QuestionerWarren, it's great to see you. Great to have you here. Yeah, you are getting ready for the invasion. The invasion. Everybody coming in. How many people are you expecting this year?
WarrenWe sent out a record number of tickets by just a couple percent. But our previous record was at the 50th anniversary of taking over Berkshire, it was three years ago. And then it dropped after that and Yahoo started broadcasting. This year we set a record that beat the 50th anniversary. We think we had about 42,000 people at that previous record. And if the attendance is proportional to tickets, we'll be up slightly.
QuestionerWhat do you look forward to at this meeting?
WarrenEverything. No, I mean, it's, I just left a dinner with all the managers. And I love seeing him, and we had well talked a lot. I like the shareholders. And it's nothing but fun.
QuestionerIs there anything different? this year, anything special that you're thinking about or anything that the shareholders would notice that are different?
WarrenYeah, we're here really to respond to them, Charlie and I are. You know, we want to talk about what's on their mind. I do have a little change in the format on Saturday where I think I'm going to give them a little lesson perhaps at the start that might be useful to them. But we'll see what happens.
QuestionerWell, there's a curtain raiser for you. What, you just came from you? You just came from a dinner with the managers where you and Charlie were interviewed in front of all of them. When's last time you saw Charlie?
WarrenLast time I saw Charlie was at the off-site directors meeting in October last fall. I don't get to Los Angeles much. Charlie doesn't come here anymore. I mean, that was a time actually when his mother was alive, he spent more time here. And he, but I used to spend a good bit more time in California, in Southern California. So we may only see each other perhaps twice a year, maybe three times a year.
QuestionerYou don't rehearse anything that you're going to talk about on Saturday, do you?
WarrenNo, zero. No. I saw him the night because we've met. And I may not see him again until we walked down our separate aisles to go up on the stage. No, no. We are unrehearsed under any circumstances. Just thinking about what's happening. And Berkshire is always such a good gauge of what's happening in the economy. Not only because of the business. businesses you own like the utility company and because of Burlington Northern,
[2:33]
Warrenbut also because of all the holdings you have in so many other companies. What would you say the economy looks like to you right now? Well, right now, I mean, I'm not, I don't know what the future holds, but business is pretty strong, generally. And that's true, I think worldwide. If you look at our international middle working companies based in Israel, in Israel, they sell little tools that go into big tools, big machine tools, and they sell them worldwide. And nobody is buying them to use two years from now or one year from now. They're buying them because they're using those machines to do punch holes or do whatever they may be doing. It's very much a current consumption type operation. And that is up significantly worldwide. I mean, one continent after another. And it has been for four or five months, and if you look at electric components, electric components, we have a subsidiary that's a huge distributor of those. And again, worldwide, not just in the United States, but Asia and Europe as well, we can't fill the orders fast enough. So businesses certainly, it's better, it's better than it's been. And I don't know what that means for six months from now, but car-loadings are up and in the rail industry and so on. First quarter of GDP was 2.3%. That was higher than expected, but we also had a lot of economists like Ian Shepardson say, that you should add 0.9% to that because the first quarter has had this weird thing going on for years now. It just, if you were trying to put a finger on it, is 2.3% sound right for the U.S. GDP? Should it be 3%? What does it feel like? Well, all I say that the last seven or eight years of average to 2% roughly, it's stronger than that. It's stronger than that right now. But there's no way to calibrate it through. And they have their own problem with seasonal adjustments, as you point out in the first quarter. They've apparently got the wrong seasonal adjustment, but they've had years to work on it. They should get it solved. I would say that the Berkshire-Hathaway index of activity, business activity, is stronger than it's been. And it's been improving year after year after the financial panic. We just heard. from some companies in the last couple of weeks that you're a big shareholder in that Berkshire Hathaway is a big shareholder in. Apple came out with earnings this week that were better than expected. iPhone sales were still a little weak. The street
[5:08]
Questionerloved what they saw. What did you think?
WarrenI like what I saw too. They, they're surprises. I mean, it is an unbelievable company. I mean, if you look at Apple, I think it earns almost twice as much as the second most profitable company. States. It's a wide, wide gap. I mean, it's an amazing business. I mean, here's a company that's, you know, whatever the earnings are $60 billion or whatever, and you can put all their products on a dining room table. I mean, that is not the way it used to be in this country.
QuestionerThere were a lot of doubters on Wall Street before those numbers came out this week. Were you in the camp that was a little worried about what was happening?
WarrenWell, we don't own it for the next quarter. I mean, it's incredible to me how you'd be the investor conference calls after reports or you read all the analyst reports and they talk about what it's going to do next year nobody buys a farm based on what they think it's going to rain next year or not they buy it because they think it's a good investment over 10 or 20 years so the the relevant question when you're looking at buying part of a business what you're doing when you buy a stock is where's it going to be in 10 or 20 years it may be that you don't know in which case you don't have to do anything but the idea of spending loads of time trying to guess how many iPhone tens or whatever may be are going to be sold in a given three-month period or something it just to be it totally misses the point I mean it's like worrying about the number of Blackberries you know 10 years ago and then what really counted what was going to happen over the next 10 years so the shares sold down before that heading into it does do you like the stock have you bought more of it do you think that that's another place you want to be
Questionerwell I don't talk about what we're going to do but but our tent queue is coming out on Saturday morning so they can actually figure it out from looking at the footnotes in there but we bought quite a bit more Apple in the in the in the first quarter at the first calendar quarter of this year it's their second quarter fiscally more than you had reported in February when we got the SEC filings I think it was a hundred and sixty three and a half million
Questionerwell that's what we had a year end yeah yeah something like that was the February 14 figures
Warrenwell that was probably that was reported on February 14th I think that was as as a year it's December 31st and I think it
[7:36]
Questionercounts our pension holdings too maybe but you're right we had a hundred and sixty odd million shares in Berkshire wait so you bought a lot more in the first quarter quite a bit more
Warrenyeah I mean you own a lot already so when you say a lot more well it'll it'll come out on Saturday morning and and so it'll be reported and we're not going to be active now so it you'll see it went up about 75 million shares
Questionerwow okay you had gotten rid of most of your IBM shares as of the year end right you held a little bit do you still have those
Warrenno meaning you have zero IBM shares right now I think we have zero right yeah yeah they answered I almost certainly yes
Questionerwow let's talk a little bit about a move that we didn't we'd sold almost all all of us all by beforehand right that we have not had massive sales or anything
Warrenno it was finishing up right I think you had sold off ninety four and a half percent of it before I just you've got that figured out now I was looking through all your numbers on all the things that you've done can I ask about Wells Fargo is that a situation where you've sold any shares
Warrenwell we we are there's several companies like this were we're right at the 10% level so they repurchase shares we try to anticipate that just by a tenth of a percent or a two-tenths of a percent because we do not want to go over 10 percent particularly in bank holding companies
Questioneryeah that's certainly the most dramatic example we also sold a chunk of Phillips to bring us below ten and we announced that at the time so with something like wells we want to stay just below 10 so that involves selling minor amounts of stock but it's only to be below 10 percent we've not sold anything of a discretionary nature
QuestionerOkay. I did want to talk to you about USG because I was surprised to see that Berkshire voted down the idea of the four directors that did not vote with the company on that. That's something that's so rare. I think you own something like 31 or 32 percent of USG and to see the largest shareholder not going along with these four directors who were standing for re-election. What happened?
WarrenWell, you're correct, we owned about 30 percent or something like that and we had owned a for 18 years. Well, we hadn't owned all of that, but we'd only a good, good-sized piece. And we had twice come to the aid of the company in financing when they needed to come out of bankruptcy in 2006, and then when that money that they raised then got hit
[10:13]
Warrenby the housing, you know, total free fall, 2008 they needed more money and we came up with it. And so we've been in it a very, very long time, and it's true that I can't think of a time. may have been one that escapes my mind that we voted against directors, but we did not think they'd responded properly in terms of not sitting down and at least talking to Gennoff, who also has held their stock for 18 years and owns 10 or so percent of the company. And we did not think that the directors were essentially doing their job, so that we said we we intended to vote against that. We don't have any rival directors running against them or anything of the sort, but we did vote against them. The company has since, and USG has said that it is going to sit down and talk to them. It thinks that the $42 dollars that that Kanaf is offering is not a fair bid. What if they don't reach an agreement? Well, we'll see what happens then. But I was very pleased that the directors decided to do. that so I think they've responded properly. And have you talked to the USG CEO? She called me a few days ago. I can't remember exactly what, but I'm not sure which day it was, but we had a very cordial conference. It was after they announced they were going to sit down and she did call me then. And it was a very friendly call.
QuestionerOkay. I know you're about out of time, so I'll quickly throw a couple other things at you. At the end of the year, You said you had a cash pile of about $116 billion. Where is it now?
WarrenWell, it's a little less, but I would estimate that it's a little over $100. We bought more stocks by a considerable margin than we sold in the first quarter, which is usually true. Not necessarily by a considerable margin, but we are usually a buyer of stocks. And in the first quarter, the Apple alone, I mean, you can figure it out that they were talking 12 or $13 billion or something. number like that. So it brought down our cash position moderately. It still leaves you with a pretty big pile of cash to put to work.
QuestionerThere have been people speculating that you might buy General Electric or some portion of General Electric. Is that something you can comment on at all? Is that something you're interested?
WarrenI've been an awkward decision because I'm, the answer is we're not doing anything on that, but I'd have to say that even more or so. I actually admire John Connery in what he's doing. He's got a very tough job, but he's doing very logically. And I'm very familiar with G, and we've done, we do a lot of business with them, both on the buying and the selling side. So, and it's a terrific American company from way, way, way back, you know, in the original out of the average. So I want the company to do well.
QuestionerGreat. Warren, I really appreciate your time and I don't want to take any more, so thank you.
WarrenOkay, thanks for coming. Great to see you.
QuestionerThank you.
OtherOkay. Great to see you. Thank you.