These notes are approximate reconstructions of the direct quotations. They should not be considered precise transcriptions, but are intended to reflect the nature of what was said as accurately as possible.
Carol Loomis: Why tell the trustees to put your wife's money into an S&P 500 index rather than in Berkshire? Are you expecting it to do worse under your successor CEO?
Warren Buffett: All of my Berkshire shares have been allocated. I want my wife's share to be in something with certainty.
Charlie Munger: Buffett can do whatever he damn well pleases.
Audience station 3: Is there competitive pressure on BNSF that doesn't have a margin of safety?
Warren Buffett: No question that we have been spending more than Union Pacific, and they spend a lot. Trying to anticipate the kinds of volumes when you get a big increase due to things like shipments from the Bakken. We have a lot more trains running there than five years ago. We had a lot of days where it was 15 below or worse this winter, and it's hard to get any work done -- you can't really ask people to go out into the life-threatening weather.
Matt Rose: Last year BNSF handled a lot of traffic, and the oil traffic came a lot faster than expected. We're trying to build into it. I have never seen winter weather like we had this past year, with multiple days well below zero. When we get to 0 to 10 below zero, things just don't work. The railroad is making a significant investment in handling the much higher volumes.
Warren Buffett: We will spend $5 billion on the railroads this year. We take it seriously to get things like fertilizer to places where it's needed. Now that the weather has warmed, things are very likely to be a lot better. Incredible floods could put that at risk. When dealing with 22,000 miles of track there are weak links: Chicago (where the weather was very tough this year), and that affects all of the four main railroads.
Audience station 4: Natural gas storage declined last year. How will we be assured that there will be enough for electrical generation in the future?
Warren Buffett: We are the largest alternative energy generator in the country, and by the end of 2015 we will be capable of producing 40% of our needs in Iowa through wind. That's unlike any other company you'll find in the country.
Greg Abel: We had a very cold winter in the Midwest. First time our systems have been challenged in a serious way. There was substantial gas available to both heat homes and produce electricity. We care about furnaces and keeping the lights on. This past year, renewables were 39% of Iowa generation. As we continue to find multiple sources, that will help us be more cost-effective. When the underlying cost of gas rises, we have negotiated positions to protect our financials.
Warren Buffett: Our companies run 9% of the gas moving around the country. We just changed the name to Berkshire Hathaway Energy. It's a point of pride for us that when we bought Northern Natural Gas in the Enron fallout about a decade ago, it was ranked #42 out of 42 pipelines in the United States. Thanks to Greg, it's now rated #1. #2 is our other pipeline, Kern.
Becky Quick: During the past several years, lots has been speculated about your successor. Has there been any discussion about replacing Charlie Munger? Are two heads better than one?
Warren Buffett: Charlie is my canary in the coal mine. He just turned 90, and I'm pleased that he still calls himself middle-aged. I think it's very likely that whomever replaces me as CEO will have developed somebody that they can work with very closely. Not as good as Charlie, but someone. It's a great way to operate. We saw it with Don Keough at Coke and at Capital Cities, they did far more because they had two people with mutual admiration and complementary talents. You can't will it to somebody, but I would be very surprised if my successor didn't have some kind of partnership that enhances the CEO's achievements and their success. I have a hard time thinking of anybody who could be a successor to Charlie.
Charlie Munger: I don't think the world has any special reason to worry; 90-year-old men are gone soon enough.
Analyst:: Does the move in Matt Rose's position at BNSF change the succession plan at Berkshire?
Warren Buffett: Matt suggested the change, and it was designed for the specific succession situation at BNSF. It has no implications for Berkshire. I have letters from every one of our managers telling me what I should do in case of a need for immediate succession. I don't even share those with the board, but I have them. I would not take anything from what happens at the subsidiaries as a sign of what's happening at the parent company's succession planning.
Charlie Munger: I think Berkshire is in very good shape and there is no reason to worry about succession here.
Audience station 5: At one time (in 2009), you were so bullish on Wells Fargo that you would have been willing to risk your entire net worth on it if you had to. What would you pick today?
Warren Buffett: Berkshire is my only choice. It's a great question, but you aren't getting an answer.
Andrew Ross Sorkin: Berkshire's summary compensation table doesn't show details for more than Buffett, Munger, and Marc Hamburg [CFO]. Why don't you list some of the other highest-paid executives, particularly when you list such artificially low salaries for Buffett and Munger. And how much should the next CEO be paid?
Warren Buffett: I'll write about that CEO pay question in my next annual report. The SEC rules tell us which parties we are supposed to report. There is good question as to whether it's in the best interest of the shareholders to report how much our people are paid. It might have a negative effect on negotiations. For instance, at Comcast [owner of CNBC], I don't think it would benefit shareholders to report its highest salaries. I don't think curiosity alone is a good reason to report. At Salomon, they were all being paid enormous amounts of money, but everyone was disappointed because they were making less than somebody else. The first compensation crisis there was when John Meriwether and his crew were paid and it was reported. It made compensation, which was already a terrible problem, a much worse one because of jealousy. It's very seldom that publishing compensation accomplishes much for the shareholders. You could argue that much of what corporate CEOs make would be much lower if it wasn't being reported in proxy statements and leading to jealousy and competition. I think shareholders pay a significant price because those compensation figures are being reported and compensation committees are responding to it.
Charlie Munger: We're not going to report further unless the SEC makes us. It's much better for us to focus on the culture.
Warren Buffett: No CEO looks at a proxy statement and thinks "I should be paid less".
Charlie Munger: Envy does a lot of damage to the country.
Analyst:: Why didn't Berkshire provide all of the funding to buy NV Energy, and why does MidAmerican get to retain all of its earnings while BNSF is expected to send earnings back to the mothership?
Warren Buffett: Berkshire Hathaway Energy will continue to have many opportunities for acquisitions, and we hope that we'll be able to come up with really large companies to buy there. At BNSF, we will spend a lot of money on the railroad, but we won't be buying other businesses. We distribute substantial money out of BNSF because it can easily handle the debt. Whereas at Berkshire Hathaway Energy, we retain heavily because Berkshire owns 90% and the only other two shareholders are Walter Scott and Greg Abel. When we need to raise capital, that shareholding arrangement comes into consideration. We will invest billions at the railroad to improve the railroad, but not to buy other businesses. We've spent $5 billion on acquisitions this year, and we spent another $2.8 billion on property, plant, and equipment in the first quarter. We will never be dependent on the kindness of strangers. We don't count on bank lines or anything else. There will be sometime in the next 100 years -- could be tomorrow, could be 100 years from now -- when we cannot depend on anyone else to maintain our strength and keep up our operations. We've spent too long building Berkshire to allow that to cause a crisis. We lent money to Harley-Davidson at 15% when they needed cash and needed it like oxygen and nobody else was supplying it. You don't notice credit or oxygen 99.9% of the time, until you can't get any. We will never go to sleep at night wondering if there might be an event that would prevent us from continuing to do what we want, and $20 billion seems to be enough. We've always had something more than that. We've spent a lot this year, and if we can continue to invest it at reasonable returns, we will continue to do so. We will never feel compelled to spend any of it just because it's sitting around.
Charlie Munger: Having abundant cash on hand is a blessing. We love the opportunity that available capital at low interest rates allow us.
Warren Buffett: Eventually, compound interest will catch up with us, but it hasn't dealt a final blow yet.
Audience station 6: How much cash comes to the mothership versus being reinvested in the operating companies, and have you and Charlie ever had a real fight?
Warren Buffett: We met when I was 29, and we've never had an argument. We've disagreed on a lot of things, but it's never evolved into an argument. We argue with other people, but it hasn't occurred. I called Charlie on the Coca-Cola deal to ask what he thought; he thought alike. We never go away the least bit mad. If you look at the really bad mistakes we've made, I've made them. I think I'm a little more inclined toward action than Charlie.
Charlie Munger: You once called me the Abominable No-Man.
Warren Buffett: We don't really care too much where the $20 billion cushion stays; we don't count what's retained in the regulated energy business or the railroad. We only count what's easily available on a phone call. It doesn't make that much difference where it is. If we kept it at the parent-company level, it might move the needle by 5 basis points. I know what I'm thinking of doing, and what I'm likely to do, and anything that I'm committing to do, I know where the cash is coming from. We don't have to sweep it all back to the parent company from day to day. That might make sense at some point in the future. We don't want our subsidiaries to see us as disciplinarians. I can think of subsidiaries that have a lot of cash building up, and it doesn't make much difference whether it's sitting there or coming back to us. I don't want my other subsidiaries thinking that's how I want them to act, but I know where to get it.
Carol Loomis: What are your weak points, and what can be done to address them?
Warren Buffett: Answering that would spoil the fun for the journalists; they're supposed to find them. I suppose if you executed a sweep account for all our subsidiaries, we'd have more money. Not because we'd be doing riskier things, but we're very disciplined about some things and very sloppy about others. A clear weak point of mine is that I'm slow to make personnel changes. I like our current managers. Charlie and I were slow to make a needed change with a guy we both liked. We probably went beyond the time when we should have acted.
Charlie Munger: The sweep-account question reminds me of a friend of mine who gave blood at one time. He was quite thin, and when he started to donate, it didn't come out very quickly. The nurse started pumping his arm as though he was a cow giving milk. I've seen companies like Teledyne that swept everything back to the parent company, and it might've been more economical, but it created a tone that wasn't good for the company.
Warren Buffett: We've waited too long to change management sometimes, though.
Charlie Munger: We had one person we took straight from the chairmanship of a company to the Alzheimer's wing.
Warren Buffett: That hits a little close to home. There will be times when our "lack of supervision" will cause us to miss something at one of our subsidiaries. We think giving our managers a high degree of freedom accomplishes a lot. Someone will come along someday and second-guess our checks and balances and oversight, compared to other companies. They can measure that. But they can't measure the succcess we achieve by giving our people a lot of leeway. We operate differently from a control level than many other companies. We don't have a legal department or an HR department. We don't say that's a 100% benefit, but on balance, it's positive. When the downside shows up, people will question it. But our reaction is that in the long run, our system works, but we will look bad in those particular circumstances.
Charlie Munger: Our high degree of trust works very well. A lot of places work better when they operate with a high degree of earned trust. Modern accounting does a lot more harm than good when it relies on institutional internal controls.
Jonathan Brandt: See's Candy is one of your favorite subsidiaries. Profit growth grew through the 70s, 80s, and 90s, but why not in the new millennium? Will geographic growth aid the company?
Warren Buffett: The boxed-chocolates business isn't growing. A long time ago, every major city had a big candy-maker. The predecessor company to Pepsi was a candy-shop company; the biggest in New York City. It was acquired cheaply under the original company name of Loft's. Boxed chocolates have lost a lot of market position, probably mainly to solid snacks. See's has done far better than any chocolate company. Russell Stover did very well for a while with a different business model, but they ran into problems of their own. We can't do much about increasing the size of the market overall. We've tried moving outside our strongest geographic territory many times, but we've tried it and it hasn't made us rich. The candy doesn't tend to travel well.
Charlie Munger: Sometimes it works and sometimes it doesn't, but we only find out by experimentation.
Warren Buffett: People in the east prefer dark chocolate 2-to-1. On the West Coast, milk chocolate prevails 2-to-1. We've added lots of earnings power to the company overall by using the earnings from See's. We made a lot of money on Coca-Cola because of our experience with See's, because See's educated me tremendously about the power and value of brands. I wouldn't be at all surprised that if we hadn't owned See's, we would never have gotten into Coke.
Charlie Munger: The main contribution from See's has been ignorance removal. If we hadn't been so good at removing our ignorance step by step, we would be a fraction of ourselves today. We were just barely smart enough to get See's in the first place, and it taught us a lot. We're very good at ignorance-removal, and fortunately for us, we have a lot more ignorance to remove.
Audience station 7: Does it worry you that Bank of America can't calculate Tier 1 capital correctly?
Warren Buffett: Brian Moynihan called me several months ago to ask if we could convert our preferred stock ($5 billion) to a non-cumulative preferred. That has certain defects, as the shareholders in Fannie Mae and Freddie Mac are finding out now. Benjamin Graham wrote about how non-cumulative preferred stocks are a very weak security. Moynihan asked me if I would do that, and he promised in exchange to make it non-callable for five years. In a world of 5-basis-point money, I was very happy to make that tradeoff. I get five years of non-callability on 6% preferred, which I can then convert into payments on common, and BofA gets to use it in their calculation of capital. That happened a long time before this past week's report of problems with accounting at Merrill Lynch. That error doesn't bother me. We have a 20,000-page tax return; you just do the best you can. It didn't affect BofA's GAAP reporting, and they'll pay a penalty, but it doesn't change my feelings about the bank or its management even one iota. They were going to pay the dividend anyway, so the probability that non-cumulative nature will hurt us is very low, and the non-callability helps us. Both parties benefitted in the exchange.
Becky Quick: What are the current prospects for Netjets?
Warren Buffett: It's a perfectly decent business. It peaked in new unit volume in 2007/08. There were a fair amount of people whose income depended on stock-market behavior and they gave us quite a boom in sales, but not only did their adds fall off, but when their contracts ran out (basically into about 2012), they didn't renew, either. Until the last 6 or 8 months, net ownership was declining slightly, and that's turned around now. It's not a huge growth business at all. It's a large business -- we're 60% of the industry or so, we're the premier product -- but I don't see the market being double or triple the present size. We're going to China very soon, but that's a long-range play. Europe continues to decline in unit volume, but flight hours are up. Owners are using them more, and that had fallen off a lot in 2007/08. I'm glad we own it, but I don't expect to see a lot of growth.
Charlie Munger: I demonstrated my optimism by buying 25 additional hours.
Warren Buffett: He was a tough sale, too.
Jay Gelb: How large of an acuqisition are you comfortable targeting currently, and how much are your large shareholdings in public companies a source of funds?
Warren Buffett: They could be a source of funds, but I don't expect them to be. We're looking for big purchases. I'm always looking to add earnings power to Berkshire. We don't get opportunities that often. If the opportunities were large enough and we needed the money, we could dip into a huge reservoir of securities. When we have $40 billion in cash and I'm willing to take it down to $20, that's a big cushion. We'd be willing to dig deeper if we needed to. That could happen -- this year, or ten years from now. You never know.
Charlie Munger: Our acquisitions have been irregular in the past, and they'll be irregular in the future. It's good for the shareholders that we have plenty of opportunities for reinvestment inside our operating companies today.
Warren Buffett: Marketable securities have played a huge part in our success over the last 49 years; it's easy to do. But what we're really thinking about it buying businesses, and that's what it will continue to be. Operating companies are what really turn us on. If we were to raise $5 billion by selling stocks, it wouldn't come from our big long-term holdings.
Audience station 8: Why not leverage long-term debt at low rates?
Warren Buffett: What you say makes great sense, and it's the kind of thing that Charlie and I discuss. If you'd told us 40 years ago that we were looking at present interest rates and had opportunities to buy great companies, we would have said yes.
Charlie Munger: It wouldn't have been a hard decision.
Warren Buffett: But we do have plenty of opportunity to raise capital cheaply. We have $77 billion in float. We don't want to take a conservatively-leveraged company and then getting more aggressive at the risk of the long-term bondholders who bought our very conservative bonds in the past. We could easily leverage BNSF and the energy company considerably more, and they could probably use even more pep. But using equity in Berkshire to buy BNSF wasn't a good decision on our part; I probably should have gone to the market and raised more debt. Another $30 or $40 billion in debt leverage wouldn't hurt us one bit, but we don't know what to do with $25 billion in excess capital right now. We are doing other things with structured settlements, for instance, that cost us far less than going to the debt markets. If we saw a $50 billion opportunity and had to raise debt, we'd do it.
Andrew Ross Sorkin: The utilities are invested heavily in renewable power, but BNSF hauls a lot of coal. How do you square these issues with climate change and the risks to investors?
Warren Buffett: If you own a railroad that carries a lot of coal, it will carry a lot of coal for a long period. It will carry less over the very long term. A lot of people want us to fill out lots of forms about the climate-change risks, and it won't have an impact on us over a material timeline. Ajit and I discuss the risks as they affect our reinsurance business regularly, and the probabilities and timelines do not have any material impact on our company. We might not like the things we have to carry on the railroads -- like chlorine, for instance -- but we are a common carrier and have to carry the freight that is brought to us, whatever it is. I do not know of any subsidiaries where climate change needs to be a factor in the decision-making process.
Charlie Munger: I think a lot of people who think they know how climate change will affect the weather are over-reaching. We are sort of agnostic about it; we think people who think they can predict the severity of storms and disease impacts are talking through their hats. It appeals to some people to have something to worry about. No matter what happens, we're going to have to produce a lot more electricity from the sun or wind, and we're beautifully positioned. Just like GEICO made a lot of money unexpectedly from the Internet, we think the energy company is similarly in an advantageous position as the demand for renewables grows.
Greggory Warren: Todd and Ted are now managing a lot more money than in the past, but it's still less than 10% of your equity portfolio, and there are huge legacy positions. How much will their portfolios grow, and how much are they working outside portfolio management? How soon are they going to be on stage?
Warren Buffett: I got through college answering fewer questions than that. They manage about $7 billion now, and we'll change that periodically -- always increasing in size. To some extent, they're seeing that it does get difficult as the sums get larger to earn bigger returns. But it's still a good idea to move money from my management to theirs over time. They're both huge assets to Berkshire beyond equity selection. They know a lot about business and a lot about management, and they can handle a lot of things that would otherwise cross my desk. They are 100% attuned to Berkshire and perform these additional duties without demanding extra compensation. It's been a big plus for Berkshire to have them on-board, and they'll be more important as time goes by.
Audience station 9: If you were running the Fed, would you be worried about asset bubbles?
Warren Buffett: Who would've guessed five years ago that we'd have rates this low for this long? I'm surprised at how well things are going, and I don't think I'd do things differently. I'd like to say I'd do the same thing and take credit for it. This is an interesting movie -- we've never seen it before, and we don't know how it ends. I think Ben Bernanke was a hero at the time of the panic, and subsequently. He's a very smart man and handled things very well. When you see the Fed meeting minutes from the period, I've found it fascinating how many members of the Fed didn't understand just how serious things were, and I credit Bernanke for pushing through regardless of the lack of consensus. The actions he thought were necessary appear to have been truly that way. I think we've seen similar wisdom from Janet Yellen thus far. Keeping interest rates at nearly zero for so long is simply never-before seen.
Charlie Munger: The things that have been happening are very confusing to the profession of economics. If you aren't confused, you probably don't understand what's been going on. But you'll notice that we aren't buying a lot of long-term bonds at Berkshire.
Warren Buffett: At the time of the panic, people said that "cash is king." But it was the dumbest damn thing to hold on to if you weren't going to use it. This is not a bubble situation that we're living in now, but it's a very unusual sitution.
Charlie Munger: I'm as confused as you are.
Warren Buffett: That's why we get along so well.
Carol Loomis: You've been looking for a credentialed bear to ask questions and haven't found one. But is it likely that your successors will be able to use your model, particularly with disparate businesses like you own?
Warren Buffett: If you look at the stock market as a whole, it's worked marvelously to be in lots of disparate places. Owning a group of good businesses isn't a terrible business plan. A good many of the conglomerates were put together to perform financial magic of one sort or another. If you look at the Litton Industries or the Gulf and Westerns, they were put together on the idea of serial issuance of stock, where you issued stock that was selling for 20x earnings to buy businesses selling for 10x earnings. It was a way to convince people to go along with you on a chain-letter scheme. I think our diversified group of businesses, conservatively capitalized, with wise managers, is a great business plan. Capitalism is about the allocation of capital. And we have a means of allocating capital at Berkshire without tax consequences. We can move that capital to places where it can be usefully employed. There's nobody else better situated than Berkshire Hathaway, but it has to be applied with business-like principles, rather than on stock-promotional principles. I'd say that a lot of the conglomerates were serial acquirers depended heavily on the issuance of stock; I think you can tell which type of company you're looking at can be signaled by which method they use. Perpetual stock issuance signals a chain-letter model. Our method -- by cash -- is much wiser and more perpetual.
Charlie Munger: We think the conglomerate model works very well when you do it right. We're willing to sit until something makes sense; we're a lot more like the Mellon brothers than Gulf and Western. They were willing to sit and wait for long periods, and we are too.
Jonathan Brandt: Forest River has done very well. Will it keep its position leading its competitors?
Warren Buffett: We bought Forest River about 10 years ago. Pete built up a very successful but much smaller RV business and sold it in the mid-90s to a private-equity firm. They started telling him what to do; he told them to go to hell; the company went broke. Pete bought it out of bankruptcy, built it back up, and called me. We bought it on the basis of some very limited promises from him, and very few to him from us. I've hope it's really there in Elkhart, Indiana -- I've never visited. We made a deal about a decade ago, and he's stuck by his end of the bargain. I think we've had three or four phone calls in the entire time we've owned the company. I think it would be tough to compete with Pete under any circumstances; his IT department consists of six people on a company doing $4 billion in business. It operates on narrow margins -- maybe 11% or 12% gross margins, and 5% or 6% SG&A. We worked out a compensation package for Pete the day we met in Omaha, and it couldn't have gone better. I'd love to do more like it. It's a leader in its industry and the industry isn't going away.
Audience station 10: Comment on the oil sands and their impact on the company, please.
Warren Buffett: We have a crane business at Marmon that does a lot of business in oil development generally. We will soon have a transmission operation that will cover 85% of Alberta with 8,000 miles of transmission lines. But the oilsands business is huge -- we own some ExxonMobil, which is operating there. We are moving 700,000 barrels of oil each day on our railroads. Rail is a flexible way to move oil. Mentally, you think of it gushing through pipelines, but railroads move it twice as fast. We recently bought a company from Phillips 66 that is a specialty chemicals company that makes an additive that allows oil to move about 10% faster through pipelines than without the additive. I think the oilsands are an important asset for mankind over the centuries to come, but I don't think they'll dramatically change things at Berkshire.
Charlie Munger: A lot of the oilsands production uses natural gas to produce the heavy oil, so it's a very peculiar thing -- only economic if oil is highly priced and natural gas is too cheap. It's a peculiar thing, but it's a good thing for humanity.
Warren Buffett: It's getting to be more fun to give the results of our wager with the hedge funds. The managers have every economic incentive to come up with a great fund of funds. There are probably at least 200 hedge funds working within it, and we are now six years into the wager with a big lead for the index fund over the hedge funds.
*** Lunch Break ***
Becky Quick: Lessons learned from Energy Future Holdings?
Warren Buffett: It was a significant mistake on my part. All businesses should constantly think about what could mess up their business model. With Energy Future Holdings, certain assumptions were wrong. We look at all of our businesses as subject to change. GEICO set out in 1936 to pass along low cost insurance to the customer. They originally did that by mail offerings. Then they evolved. They stumbled when they went away from their original exclusivity with government employees. You want your managers to be constantly on the lookout for change. Many of our businesses are in slow-change industries, but you still have to adapt. I will assuredly make mistakes in the future, but we won't ever make bet-the-company decisions that could cause us real anguish. But you can't make a lot of decisions without making some mistakes. In 1966, we bought a department store in Baltimore. Not a lot of things dumber to do than that; none of them are still there today. The money we made by selling it off before things went badly are worth about $45 billion inside Berkshire today. Risks are something that Charlie and I think about, as well as the board, and our managers.
Charlie Munger: Sometimes you just have to scramble out of your mistakes. Imagine Berkshire coming from textiles, a department store, and a stamp company sure to fail in the long run. Imagine if we'd actually gotten a good start.
Warren Buffett: You really have to face facts, and the wish being father to the thought is unfortunately what overcame my grandfather when he thought his store would outlast chains.
Jay Gelb: What is the normalized earnings power at Heinz after the restructuring?
Warren Buffett: Heinz will file its own 10-Qs. You will get to see their own figures. It was a very reasonably-run company with about 15% pretax margins, and that's not an unusual operating margin in the food business. Look quarter-by-quarter, and I think you'll see the margins at Heinz significantly improved over those 15% historical figures.
Audience station 11: How do you think about comparing investment opportunities? How do you decide when to buy more of your favorites instead of something new?
Warren Buffett: The bottom of the panic was in March 2009, a lot lower than the September/October 2008 period when we invested $16 billion. Our hands were tied by the Mars deal. We didn't do remotely as well as if we'd kept all of the powder dry and spent it all at the bottom. But we don't know how to do the timing perfectly. But as late as fall 2009, the economy was still in the dumps, and that's when we bought BNSF. We did reasonably well in that period, but the most money would have been made if we'd just bought bundles of stock at that time. We could have done better than our 15% bonds with Harley-Davidson just by buying Harley stock instead. We want to buy big businesses with good management at reasonable prices, then build the over time. Starting 2014, we had very good businesses -- some very big. We want more of them, and we want to do it without issuing stock. I feel the game is still a very viable one and will be for quite some time -- it can't go on forever, but it still has a lot of juice in it.
Charlie Munger: The operating businesses have continued growing into a bigger thing. Early on, we were a big portfolio of common stocks with some operating companies thrown in. Today, it's the opposite.
Warren Buffett: When we're right about stocks, it shows up in reports. When we're right about businesses, increases earnings power, and that doesn't show up in the short run. Both methods are fine, but we're in phase 2.
Charlie Munger: When we buy businesses, we can deploy lots of cash effectively. We can't really deploy that much in common stocks; it's really no longer an option. I love it when we buy transmission lines in Alberta; I don't see anything bad happening to the whole of Alberta. We've adapted pretty well to changes under the circumstances. Change is inevitable, so how you adapt to it is essential. Many of the changes at Berkshire have been very much in the shareholders' interests.
Warren Buffett: We bought a lot of Wells Fargo, but in the long run, we made more money buying the banks of lesser quality. You get the biggest kick on profits in a down market by buying the worst marginal player, but looking back we are very comfortable with our Wells Fargo investment even if we could have done better by buying a basket of bank stocks that overall would have had much more potential to the upside.
Andrew Ross Sorkin: Would insurance priced based upon driver tracking change the moat at GEICO? Would you ever sell?
Warren Buffett: Progressive is the most closely identified with driver tracking through their Snapshot program. Of course, knowing how drivers operate is a valuable input to assessing the proper premium. Insurance is all about evaluating the propensity of loss to establish the proper premium. It's very easy to do with life insurance. Variables like age and gender are obvious, and you just set the proper price based on those variables. There are all kinds of variables, and through studying usage, Progressive is trying to look at variables and get better information about the propensity of an individual driver to get into an accident. We look at lots of variables; so do they. We think our system is pretty good, and we'll continue to look at many variables. I feel very good about GEICO, its management, and its ability to evaluate risk. The self-driving car is a real threat to the auto insurance industry. A much lower accident rate would be very good for society, but very bad for the auto insurers. It could happen, and it would still not cause us to sell GEICO.
Charlie Munger: Some of these things happen much more slowly than you might think. I went to a seminar about movies-on-demand 30 years before it actually happened. I think self-driving cars are a long time away, but I could be wrong.
Warren Buffett: If we're wrong, then we're wrong together. GEICO will be doing a lot more business 5 and 10 years from now than they are today, and if self-driving cars put them out of business in 30 years, I'll go away peacefully.
Greggory Warren: Despite high incidence of family ownership of businesses in Europe, you haven't really deployed serious capital outside the US. Why not?
Warren Buffett: We've never turned down an international opportunity because it was outside the country. We just haven't had as much luck getting on the radar screens of owners around the world than inside the United States. We do best when buying a business from a founder or the family of a founder. That's our strong suit, and in the US, we believe that any business of size thinks of us and many prefer us. I think there is much recognition outside the United States, but not as much as we would like. There's some awareness, and we've done well with Iscar, but we're continuing to work on reaching out overseas. Iscar has done a record business in April, and that signals strength around the world economy. People don't buy Iscar's products because they'll look pretty around the office; they buy Iscar products to do real work. If Iscar is doing well, that signals strength elsewhere. We have not been contacted by many significant companies that make sense over the last five years.
Audience station 1: How do you define your circle of competence?
Warren Buffett: That's a question of being realistic about yourself, and it applies inside and outside business. We've been reasonably good about defining our own perimeter. I can say for my own case that I've gone outside that perimeter more often in retail than with anything else. I was probably outside my circle of competence when I bought control in Berkshire itself. I imagine there are many CEOs who are unaware of where their circles of competence begin and end. Fortunately, we have plenty of managers who know their boundaries and they are excellent at what they do. I think the best at defining that perimeter was Rose Blumkin -- she didn't want stock in exchange for her store; she wanted cash. She didn't know anything about stock, but she knew exactly what to do with cash. Sometimes you may need your friends to help with "contributions" to knowing your circle of competence. Charlie does that a lot for me.
Charlie Munger: If you're 5'2", you don't have a future in the NBA. If you're 95, you probably shouldn't be looking for a leading romantic role in Hollywood. If you're 350 lbs., you probably aren't going to dance the lead in the Bolshoi ballet. You don't have to be great at what you do, you just want to go up against idiots, and fortunately there's a large supply.
Carol Loomis: Why do you annually make the comparison between your performance and the S&P 500 when you're an operating company and that yardstick no longer applies?
Charlie Munger: It's insane to do so. Warren likes to wear a hairshirt.
Warren Buffett: Usually when he goes all wishy-washy, I try to clarify, but I think I'll let this one slide.
Jonathan Brandt: Why did your valuations change between Marmon and Iscar?
Warren Buffett: When we made the Iscar deal in 2006, we took multiples of earnings, adjusted for cash, and stuck it in as both a put and call option for the family and Berkshire. We stuck that in to govern things from now until Judgment Day. There's been no deviation from this formula. The Marmon deal was an installment sale, not a put-and-call structure. We intended to take 60%. The family wouldn't have sold us the original 64% they did if they didn't have the assurances of subsequent phases of the deal.
Charlie Munger: The price went up because the value went up. We paid value.
Warren Buffett: Both the Pritzker and Wertheimer families have been terrific. It pays to have deals in which all parties feel good.
Charlie Munger: We had enormous respect for the intelligence at both families. It was amazing what both families had done.
Warren Buffett: They added lots of intrinsic value to Berkshire. The carrying value of the businesses is well below the intrinsic value.
Charlie Munger: The Union Tank Car Company is the original John Rockefeller company. It's amazing how some of these companies endure.
Warren Buffett: You'd find it amazing how many people you'll deal with over and over again.
Audience station 2: If entrepreneurship is synonymous with technology today, what non-tech industry would you start in today if you were 23 and entrepreneurial?
Warren Buffett: I'd go into the investment business, just like I did. I'd look at lots of companies and talk to lots of people. I often just dropped in and ask a lot of questions. At the end, I would always ask (a) If they had to put all of their money into one competitor and leave it for 10 years, which one would it be? And (b) If they had to short one company in their industry, which would it be? I usually came away from that question with a great deal of economic understanding of the industry. You won't start a Google or a Facebook that way, but if you have a great deal of curiosity, you can learn a great deal. As you ask around in different industries, you may very well find something that comes along which you'll find extremely useful, but you have to be open to it.
Charlie Munger: You might try the Larry Bird method for selecting an agent -- he interviewed a lot of people, and everyone recommended themselves but gave the same #2 choice, so he hired the guy everyone agreed was best.
Warren Buffett: I did the same thing when I needed to put someone in charge at Salomon's Japan office in a hurry. It's not a bad system to use. You can learn a lot of things just by asking (though I risk sounding like Yogi Berra). People like to talk, and you just have to be open to it. You'll find your spot. You may not find it in the first day or week or month, but you'll find it eventually. If you're lucky, you find it early, but sometimes it takes a while.
Charlie Munger: If it's a very competitive business and it requires skills you lack, you should probably pick something different. When I was at CalTech, I came up against someone who was always better than me at thermodynamics. I was never going to succeed at that topic. I've found the same thing in many other subjects, and today I'm down to two or three left.
Becky Quick: Isn't complaining about hotel rate hikes over Berkshire weekend contradictory with your belief in free markets?
Warren Buffett: If we want to increase the demand, perhaps we'll need to increase the supply. If you have an event that isn't sized by the people scheduling it, you run into trouble. What really bothered me was the three-day minimum reservation on hotels. This event is a good event for Omaha, and we're not going to move it. We can't expect everyone to build hotels around demand for one weekend a year. I think the market for hotels and hotel alternatives will work out well next year.
Jay Gelb: Will GEICO eventually overtake State Farm?
Warren Buffett: Nobody knows for sure, but we passed Allstate this year. State Farm is a great company, and has one of the great company histories in America. It was started by a farmer with no insurance experience. He built an incredible business based on an excellent business model. GEICO came out with an even better model, but State Farm was huge by then. It's taken us since 1936 to get to #2. If I live to 100, we should be #2 -- and I've told GEICO management that I'll do my part. We will continue to gain share if we always take care of the customer and properly rate risk.
Charlie Munger: GEICO is a lot like Costco -- a great product at an excellent price.
Warren Buffett: People don't come and go from GEICO -- they don't come in from other places, and they don't leave to go elsewhere. That reinforces the culture and reinforces success within the company.
Charlie Munger: It's easy to talk good game, but living the game is something else. It's against the entrepreneurial instinct in a lot of people to cut prices while increasing quality, but that's what works at both GEICO and Costco.
Audience station 3: How has being personally frugal helped the company?
Charlie Munger: In personal consumption, Warren is more frugal than I.
Warren Buffett: Care to give an example?
Charlie Munger: You paid less for your house than I did.
Warren Buffett: You designed your own house though.
Charlie Munger: No, I paid an architect $1900.
Warren Buffett: Notice how he remembers the figure. I have everything in life that I want that money can buy. I think that after a certain point, standard of living is no longer tied to cost of living. At some point, there's an inverse correlation. I'd be less happy with 6 or 8 houses.
Charlie Munger: I look around the room and see a lot of frugal people.
Warren Buffett: But not this weekend! The more you spend, the more you save!
Andrew Ross Sorkin: If Pfizer moves part of its company overseas, it may save money on taxes and increase shareholder value. Would you do the same?
Warren Buffett: No.
Charlie Munger: We would be crazy to be as prosperous as Berkshire and then try to cut corners on taxes.
Warren Buffett: Berkshire could only have happened in the United States. That being said, after we calculate a 20,000-page tax return, it's not like we add a 20% tip. And we do some deals like wind energy that are tax-driven. They wouldn't make sense otherwise. We follow the rules, and we don't begrudge the taxes we pay. We've earned a lot of money while paying US taxes.
Greggory Warren: Union Pacific generates a lot of money from shipments to and from Mexico. How attractive is the Mexican freight market?
Warren Buffett: Union Pacific has an advantage in its route structure. The KC Southern has a significant presence in Mexico, but in terms of what we can do with our money, it's not necessarily our best move in terms of return. The math does not work at this stage for Mexico, but we'll always think about them and other markets. There are lots of possibilities for moving more freight via BNSF. We won't forget about Mexico, but we won't do anything silly there, either.
Charlie Munger: It's awfully easy to think about moves you can make that would make you look richer via sleight of hand, and the usual default is to buy a competitor. That doesn't mean it's the smart thing to do.
Audience station 4: What differences do you have with the valuation methods in Security Analysis? Which company do you fear the most?
Warren Buffett: Graham didn't get too precise about calculating intrinsic value. I think it's generally become equated with what you'd call private business value. The intrinsic value of any business is the present value of all cash that will be distributed by that business from now until Judgment Day. Aesop said that a bird in the hand is worth two in the bush. Oddly, business professors haven't really improved on that. The question is how sure you are that there are two birds in the bush, and how far away it is. Phil Fisher would say he would look much more closely at the qualitative factors telling him whether there are birds in the bush; Graham would just want to see $2 cash in the bush. I started out very much influenced by Graham and qualitative factors; Charlie was deeply influenced by law and qualitative factors, and he's been right. Whatever you buy, you have to know how much cash goes in, how much will come out, and what's the discount rate? If I had a silver bullet that I could use to shoot a competitor, I don't know who it would be. Private equity can do things to borrow money and bid against us, but I don't see anyone with a model -- or even trying to build a model -- which goes up against us in where we want to be, and that's buying good businesses at fair prices from people who care about where their companies will be.
Charlie Munger: I think Berkshire has "legs" -- enough advantage that it'll keep going for a long time. Few of the great big businesses of yesteryear are still big today. Only Rockefeller's creation (Standard Oil) has really kept going, and I think Berkshire will do that. We'll keep learning from our mistakes. The momentum is in place, and it's going to keep on going. If you're young, don't be too quick to sell the stock.
Warren Buffett: Why don't we get more competitors?
Charlie Munger: I think it just looks too hard to do. Eddie Davis conducted surgeries that were very complicated, and when other surgeons would look at it, they decided it looked too difficult to copy.
Warren Buffett: Eddie Davis is the person who introduced us.
Charlie Munger: And it's very slow. The problem with doing something slow is that you're dead before the work is finished.
Carol Loomis: Should investors and business owners be worried about inflation? How would Berkshire change behavior if inflation rose?
Warren Buffett: It would hurt us, but it would hurt everybody. Suppose drones dropped $1 million on every household tonight. Would we be better off? No. The trick is to find out you have $1 million before anyone else does. You can't create wealth via inflation, you can only move it around. Earnings per share would rise and so would intrinsic value, but unless we leveraged those businesses, the value in real terms would not improve.
Charlie Munger: We had an experience with extremely high inflation, and that was Weimar Germany. People with big bank accounts and life insurance policies were hurt. People with good businesses managed to muddle through. Anything that leads to the rise of a Hitler is terrible and has to be avoided. We should never forget the lessons of Weimar Germany. I don't trust idiot politicians at the printing press.
Jonathan Brandt: What kind of earnings would you assume from the total acquisitions done by American businesses
Charlie Munger: I think the sum would be lousy. Bureaucracy tends to feed on itself. The history of acquisitions isn't a way to wealth, but we're peculiar and it has worked for us. A lot of people don't want to be peculiar in our way.
Warren Buffett: When we read that a company we don't control is making an acquisition, I'm usually more inclined to cry than to laugh. I've sat in on hundreds of acquisition discussions for companies we don't control; most of them have not been great ideas.
Charlie Munger: Some have been mediocre.
Warren Buffett: GEICO had been an incredible business until going off the tracks in the 1970s. After it got back on track, it made acquisitions that weren't disasters, but they weren't successes either and they took people's eyes off the ball in terms of GEICO's core business. The accounting cost of their two acquisitions was poor but not disastrous, but if you look at the secondary effects, those were huge. Gains that could have been made were not. That was probably a net plus for Berkshire, since it allowed us to buy the other half of the company. It's human nature that CEOs tend not to be shrinking violets. They tend to have animal spirits, and the people around them can sense that. All of these forces push toward deals, and if yuo have a lot of deals, you'll have a lot of dumb deals. We try hard only to do deals that make sense. The setting in which you operate can be really important. If we had a board pushing us to make deals all the time, we might make dumb decisions.
Audience station 5: Is criminal activity being institutionalized by policy like "too big to fail"?
Charlie Munger: I think behavior on Wall Street is tremendously improved thanks to the response to the panic. You'll never have perfect behavior when there's easy money to be made. There's nothing more likely to change personal behavior than personal accountability through individual criminal prosecutions.
Warren Buffett: Thanks to my experience at Salomon, I'm far more in favor of criminal prosecution for individuals than for corporations. The crimes of a few can imperil the jobs and livelihoods of thousands of people. It's much easier to prosecute a corporation, because the company will usually just cave and write a check. It's much harder to get a prosecution against an individual who's trying to stay out of prison. And it's a lot more headline-grabbing to go after a corporation. But I believe much more in going after individuals.
Charlie Munger: We haven't had enough prosecutions of individuals, and there should be many more.
Warren Buffett: Berkshire is large enough that I don't worry about economic disaster befalling us. I worry about individuals behaving badly and imperiling us. To a degree that's out of our hands. I can communicate policy on maintaining our reputation and push that throughout the culture, and that can do a lot more good than a 200-page manual, but you can't make 300,000 people act perfectly every day. The way to change behavior is to have the fear (at least among potential wrongdoers) that if people do something wrong, it'll come back to them. It's much less effective if it's just the company writing a check.
Becky Quick: How would a worst-case rail disaster affect BNSF and Berkshire?
Warren Buffett: Ajit Jain has offered the railroad industry some very high limits, but they don't seem to like his price. The four major railroads have the financial capacity to pay a huge award if something really terrible happened. As a common carrier, you're forced to carry hazmat even if you don't want to. And you really can't get enough payments per carload to make up for that risk. The four main railroads have the capability to handle something really drastic if it happened. If they feel like they don't have the wherewithal, they can call Ajit. The risks inside the nuclear power industry as well as for terrorism appear to be too large for any individual firm to pay. Rail appears to have a better handle on that.
Charlie Munger: The scale of the BP oil spill was incredible, but I think the worst judgment against a rail carrier was vastly smaller -- maybe $200 million.
Warren Buffett: We are not paid enough to carry ammonia or chlorine. But it doesn't keep me awake nights. You could have terrorist attacks with enormous costs, but we don't know when or how much.
Charlie Munger: The Malaysian airliner reminds us that we can have elaborate safety programs and still have occasional bad events.
Jay Gelb: Why is Berkshire expanding its presence in commercial property/casualty insurance when the market is weak?
Warren Buffett: We found some wonderful talent that wanted to join us, and we have both capital and a great reputation. We think we can underwrite wisely and keep our costs well below average. Put those things together, plus have Ajit Jain overseeing the operation, and it's hard not to do it.
Charlie Munger: It's a very logical thing for us to do, and when we think something is logical, we aren't going to be deterred by temporary conditions in the market. It's a forever business.
Audience station 6: Would you ever invest in sports?
Charlie Munger: Warren's already done it.
Warren Buffett: I invested in a minor-league team, but it's not responsible for my position on the Forbes 400. If you read about either Charlie or me buying a sports team, it's time to talk about successors. We own Spalding and Russell, but if you look at sporting-goods equipment manufacturers, it's not a particularly profitable business. The last thing Berkshire should do is own a helmet company. The ideal owner for a helmet company is a guy without a penny to his name. We once owned part of Pinkerton, and when given the opportunity to buy it all, we realized that we were the perfect target for legal action in case anything went wrong. The right owner for a security company is a guy with a net worth in the two figures.
Charlie Munger: The more Warren says about sports ownership, the less I like it.
Andrew Ross Sorkin: Is Bill Ackman a greenmailer? What do you think of shareholder activism?
Warren Buffett: It isn't going away, and it scares the hell out of a lot of managers. There are certain companies that need to be reformed. There are some activists who are certainly trying to push prices in certain directions, and anything that looks like it's being successful is going to attract new money.
Charlie Munger: Activism certainly scares a lot of companies. If 20% or 30% of a company changes hands, that can put a lot of anguish on the managers. Some of it reminds me of fox hunting: The pursuit of the un-eatable by the unspeakable. I think it'll be bigger in the future, and I don't think it's good for America. It's really serious.
Greggory Warren: Should Berkshire target a larger collection of smaller companies, rather than an elephant? What is the opportunity cost of cash sitting around without getting deployed?
Warren Buffett: One doesn't preclude the other. We're not passing up anything of any size that could have a real impact on Berkshire or its subsidiaries. Subsidiaries made about 25 tuck-in acquisitions last year. If we're really trying to build a lot of earnings power, our main emphasis has to be on bigger deals. There's lots of competition for the smaller deals, especially with private equity being involved.
Audience station 7: What is the most intelligent question you've been asked recently about investing?
Charlie Munger: I thought it was the question about why we continue comparing our book value growth to the S&P 500.
Warren Buffett: I can't come up with a question.
Audience station 8: Why does MidAmerican appear to have negative operating cash flow and a poor return on assets?
Warren Buffett: We are in businesses where we can be treated fairly by regulators and be assured of reasonable returns on investment. There will be times in our businesses when no net investment is required, but we prefer the ones in utilities where more investment is required -- if that means we can reinvest for a reasonable return, under the supervision of regulators who will treat us fairly. In Iowa, our rates are considerably lower than our largest competitor. We have a deserved good reputation with the regulators and we've improved the operations (including safety) dramatically from conditions prior to our ownership, and that means we're going to be welcomed to do new projects. We have every reason to expect a reasonable rate of return. If you compute net cash returns, you will see low or even negative returns for a while, but we are acting for the long term.
Charlie Munger: If the numbers you cited came from a declining department store, we'd hate it. But when they come from a growing utility, we love it.
Greg Abel: We're generally the low-cost provider in every market, or at least in the low quartile. We just had our first rate increase in 16 years in Iowa and don't anticipate doing it again anytime soon. Regulators are supportive of our projects like the new $1.9 billion wind projects. The return on that investment will be 11.5% or 11.6%. The lion's share of our capital is in growth.
Warren Buffett: Can you speak to the growth of tech companies in Iowa thanks to our business?
Greg Abel: Google has a data center in Council Bluffs that they're ultimately growing to 100 MW consumption, which is very large. A significant portion of our energy comes from renewables, and tech companies want our low rates and to be associated with the green energy.
Audience station 8: What do you think about the educational market between the United States and China in the future?
Charlie Munger: I think America made a huge mistake when it let public school systems in many places just go to hell. I think Asian cultures are less likely to do that. To the extent that they're avoiding some of our mistakes, I wish we were more like them.
Audience station 9: What do you think about acquiring Fannie or Freddie?
Warren Buffett: The 30-year fixed-rate mortgage may be a bad deal for investors, but it's been very good for homeowners. It lets people get into homes sooner than they would otherwise and keeps prices down to a degree. The government guarantee does keep the cost down. They're an $11 trillion market. There isn't anywhere close to enough insurance capacity to handle that. The government has to be in the picture, but how do we keep politics out of it? Hard to do, when you see how Fannie and Freddie didn't just make bad decisions on their own, but were also prodded into bad decisions by politicians.
Charlie Munger: When private industry ran the whole thing, we got a huge band of idiots and thieves. So as much as I hate what politicians do, I think the existing system is pretty sound. Right now, Fannie and Freddie are being conservative and making lots of loans. I don't see a reason to go back.
Warren Buffett: One question is whether to let them run off as-is, but one of the things that led them astray was the desire to serve two masters -- increasing earnings by double digits.
Charlie Munger: When they really got lousy was when private companies took a lot of the market, and they joined in the rush to folly.
Warren Buffett: Would you let them have portfolio activities?
Charlie Munger: No.
Warren Buffett: I wouldn't either.
Charlie Munger: That experiment in privatization was a total failure. Remember, too, that we made a billion dollars from it.
Audience station 10: What does 3G do well? And will the Buffett brand carry over to your successor?
Warren Buffett: The Berkshire brand may have started with me, but it will continue after me. The Brazilians at 3G are focused, smart, hard-working, and never satisfied. They don't over-promise and they don't over-reach. We're fortunate to be working with them, and we're fortunate to have a lot of people working with them (and us) whom we trust.
Charlie Munger: The way to get a good spouse is to deserve one. The same thing goes with a partnership in business. If you behave yourself correctly, it's amazing how well it works. 3G is very good at removing unnecessary costs, and that's not in any way immoral or wrong; it's a service to civilization. It should be done with some sensitivity, but it's not good for our system to have a lot of make-work. I think they set a good example for the rest of us.
Audience station 1: What will Berkshire look like in 20 years?
Warren Buffett: At some point, we'll have more cash than we can intelligently deploy in the business, and that will depend upon the circumstances at the time. If the stock can be bought back at a price that would make sense for existing shareholders, I would be very much in favor of that. The tax laws of the future can't be foreseen. But we'll continue to have a lot more cash rolling in all the time, and the numbers are getting up to where we will just not be able to deploy intelligently. Whatever is done will be done in the interest of the shareholders.
Charlie Munger: It's not a tragedy to succeed so much that future returns go down.
Audience station 2: Do you think shared-service models like Uber have a future?
Warren Buffett: They have competitors, and the competitors will fight back in their own ways. When State Farm came on the scene in 1920 or 1921, the agency system was sacrosanct. State Farm had a better mousetrap. The industry originally fought back, but one method of fighting back was to try to manipulate state laws to try to entrench the role of agents. In the end, the better mousetrap usually wins. The people with the 2nd- or 3rd-best model will try to preserve what they have. We try to stick with businesses where we know what the future looks like and that we can pick the winners for the long term. If we can't figure out the winners, we like to sit and watch.
Charlie Munger: Retailing in particular faces very serious challenges. When you get computing capacity on the scale we're seeing, it's going to hurt a lot of people just like past technology developments have hurt a lot of people.
Audience station 3: What can we do to make students more financially literate? Should it be a standard part of the curriculum in schools?
Warren Buffett: The earlier the better. Habits are a hugely powerful force. I see everyday the holes that people dig for themselves. You want to reach them at a very young age; Charlie and I were fortunate to learn at the dinner table long before we knew we were learning. The problem carries over into creating huge adult financial illiteracy. It's hard to be smarter than your parents unless schools intercede. Anything you can do very early through the school systems is something I'd vote for.
Charlie Munger: I generally blame the parents.
Warren Buffett: It's hard to get the right parents.
Charlie Munger: It's hard to fix the people who got the wrong parents. The main trouble with schools are probably not so much in the lower grades, it's in the colleges. Even in the economics departments. You shouldn't assume that just because the language is highfalutin, it's better.
Warren Buffett: For a long time, the net utility of a lot of college programs was negative. I watched extraordinary universities teaching people extraordinarily dumb things. To maintain the departments in some of those schools, you had to maintain an orthodoxy that was just insane. It might have soured my opinion needlessly.
Charlie Munger: You might have liked education better if you'd taken physics instead of finance.
Audience station 4: Is it too hard for people to value Berkshire because it's so big? Is your yardstick for success unfair?
Warren Buffett: We would lose significant value if we broke up Berkshire. There are large advantages in taxes and capital allocation in its present form that would not exist if we broke it up.
Another running log of the event was kept by the Wall Street Journal.