Station 1: Andy, Westin CT
You’ve had a few investme
nts in China, PTR and BYD. What advicewould you give the new Chinese leadership and to corporate CEOs?
WB: CM made our last China
investment, I’ll let him handle it.
CM: We’re not spending much time giving advice to China.
China has been doing well from a toughstart, in some ways we ought to seek advice.WB: We have found it useless to give advice in 60 years of business.CM: It is like pushing on a noodle. Even with 20% of stock. At Berkshire, we created a system that
doesn’t require much control at
headquarters.WB: Four largest investments are 50bil and have had some for 25 years, one for 20 years. The numberof times we have talked to CEOs of those companies, it
doesn’t average more than twice a year. We are
not in business of giving them advice. If success of our investment depended on them following our
advice, we’d go somewhere else.
Q4 -- Becky Quick: Ben Knowl
I am pleased about 1.1x price-to-book buybacks, it is bad to be
overvalued. Why didn’t you warn us previously
when overvalued? Or have you felt Berkshire not overvalued over last decade?
WB: If we could have our way, we would trade stock once per yea
r, and we’d come up with a valu
ationand it would trade there. That is what some companies do. It would be odd if 30min before marketopen to announce stock was overvalued. We have never consciously done anything to suggest peopleto buy stock when stock was above intrinsic. We put on cover
in 1990s ‘
that neither myself nor CMwould buy stock at this price.
WB: if we repurchase, we think people should know we think they are selling too cheap. We are not
saying 110%. We know significantly above 110%. I don’t think we will ever announce that we think
stock considerably above intrinsic biz value.CM: Nothing to add.
Q5 - Jay Gelb, Barclays. Share buybacks. Not a dime of cash has left for dividends and share repurchases
in 40 yrs. What is Berkshire’s capacity for buybacks, and how attractive vs
. M&A and dividends?
WB: At 1.1x we feel very comfortable. We feel comfortable above that, but we want large margin. Wewant shareholders to know. We have terrific group of businesses. Some of businesses are worth farmore money than we carry them at. We have no businesses at large discount to carrying value. From
money making, we’d love to buy tens of billions at 110% of book. You never know what kind of market
you run into.
We’ll keep cash at $20bil. Val
ae per share goes up if we buy at 110% of book. We woulddo it on a big sc
ale, if didn’t take
our cash balance below $20bil.CM: Some people buy back their stock regardless of price. That is not our system.