Highlights From Liz Claman’s Interview With Buffett, Munger, Gates [2012]

On Monday, May 7 2012, FOX Business Network’s (FBN) Liz Claman spoke with Berkshire Hathway’s CEO & chairman, Warren Buffett, vice-chairman, Charles Munger, and Microsoft chairman & Berkshire director, Bill Gates.  For those of you who don’t know, Bill Gates is a long time friend of Buffett, and also a long time investor in Berkshire Hathaway.  During the interview Buffett answered questions regarding his cancer diagnosis, Berkshire’ succession, Buffett rule/tax, dividend, and even Facebook’s IPO.

 

Excerpts from the FOX Business Network interview:

CREDIT: FOX Business Network

On his statement that he will not miss a day of work as a result of his cancer diagnosis:
“Maybe 15 minutes a day.”

On whether he has begun to apprentice his successor:
“My successor doesn’t need apprenticing. If they needed apprenticing, they wouldn’t be the successor. None of the three candidates would need apprenticing.”

On his successor:
“It is a male. All three of the candidates understand the culture very well.”

Charlie Munger on whether this was his last year at the annual shareholder conference:
“No. I hope not. I serve a very important function because people look at me and think they we will get another seven years out of Warren. It makes him look very good. I am not going to sit up there drooling. Ahead of the drooling stage, I plan to be there.”

On why Berkshire isn’t paying dividend:
“Our shareholders five years from now will be wealthier if we hold on to the money. We may be wrong in that, but historically we have been right, and if we paid the dividend over the years, our shareholders would be considerably poorer. As long as we think we have the opportunity to invest dollars to create more than a dollar of present value, we will retain the money. When we don’t think we can do that, we will either repurchase the stock or pay dividends. Someday Berkshire will pay a dividend because it will get so large that we can’t use all the money we earn effectively, although we don’t think we are at that point.”

On why he takes his salary in stock and in turn does not pay 30% income tax rate:
“The company would get a 35% deduction if they paid, so the government would be worse off revenue wise and it wouldn’t just take money from shareholders.”

On the government’s execution of the Buffett rule:
“It’s not different from what I intended. I might have tweaked it in one direction or another. Senator Whitehouse put the bill in and I wrote him immediately and said I basically approve of his bill. I would write it slightly differently, but it gets at the point. It doesn’t solve the revenue problem. If you want to pay less tax you should give away more money.”

On whether regulations inhibit his desire to invest in America:
“No. There are regulations that don’t make any sense and there always will be. It is a very big, complicated economy. We are dying to make investments and we invested more money last year than we have in the history of Berkshire and we will break that record again this year.”

On how he chooses his investments:
“We don’t really look by country. We look for businesses we understand with a competitive advantage, good management, and a price that makes sense. If we find it, we found the most wonderful of all in Israel six or seven years ago, but we find them here in the United States usually.”

On Facebook:
“It’s an enormously impressive accomplishment and my guess is it has a big future of some sort but I have no idea. I didn’t even know what it was six or seven years ago and I am still not on it.”

On whether he would advise Mark Zuckerberg to attend the road show for the Facebook IPO:
“I wouldn’t worry about it too much. That offering is going to be big. It’s going to get all the attention in the world. People know what Facebook is. It is not a mystery that needs to be explained. Except to me.”

On investing in technology stocks and why he has not purchased Microsoft:
“I can’t buy Microsoft. If something happened that was favorable, people would say I had insider information.”

On whether he would invest in Apple:
“I wouldn’t know enough to buy Apple. I am not going to buy anything I don’t feel I can have a reasonable fix on what they are going to look like in five or ten years. I certainly didn’t have a reasonable fix ten years ago on Apple and I wish I had. It’s an amazing company but there are lots of businesses I don’t understand.”

On whether he would like to buy The New York Times:
“If I could buy the New York Times I might buy it personally, I don’t want to buy it for Berkshire, but it’s not for sale. That is a very special place.”

On his intention to buy more newspapers:
“The newspapers that exist in a community where there is a strong sense of community and where the newspapers respond to that strong sense of community by telling people they want to know about their community they can’t find somewhere else, those newspapers will do ok. They will still be in decline over time. The earnings are goings to shrink as are the revenues, but I don’t think they will shrink at a dramatic rate. Earnings are not going to go up, they will probably go down, so you have to buy at a valuation that takes that into account.”

On his decision to step down from the board of the Washington Post and whether he still owns shares:
“We own every share we have ever owned. They have problems in two of their businesses; one in the education business, and one in the newspaper. That has been reflected in the price but the newspaper is far tougher than it was five or ten years ago, and the education business is tougher than it was two years ago. “

On the insurance business:
“It’s been enormously important to getting us to where we are now. It’s actually not as important relative to the entirety of Berkshire as it was 10 years ago. Insurance has driven us to where we are.”

On the economic problems in Europe and whether moving to the Euro was a mistake:
“The problems facing Europe transcend those in any specific country. They have to work out the rules under which 17 countries can work together. I think maybe it was a mistake; it was a mistake as it was done. Now the question is whether you can modify the original concept in some way to make this more workable than it is proving to be. Getting out of it would be an enormous problem.”

On the failing European banks and whether he would look to buy one:
“It would have some effect but I don’t think our fate is in the hands of the European banks and I would worry very much if it were. There is not a European bank I am looking at.”

On the recent corporate scandals at Foxconn and Walmart:
“If you have a very large company, something is going to go wrong, and right now I can tell you with 270,000 employees at Berkshire, somebody is doing something they shouldn’t. I just hope its small and I hope we find out about it and then I hope whoever is in charge of that will do something about it. I know something is being done that is wrong at Berkshire, I just don’t know what it is.”

On why he is bearish on business school:
“In the investment field I thought over the last 40 years a great many business schools were teaching nonsense, but that doesn’t mean they were in other majors.”

 

Video Of The Interview:

In case you missed the interview, you can watch clips on FOX Business Network’s website.

http://video.foxbusiness.com/v/1625297950001
http://video.foxbusiness.com/v/1625282679001
http://video.foxbusiness.com/v/1625297948001
http://video.foxbusiness.com/v/1625629203001
http://video.foxbusiness.com/v/1625629189001
http://video.foxbusiness.com/v/1625629190001
http://video.foxbusiness.com/v/1626191610001
http://video.foxbusiness.com/v/1626194240001
http://video.foxbusiness.com/v/1626191609001

 

Thank you to FOX Business Network for sharing this info with The Investment Blog!
Thanks & Happy Investing!

Author: The Investment Blogger

I’m a private investor, who developed the “function-centric investing” paradigm. I am an investor who blogs a little here and there, rather than a blogger who invests a little here and there. I'm passionate about investing and sharing investment knowledge!

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