Buffett Questions for 2013 Annual Meeting

[Mephistopheles]

Question:  Do you impose the same investment limitations on Tedd and Todd as yourself?  E.g. can one of them invest in MSFT?

 

Didn't Buffet also mention he won't invest in vice stocks like tobacco and alcohol?  Curios to see if he imposes that on them as well.

I'm curious, when did Buffett mention vice stocks? Past AGMs? Don't recall this, though have heard him talk about how many letters from gamblers he gets (when talking about state lotteries).

 

I think it's mainly Charlie, who has mentioned in several interviews that Berkshire would never invest in a casino because it's a dirty business. Buffett I think once said that he would never be in the tobacco business, but he doesn't mind owning a retailer (referencing Costco) that sells tobacco. I think they were once offered to buy a tobacco company, and even though they liked the economics, they chose against it for moral reasons.

 

EDIT: As far as when they've said it, I'm not sure, but I'm trying to do a google search.

[cubsfan]

Question:  Do you impose the same investment limitations on Tedd and Todd as yourself?  E.g. can one of them invest in MSFT?

 

Didn't Buffet also mention he won't invest in vice stocks like tobacco and alcohol?  Curios to see if he imposes that on them as well.

I'm curious, when did Buffett mention vice stocks? Past AGMs? Don't recall this, though have heard him talk about how many letters from gamblers he gets (when talking about state lotteries).

 

I think it's mainly Charlie, who has mentioned in several interviews that Berkshire would never invest in a casino because it's a dirty business. Buffett I think once said that he would never be in the tobacco business, but he doesn't mind owning a retailer (referencing Costco) that sells tobacco. I think they were once offered to buy a tobacco company, and even though they liked the economics, they chose against it for moral reasons.

 

EDIT: As far as when they've said it, I'm not sure, but I'm trying to do a google search.

 

Yes, that is correct - I think the company was called Conwood Holdings or something like that. Charlie talked about it.

Said it was one of the best economic deals they ever saw, and the people were great - but they took a pass because of the business it was in.

[rogermunibond]

http://www.prnewswire.com/news-releases/reynolds-american-completes-acquisition-of-conwood-56588657.html

 

Smokeless tobacco, Kodiak and Grizzly brands. American Spirit cigarettes.

[UK]

Question:  Do you impose the same investment limitations on Tedd and Todd as yourself?  E.g. can one of them invest in MSFT?

 

Didn't Buffet also mention he won't invest in vice stocks like tobacco and alcohol?  Curios to see if he imposes that on them as well.

I'm curious, when did Buffett mention vice stocks? Past AGMs? Don't recall this, though have heard him talk about how many letters from gamblers he gets (when talking about state lotteries).

 

I think it's mainly Charlie, who has mentioned in several interviews that Berkshire would never invest in a casino because it's a dirty business. Buffett I think once said that he would never be in the tobacco business, but he doesn't mind owning a retailer (referencing Costco) that sells tobacco. I think they were once offered to buy a tobacco company, and even though they liked the economics, they chose against it for moral reasons.

 

EDIT: As far as when they've said it, I'm not sure, but I'm trying to do a google search.

 

http://legacy.library.ucsf.edu/tid/whg85e00

http://www.thefreelibrary.com/Warren+Buffett+calls+the+U.S.+beer+business+%22fascinating%22.-a0133566651

 

 

[craigatk]

Question:  Do you impose the same investment limitations on Tedd and Todd as yourself?  E.g. can one of them invest in MSFT?

 

Didn't Buffet also mention he won't invest in vice stocks like tobacco and alcohol?  Curios to see if he imposes that on them as well.

I'm curious, when did Buffett mention vice stocks? Past AGMs? Don't recall this, though have heard him talk about how many letters from gamblers he gets (when talking about state lotteries).

 

I think it's mainly Charlie, who has mentioned in several interviews that Berkshire would never invest in a casino because it's a dirty business. Buffett I think once said that he would never be in the tobacco business, but he doesn't mind owning a retailer (referencing Costco) that sells tobacco. I think they were once offered to buy a tobacco company, and even though they liked the economics, they chose against it for moral reasons.

 

EDIT: As far as when they've said it, I'm not sure, but I'm trying to do a google search.

 

Well Berkshire does own McLane Company which is probably the largest wholesale distribution company in groceries and that includes a massive business in tobacco. See some details: http://www.forbes.com/forbes/2000/0821/6605054a.html. Walmart sold McLane to Berkshire in 2003 for $1.45B. Seems a little counter-intuitive that distributing tobacco would be okay but not manufacturing it?

[jay21]

Some questions:

 

Who manages the bond portfolio for BRK?  Will BRK hire an investor specializing in distressed debt as this appears to be a very large market that could help BRK compound at a hire rate despite its size?

 

Can you give a summary of the Rescap situation?  I understand Tedd was involved in that deal.  Do those kinds of deals count towards his capital that you have given?  What type of authority do Tedd and Todd have in making deals?

 

Can other managers write annual letters?  It would be nice to hear the thoughts of some of the many outstanding managers at BRK.  This will also help the succession at BRK as we may learn more about the new CEO before he/she takes over.

[Mephistopheles]

Question:  Do you impose the same investment limitations on Tedd and Todd as yourself?  E.g. can one of them invest in MSFT?

 

Didn't Buffet also mention he won't invest in vice stocks like tobacco and alcohol?  Curios to see if he imposes that on them as well.

I'm curious, when did Buffett mention vice stocks? Past AGMs? Don't recall this, though have heard him talk about how many letters from gamblers he gets (when talking about state lotteries).

 

I think it's mainly Charlie, who has mentioned in several interviews that Berkshire would never invest in a casino because it's a dirty business. Buffett I think once said that he would never be in the tobacco business, but he doesn't mind owning a retailer (referencing Costco) that sells tobacco. I think they were once offered to buy a tobacco company, and even though they liked the economics, they chose against it for moral reasons.

 

EDIT: As far as when they've said it, I'm not sure, but I'm trying to do a google search.

 

Well Berkshire does own McLane Company which is probably the largest wholesale distribution company in groceries and that includes a massive business in tobacco. See some details: http://www.forbes.com/forbes/2000/0821/6605054a.html. Walmart sold McLane to Berkshire in 2003 for $1.45B. Seems a little counter-intuitive that distributing tobacco would be okay but not manufacturing it?

 

I don't disagree. Maybe it's more of an image/reputation thing more than a ethical decision. Manufacturers, not distributors, are the ones who look evil in the face of the public, and maybe that's why Buffett doesn't want to get involved.

[Buffett_Groupie]

I'll have a chance to help interview Buffett at his office again on Sunday, 05/05.  Therefore, please vote on ONE (1) question you'd like to ask the most and I'll try to sneak it to the interviewer.

 

This is from last year: http://jingji.cntv.cn/2012/05/15/VIDE1337091481780125.shtml

 

The entire interview's in English (I was at 01:38) and both photos are Photoshop pics! LOL :-)

[JBird]

I would ask: In your annual letter you expressed confidence in Berkshire increasing intrinsic value faster than the general market. At what rate, roughly, do you believe the S&P will compound at over the next 10 years? And why?

[racemize]

I like the margin question the most at this point (and it didn't really come from me, I just posted it).

[JBird]

"Mr. Buffett, you have said in the past, in your letter regarding the stock market in 1999, "you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%". 

Corporate Profits are now greater than 10% of GDP--how should we think about this?

 

My vote as well.

[Palantir]

"Are you hiring?"

 

"Internship?"

 

"Unpaid internship?"

 

"I'll pay you?"

[jay21]

"Mr. Buffett, you have said in the past, in your letter regarding the stock market in 1999, "you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%". 

Corporate Profits are now greater than 10% of GDP--how should we think about this?

 

My vote as well.

 

What is the source of this?  Are you talking about this from the 99 letter:

 

 

We see the growth in corporate profits as being largely tied to the business done in the country (GDP), and we see

GDP growing at a real rate of about 3%. In addition, we have hypothesized 2% inflation. Charlie and I have no

particular conviction about the accuracy of 2%. However, it’s the market’s view: Treasury Inflation-Protected Securities

(TIPS) yield about two percentage points less than the standard treasury bond, and if you believe inflation rates are going

to be higher than that, you can profit by simply buying TIPS and shorting Governments.

 

If profits do indeed grow along with GDP, at about a 5% rate, the valuation placed on American business is

unlikely to climb by much more than that. Add in something for dividends, and you emerge with returns from equities

that are dramatically less than most investors have either experienced in the past or expect in the future. If investor

expectations become more realistic — and they almost certainly will — the market adjustment is apt to be severe,

particularly in sectors in which speculation has been concentrated.

[racemize]

"Mr. Buffett, you have said in the past, in your letter regarding the stock market in 1999, "you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%". 

Corporate Profits are now greater than 10% of GDP--how should we think about this?

 

My vote as well.

 

What is the source of this?  Are you talking about this from the 99 letter:

 

 

We see the growth in corporate profits as being largely tied to the business done in the country (GDP), and we see

GDP growing at a real rate of about 3%. In addition, we have hypothesized 2% inflation. Charlie and I have no

particular conviction about the accuracy of 2%. However, it’s the market’s view: Treasury Inflation-Protected Securities

(TIPS) yield about two percentage points less than the standard treasury bond, and if you believe inflation rates are going

to be higher than that, you can profit by simply buying TIPS and shorting Governments.

 

If profits do indeed grow along with GDP, at about a 5% rate, the valuation placed on American business is

unlikely to climb by much more than that. Add in something for dividends, and you emerge with returns from equities

that are dramatically less than most investors have either experienced in the past or expect in the future. If investor

expectations become more realistic — and they almost certainly will — the market adjustment is apt to be severe,

particularly in sectors in which speculation has been concentrated.

 

from this:

http://rlaexp.com/studio/biz/conceptual_resources/authors/warren_buffett/warrenbuffett.pdf

[warrior]

Buffet _Groupe thank you !

I would support the question about Microsoft.

” If you weren't good friends with Bill Gates, would you invest in MSFT at these prices?”

Or if he could buy Microsoft would he buy instead of buying IBM?

 

regards!

[jay21]

Buffet _Groupe thank you !

I would support the question about Microsoft.

” If you weren't good friends with Bill Gates, would you invest in MSFT at these prices?”

Or if he could buy Microsoft would he buy instead of buying IBM?

 

regards!

 

I know Buffet wouldn't answer those questions.  It would probably be a bigger issue if he said he would buy it than if he actually bought it.

[Rabbitisrich]

If anyone gets to ask a question, it would be interesting to hear how Buffett would incorporate Brown-Vitter into his banking valuations. Even though the market doesn't seem to be pricing Brown-Vitter's passage, it could reveal a lot about how Buffett looks at banks.

[Mephistopheles]

How about asking him the metrics he uses to decide on pay for some of the big executives. I'm interested in knowing what metrics decide Ajit Jain or Matt Rose's pay. He went into detail last year of Ted and Todd's compensation structure.

[arbcon]

Racemize. I teach a value investing class at Villanova. We used Carol's 1999 and 2001 articles 2 months ago to ask the very question on margins posted in this thread by you, and were amazed and impressed that someone else was asking it. I can't say how, but this question is going to come up at the meeting.

Our question in class reflected Jame's Montier's work at GMO. However our class liked your phrasing because it states the matter quite succinctly, in our view, and so we sent your phrasing to someone we know with attribution to this forum. I will not know until the meeting which phrasing is used(the class or yours) and how the question will come up, but I hope the answer will be as thoughtful as the original articles were. It is the single most important question out there in our view. Hopefully we will get an answer.

[racemize]

Racemize. I teach a value investing class at Villanova. We used Carol's 1999 and 2001 articles 2 months ago to ask the very question on margins posted in this thread by you, and were amazed and impressed that someone else was asking it. I can't say how, but this question is going to come up at the meeting.

Our question in class reflected Jame's Montier's work at GMO. However our class liked your phrasing because it states the matter quite succinctly, in our view, and so we sent your phrasing to someone we know with attribution to this forum. I will not know until the meeting which phrasing is used(the class or yours) and how the question will come up, but I hope the answer will be as thoughtful as the original articles were. It is the single most important question out there in our view. Hopefully we will get an answer.

 

I actually stole the question from another user from another thread (can't remember which), so I can't take much credit.  Regardless, thank you very much for getting the question through, and I'm very excited that I'm actually going to be there this year, and hopefully will get to hear the question answered in person. 

[arbcon]

R..my understanding(not a guarantee) is that it will be the first question asked so be there early.

[racemize]

Racemize. I teach a value investing class at Villanova. We used Carol's 1999 and 2001 articles 2 months ago to ask the very question on margins posted in this thread by you, and were amazed and impressed that someone else was asking it. I can't say how, but this question is going to come up at the meeting.

Our question in class reflected Jame's Montier's work at GMO. However our class liked your phrasing because it states the matter quite succinctly, in our view, and so we sent your phrasing to someone we know with attribution to this forum. I will not know until the meeting which phrasing is used(the class or yours) and how the question will come up, but I hope the answer will be as thoughtful as the original articles were. It is the single most important question out there in our view. Hopefully we will get an answer.

 

 

I actually stole the question from another user from another thread (can't remember which), so I can't take much credit.  Regardless, thank you very much for getting the question through, and I'm very excited that I'm actually going to be there this year, and hopefully will get to hear the question answered in person.

 

I've been trying to figure out where I got this question from--I think someone posted the Hussman article quoting Buffett, and I generated it from there, so perhaps it wasn't as much of a stolen question as I was thinking (other than from Hussman). 

[arbcon]

R...this has been a hot topic for the past six months so no worries. i hope we get a good answer. keep digging-always.

[JBird]

Here is another question,

 

A $1,000,000 stock price for one A share is a real possibility over the next decade or so. Given your thoughts of being inclusive of the small shareholders (like you shared during the BNI purchase) which created the <$100 B share, what are your thoughts around the BRK shareholder base when the Million dollar A share becomes a reality? Even today there are people who cannot mentally deal with a $100,000 dollar stock price. Will the Berkshire of tomorrow deal with this issue the same way you have?

 

For people that didn't attend, this was the last question asked at the meeting. The answer was, we're not going to change.

 

Longinvestor, was that you asking it?

 

[Guest longinvestor]

Dd

Here is another question,

 

A $1,000,000 stock price for one A share is a real possibility over the next decade or so. Given your thoughts of being inclusive of the small shareholders (like you shared during the BNI purchase) which created the <$100 B share, what are your thoughts around the BRK shareholder base when the Million dollar A share becomes a reality? Even today there are people who cannot mentally deal with a $100,000 dollar stock price. Will the Berkshire of tomorrow deal with this issue the same way you have?

For people that didn't attend, this was the last question asked at the meeting. The answer was, we're not going to change.

 

Longinvestor, was

that you asking it?

 

Yes. Won the lottery. At #3 position at my microphone.  It was a bonus since there was no one at the previous mic position.  I muddled my way thru the question. Charlie ruled it out, Warren left it open to potential. Future deals such as BNSF.