Is Buffett a Reason to Buy Goldman Sachs?

OMAHA, Neb. (TheStreet) -- When Warren Buffett speaks, should Goldman Sachs(GS) investors listen?

Warren Buffett voiced unequivocal support for Goldman Sachs during and after the Berkshire Hathaway(BRK.B) annual meeting, and Goldman Sachs shares ended Monday up 3%. On Tuesday morning, as the markets went into a tailspin, Goldman Sachs shares were down to a much lesser extent than financial stocks. If it were left up to Warren Buffett or his right hand man Charlie Munger, there would be no case against Goldman. Yet there's a big caveat emptor for investors: the $5 billion Goldman Sachs investment made by Berkshire Hathaway at the height of the financial crisis makes an obvious case for why straight shooter Warren Buffett might not shoot so straight on the subject of Goldman Sachs. It complicates the issue of Buffett speaking out on Goldman Sachs that Buffett has such a stellar reputation for being frank. Would Buffett risk his reputation on support for Goldman Sachs if he really didn't believe what he was saying? It is fitting, in at least one respect, that Buffett's decision to invest $5 billion in Goldman Sachs at the height of the financial crisis restored confidence in the markets, as it shows the power of the Buffett brand -- and that power has now come full circle by way of Buffett's support for Goldman Sachs at another time of crisis. Analysts are not convinced that the government is the one with the losing legal strategy, though. On Monday, Rochdale Securities analyst Richard Bove said Goldman Sachs should replace its top executives. Bove didn't advocate selling Goldman Sachs shares, but he wrote in a note to investors, "Goldman is going to have to pay a high price for its ineptitude." Bove wrote that Goldman's response was politically naïve, weak and ineffectual.   Loading Comments...   1 2 3 4 Last » Next ›

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