"The original purchase of Berkshire was a terrible mistake" · Transcript

WarrenThe original purchase of Berkshire was a terrible mistake, and my mistake. No one pushed me into it. I bought it because it was what we used to call, or the cigar, it was a cigar but approach to investing where we would look around for something with a free puff left in it. You know, it was soggy and kind of disgusting and everything, but it was free. And Berkshire was selling below working capital, had a history of repurchasing shares periodically on tender offers, and it was selling at – the first purchase was, I think, at 7 and a half dollars a share and like I've got the I've got the broker's ticket up in the office two thousand shares and they it looked to me like they were going to have a tender offer periodically and there would probably be at some figure closer to working networking capital which might have been eleven or twelve dollars share some some such number and we would sell on the tender and that was we had other securities we own that way and we bought some that way And then, actually, I met Seaberry Stanton one time. I was running Berkshire, and he told me and made me an insider, so I couldn't do anything, but he said he was thinking of having a tender, and he was wondered what price we tender at. And I, as I remember, I may be wrong as I could look back on it, but I think I said 11 and 3.8s, and he said again to me, well, if we have a tendered 11.3.8s, will you tenor? I said, yes, I will. And then I was frozen out, obviously, of doing anything in stock for a little while, but then he came along with the tender offer. And as I remember, I opened the envelope, and it was 11 and a quarter. I may be wrong as, maybe in 11.5 and 11.3.8s, but it was an eighth below what he had said to me and what I had agreed to. So I found that kind of irritating, and I didn't tender, and then I bought a lot of stock, and I bought Kim Chase, who's a director, his father. had some members of the family, not his direct family, but a related family that wanted to sell a block. And we bought several blocks, and before long we controlled the company. So at an eighth of a point difference, we wouldn't have bought it, the company, if they'd actually tendered at that price. It is interesting that a wrong decision has been made to work out so well. We've done a lot of that, scrambled out, wrong decisions. I'd argue that's a big part of having a reasonable record in life. You can't avoid the wrong decisions, but if you recognize them promptly and do something about them, you can frequently turn the lemon into lemonade, which is what happened here. Warren twisted a lot of capital out of the textile business and invested it wisely, and that's why we're all here.