2022.
- It had no effect at all. Buffett just said he sold all of his stock holdings and lost “a significant amount of money.”
- Let’s do some calculations to understand what that means.
What will happen to Paramount, once a powerful media conglomerate?
No one knows! Maybe the son of the richest man in the world will buy it. It will likely be acquired by Sony and private equity giant Apollo. Chances are, no one will buy it, and you’ll have to work with the clunky three-person leadership group that runs the store to get by.
Warren Buffett doesn’t try to find out anyway. The famous investor, who most recently owned 15% of Paramount stock, revealed over the weekend that his holding company, Berkshire Hathaway, sold all of its shares in the company this year.
“I am 100% responsible for Paramount’s decisions,” Buffett told attendees at Berkshire Hathaway’s annual shareholder meeting. “It was 100% my decision, but I sold everything and lost a significant amount of money.”
So, how much is “substantial money”?
Berkshire Hathaway hasn’t disclosed the total amount (I asked). But when you say “a significant amount” when someone is worth an estimated $132 billion, it’s probably a very large amount.by me very A rough estimate could be in the $1.5 billion range.
The math: In 2022, Berkshire accumulated 91 million Paramount B shares. Barron’s estimates he paid “more than $30” per share. That’s a $2.7 billion investment.
At the end of 2023, Berkshire announced that it had sold approximately 28 million of these shares in the last three months of the year. Paramount’s average closing price in the quarter was $13.39, according to Bloomberg data. So let’s assume Berkshire was able to sell these shares in the $374 million range.
That leaves Berkshire with an additional 63.3 million shares of Paramount stock in early 2024, and it sold the remaining shares between then and Saturday. Paramount’s average price during the same period was $12.38. This suggests Berkshire earned an additional $784 million from those sales.
Adding all these up, we get Appearance Berkshire sold its Paramount stock for $1.2 billion after paying $2.7 billion, resulting in a $1.5 billion loss. It certainly seems like a “considerable amount”.
