Berkshire Hathaway chairman and CEO Warren Buffett and vice chairman Charlie Munger spent more than five hours Saturday answering questions from shareholders, reporters and stock analysts.
Here’s some of what they said:
Breaking Up Berkshire Hathaway:
Buffett said he thinks it would be a horrible idea to break Berkshire’s collection of 80-odd companies into separate entities.
“We would not unlock value. We would lose significant value,” Buffett said after a shareholder asked about the possibility of splitting Berkshire into four companies.
Buffett said Berkshire is worth significantly more as it stands today because cash can move between different subsidiaries and there are tax benefits.
Bank Of America:
An error revealed recently by Bank of America in its reports to the Federal Reserve hasn’t diminished Warren Buffett’s appreciation of the bank. Buffett said he’s not bothered that the bank had to suspend a long-awaited dividend increase and stock buyback due to the error.
Back in 2011, Buffett invested $5 billion in Bank of America in exchange for 6 percent interest and warrants to buy 700 million shares of stock at $7.14 apiece.
“It doesn’t change my feeling about the Bank of America in any way,” Buffett said.
The bank’s mistake was tied to an incorrect adjustment of how it valued securities it obtained through its acquisition of Merrill Lynch in 2009. The bank must now resubmit a new capital plan to Fed.
Berkshire Hathaway also has large investments in Wells Fargo & Co., U.S. Bancorp and Goldman Sachs.
Dealing With Mistakes:
Over an entire career of making investment decisions, Buffett and Munger have made their share of mistakes.
Munger said the key to Berkshire’s success over time has been “ignorance removal” and “scrambling out of mistakes.”
When Buffett and Munger took control of Berkshire, it was a struggling New England textile mill, and a couple of their first acquisitions of a department store and a trading stamp company floundered.
“Think of what we might have done if we had a better start,” Munger said.
Buffett poked fun at himself while singing a duet with songwriter Paul Anka to start the Berkshire meeting. One of the videotaped skits at the start of the meeting featured Buffett and Anka singing a Berkshire-themed parody of “My Way.”
Buffett referenced in the song a past investing mistake—buying Dexter shoes. He also paid tribute to one of his assistants, Debbie Bosanek, as the brains of Berkshire.
Anka attended Saturday’s meeting. The 83-year-old Buffett joked that his pairing with Anka was part of his succession planning, so he and Anka will be available to sing at weddings.
Buffett said someone offered him $1,000 if they both sing or $10,000 if Anka sang alone.