Here, you can find a transcript of the Gabelli’s Berkshire Hathaway Panel 2024 with:
- Adam Mead, Author, “The Complete Financial History of Berkshire Hathaway”
- Chris Bloomstran, President, Semper Augustus Investments Group, LLC
- Todd Finkle, Professor & Author, Gonzaga University, “Warren Buffett: Investor and Entrepreneur”
- Jacob McDonough, Author, “Capital Allocation: The Financials of a New England Textile Mill (1955 – 1985)”
- Pieter Slegers, Founder, Compounding Quality and author of The Art of Quality Investing: How to invest in the best companies in the world
- Macrae Sykes, Gabelli Portfolio Manager and moderator
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Introduction to Gabelli’s Berkshire Hathaway Panel 2024
[00:00:00] Macrae Sykes: Good morning. Good morning. Good morning. Wow, what a beautiful day. Thank you for everybody coming here today. I believe we have people in the room as far as Asia, Sweden, Europe as well, and Latin America I believe.
So an incredible audience today and we’re really excited to be here. This is our 15th year coming out to Omaha. So you can imagine just how much we love it as an organisation and to be with you today as well, to be a part of the culture is just incredible. My name is Macrae Sykes. I’m a portfolio manager with Gabelli Funds, who is the sponsor of the event today.
We’re located in Rye, NY. We manage about $30 billion in mutual funds, closed-end funds, ETFs and separate accounts, and we were founded by Mario Gabelli, who was on CNBC this morning, we’ll be on a panel a little bit later. And he pioneered our methodology which is private market value with a catalyst methodology and it’s a value strategy.
On your tables, you’ll notice a picture frame, and there’s information about the Wi-Fi for the room. There’s also a QR code, and if you have any questions or want to learn more about the people in the event, we’ve tried to minimise paper. Just click on the QR code.
You get all the information as well as information on our website. And before we get started, I’d like to just point out my colleagues today. They’re walking around. So in the room, it’s James Carey, Wyatt Clancy, and Janice Musselwhite, which you’ll hear from a little bit later, Paul Schwebel and Charles Larosa. And of course, you’ll see Mario later.
So if you have any questions for them, please don’t hesitate or me afterwards. We do have a few breaks as well. I just want to give a special thanks to our founder Mario for this opportunity again to be here today. This is both, you know, having graduated from Columbia Business School and being able to come out here. It’s been a dream for a long time and to spend this time too with an amazing investor like him and to mentor and be around him.
And just to see him in this kind of delight and to be around you too as well and to continue the message of a lot of what we learned this weekend is a real privilege. So thank you.
All right. So we’re going to get started with our first panel, which is our largest and to be honest, I don’t want to spend too much time on intros. I will just share their names here this morning. I would just note that all of our panellists have published material on the conglomerate. All the incredible keen interest in the lessons for this unique company as well. I’m going to start off with questions.
We’re going to ask all the panellists to chime in, and then we’re going to open up the Q&A to the room. If you do have a question, raise your hand. We have two mics that will be passed around. Please announce your name and ask a very succinct question. No rambling, please. You know we all have precious time today, so if you have a quick question, ask it and then we’ll do our best to answer it. But before I announce names, I just wanted to honour Charlie Monger, and we brought to the other peanut brittle.
Obviously, a great influence, and we’ll talk a little bit about that influence later, but this is just a reminder of the great culture that he helped build here. And while we’re all here to kind of enjoy it.
All right, so our panellists today: Chris Bloomstran, Todd Finkle, Adam Mead, Jacob McDonough and Peter Slegers. Again, my name is Mac Sykes. And we’re going to get started. OK. My first question and probably one of the bigger questions, guys, is capital allocation both today and for the future. I think two companies that come to mind recently met a group and Alphabet both announced dividends kind of surprisingly typically growth companies that retain capital and now have large cash flows.
We know that story. Berkshire generated 700 million a week of operating earnings, 165 billion. However, you want to call it in cash. Numbers are significant. I would just point out that Jamie Dimon recently talked about excess capital as not wasted capital and earnings in store, which we all understand in terms of capital allocation.
So I’m just going to go out to the panellists here and we’ll start with Chris. The prospect for a dividend, if at all, what to do with the cash today, if anything, and what should we be looking for in terms of capital deployment over the next year?
Berkshire Hathaway’s cash
[00:04:46] Chris Bloomstran: Yeah. Thanks, Mac. First, before I answer that, thanks to you and Mario and everybody at Gabelli for doing this, I think the first year you did it, we had maybe 20 people in the room. If it grows at this rate, we’re going to have to move it across the street on Saturday morning, maybe at a point.
Capital allocation, obviously Berkshire is what it is for it. Never been done as well for as long. I think there’s a misnomer. Berkshire gets criticised for all the cash sitting on the balance sheet, 167 billion, whatever it is today. In my opinion, maybe half of that is deployable and Charlie always said there’s maybe 30 billion that they wouldn’t take the cash level below. But I think there’s kind of a permanence to insurance reserves.
You’ve really got from when Warren took himself out of the essentially the CEO job of overseeing the managers outside of insurance, this rules capital allocation. And I’ve got a table in my letter that goes back to when they started buying the shares back in 2018, essentially taking cash flow from operations. Subtracting depreciation expense, which to a point should equate to maintenance capital expenditures. And there’s a nuance there and I want to touch on that.
And then you know the things you can really do with money or buy the shares back, which they’ve proven to do fairly in earnest. They bought a lot of it back in 2000 and 2021. You can make acquisitions of other businesses, Alleghany. They completed the full acquisition of Pilot. You can buy common stocks in the market and growth CapEx.
On that, so at today’s run rate, you’ve got about $50 billion in operating cash and subtract about 10. In this inflationary world, think about depreciation expense. You’re depreciating old assets and to the extent you’ve got to replace them in today’s higher cost, the notion would be that those two are no longer correlated, that the amount of money required to replace an old asset is now higher than depreciation would allow.
We haven’t seen this phenomenon since the 1970s and it’s a real deal. If you look across Berkshire subsidiaries it’s not just the energy business that really is investing in growth CapEx, building out wind, solar, the grid that goes with it. The rail had done a lot of that. There’s not a lot of use for growth CapEx there now, but even the manufacturing service retail business.
If you look at the incremental growth in CapEx versus depreciation, depreciation in the last two years alone is up maybe 2 billion whereas CapEx is up more like 7 billion. So you’ve got a disparity and I presumed that the entirety of maybe $10 billion in depreciation expenses maintenance and I’m not sure that’s the case.
And so that has a big impact on a business like Berkshire, which outside of insurance is very capital intensive and it has broader implications for the broad economy, I mean, you’ve got in the last since 2021 no growth in earnings per share for the S&P 500. Top lines grew 25%. That’s a huge margin compress.
Some of that’s the rising cost of goods sold but a portion of it is CapEx is maintenance CapEx is getting more expensive and businesses that are capital intensive. We’re having a tough time dealing with it. So I’ve never asked a question of Becky at the meeting, and I’ve sent her. I hope he addresses the inflation in the system because it really does have an impact across the Berkshire Empire.
And on the dividend, they’ve never paid one, I think as long as the share is cheap under intrinsic, there’s an opportunity to buy it. Two years ago they bought a whole bunch of common stocks when the stock market was declining.
Last year sold a bunch of stocks when you had the recovery plenty of uses, I think at the point if they ever got around to saying, OK, we just don’t have use for the cash and it’s too much. I’d love to see a special dividend before you introduce a regular dividend that you’re kind of wed to.
[00:09:13] Adam Mead: So I think just in respect to Berkshire’s cash, you know, that $167 billion figure is big but the focus is always on that number, right? I think the more appropriate thing to do is compare that number to Berkshire’s assets.
And so cash as a percentage of total assets right now is around 15, 16%. It’s up slightly say compared to 2010, which I think was around 10%, but it’s not an abnormal level of cash at Berkshire. If you go back to 2004, Berkshire had, I think, it was 48 billion of cash on the balance sheet which equated to 23% of total assets.
So where we are today is not abnormal in that sense. It’s just the numbers continue to grow as that asset base continues to grow. So I think it’s important to put that number into context. So that’s kind of where I would start.
And then you know, I agree with Chris, I think at some point probably I would say as long as Warren is still at the helm, we won’t see a dividend but probably within 10 years, you know, we’ll have to start bleeding off some of the cash and maybe that looks like, you know, a regular dividend at 10 or 20% of annual operating earnings, but I think a small regular dividend to kind of bleed that cash off overtime in conjunction with special dividends in the absence of having buyback opportunities would probably be my preferred method of capital deployment.
[00:10:53] Jacob McDonough: Capital strength of Berkshires of real competitive advantage. So a dividend would be fine and some share repurchases would be fine, but I don’t expect a major recapitalization to get rid of that advantage. One example might be Progressive versus GEICO. It’s been quite a battle lately. In the very short term,
Progressive has been running circles around GEICO. A tough competitor and I don’t expect anything bad to happen to Progressive anytime soon. It’s a great company, with a great track record underwriting. But I just wonder if you zoom out 50 to 100 years of the structure of Berkshire could win out versus the structure of Progressive. Berkshire might win just by finishing the race and surviving.
And what I mean by that is progress is pretty highly leveraged, not in terms of debt, but operationally they’re underwriting leverage. They’re right about I believe it was 60 billion in premiums compared to 20 billion in capital. They do about three times as much business as their capital which is pretty highly leveraged.
Berkshire is the opposite. I believe 80 billion in premiums written in 2023 compared to, you know, 300 billion in capital statutory surplus. And the insurance business has more capital outside of insurance. And so maybe 0.25 times leverage compared to three times for Progressive and GEICO, back when it was a standalone business before Berkshire took it over.
And before they got involved, GEICO got pretty highly leveraged itself. It even got up to four or five times leverage, and when you do that, if you have a couple of bad years of underwriting you can get yourself in trouble, which is why having a GEICO in the 70s. So again, I don’t expect anything in the short term for Progressive because they’re great.
But if you zoom out 100 years, could they have a couple of bad-year stretches where they get themselves into trouble just because of their leverage? I think maybe it’s possible and I just feel a lot more comfortable with the structure of Berkshire and that’s why capital is important. And I hope they don’t send too much of that cash to shareholders.
[00:12:51] Peter Slegers: So yeah, I think most of you will also know the saying of Warren Buffet will try to buy a wonderful company at a fair price. [unintelligible]. I think that’s exactly true. And what you see with many companies like Berkshire Hathaway, [unintelligible] wonderful companies, they are so big and they are so profitable pouring out so much cash. Indeed, they have so many problems finding attractive reinvestment.
And I’m paraphrasing Charlie Munger here. But he basically said, well, when you buy a company with a return on invested capital of 6% and you keep it for 20 years, well your return will be more or less equal to 6% even if you buy it at a huge discount. And the other way around, well, if you buy a company with a return on invested capital of 18% and you keep it for 20 years.
Well, you will end with one hell of a result even if you pay a high multiple for that. So probably for investors, the Golden Goose or as Chuck Acre call it while the compounding machines are created when you have a wonderful company, plenty of investment.
And obviously today, well, Berkshire has become so large, it’s really difficult for them to move the needle and they have two options like what Berkshire always does in my view, obviously waiting for those opportunities to rise, right because certain that over the next few years, we don’t know when, but a big crash will happen one day and obviously they have a lot of cash in that case. Share buybacks could also be possible. I’m sure most of you have read all the shareholder letters and we care to read that there. But in the shareholder letters, Buffett has always said, Well, as long as we can create more than $1.00 in market value by keeping the money in the business. But it’s way better for us to just keep doing that and try to keep company.
And when I also don’t think they will issue a dividend anywhere soon because it would be some kind of an admission that, for me, it would be some kind of admission we have become so big that our terms will be really S&P 500 like and we also know that well, Buffett test sets well most investors would be very well off to just buy the S&P that, yeah. We talked about the capital location.
Warren Buffett is probably one of the best capital allocators in the world, and if someone can have an edge, well, it will probably be Berkshire. So I think they will be better off to keep the money in the business.
Berkshire Hathaway’s public portfolio
[00:15:18] Macrae Sykes: Okay. Digging in a little bit more. We’re all here to talk about stocks and it’s interesting over the last couple of quarters, Berkshire has been able to petition the SEC to keep one mystery holding under wraps. So the 13 F, I would note this was last done with Chevron in 2020, and that turned out to be a pretty large holding as we know. It looks like given some of the disclosures around the cost of the bank’s insurance and finance segment for the equity portfolio, you can see the cost moving up there.
So perhaps the stock is in that bucket. I going to start with our panel, we’ll start with Peter, but if you have a strong opinion of what this stock could be, let’s hear it. Otherwise, what should they be buying as a mystery stock?
[00:16:10] Peter Slegers: It’s a difficult question, right? Obviously, nobody can read the mind of Berkshire, of Warren Buffett. And yeah, obviously we’re all investors and not speculators. And we like to think in quarter decades instead of quarters.
So it’s a very tough question, but obviously, well, I will try and do an educated, I guess for this one. And before that, maybe to add, I think it’s a very good sign or a very good thing that they don’t need to talk about the company for the SEC, because obviously, many people are looking at what Berkshire is doing.
Many people are looking at what Berkshire is doing and when the news will become public. Well, it would influence the stock price, right? And they couldn’t buy the company at the attractive valuation levels or at least that’s what Berkshire thinks they are buying today. But what we also know is, well, they should, or they would be obliged to make it public when the stake would be larger than 5%. And obviously, Berkshire Hathaway is so big. So this would mean for Berkshire that the market cap of the company they are buying should be at least 100 billion.
And what we also noticed or what we also have seen in the latest report is that they’ve added or net added 3.5 billion to the financials and this while for example they sold Markel and when you OK we have around one or companies with a market cap larger than 100 billion when you only look at the financial. Well, at the financials, 24 companies remain.
There are also companies that Buffett already owns, like Bank of America, American Express, and then Citigroup. So it won’t be them. On the other end of the story, there are also companies that they have owned in the past but sold things to companies like Goldman Sachs and so on. So when we exclude them, well, we go one step further.
And when you look at the list that remains, well, you only have seven companies left. You have an insurance company, but I would say, well, quite likely because they just sold Markel. And Tom Gayner is talking and I’m a big fan of Tom Gayner, a big fan of Markel, and I’m sure that plenty of you in the audience are true.
So I don’t think it will be an insurance company. You have plenty of European banks and plenty of Canadian banks but correct me if I’m wrong, but I’ve never heard Buffett saying something about liking Canadian banks or European banks, so I also think that they can be taken off.
And when you look at it then there are basically only two companies that remain and it’s Morgan Stanley and then a Mitsubishi Financial Group. So it’s the largest Japanese bank. And we also know that well, Warren Buffett likes to buy high-quality banks at a discount. So at book value or low book value, well more standard rates above book value.
And when you look at Mitsubishi, well they trade around 12 times earnings around book value and they also have a 9 billion stake of preferred shares in Morgan Stanley because they bought that or they acquired it during the financial crisis. So if I should make an educated guess, probably Mitsubishi Financial Group. Also, we all know that well, Warren Buffett likes Japan. He used to say that the five trading houses he owned there, well, he likes to own them forever.
So it’s in his forever journalist. So I would, yeah, think that would be that one, but once again I think, yeah, one Buffett is 93 years old. Well, Charlie would have turned 100 this year, and even they think in the very long term and 10 years, 20 years from now.
And I think we should definitely do too. And yeah, always try to think as investors and not try to speculate about certain things in the stock market. Yeah, I think that’s my take on it.
[00:20:04] Jacob McDonough: And yeah, I’m not sure exactly what the stock is. I’d be really excited to find out. Speaking of Japan though, I am a big fan of their investments over there. They’ve obviously issued debt attractively and the stocks in Japan they bought worked out well. But what’s interesting is those companies they invested in are conglomerates themselves, they do a lot of deals and make a lot of acquisitions.
And historically, Berkshire hasn’t made a tonne of acquisitions internationally. And so it’ll be interesting to see if you know they can form relationships and put more capital work internationally over time. Japan is one of the markets I study the most, mostly small-cap companies in Japan which Berkshire doesn’t waste their time with.
But there’s a lot of interesting companies over there with, you know, interesting attractive-looking valuations. I think there’s a real opportunity for a company like Berkshire maybe to nudge a few companies in the right direction in terms of capital allocation and keeping shareholders in mind. A lot of companies in Japan have a very long-term focus, which is great and fits really well with the Berkshire culture.
But if somehow you could keep that culture alive and maybe nudge some companies in a different direction, cap allocation-wise or another way to say that there might be some real room for some financial engineering in Japan. I think it’d be interesting. And I’d love to see if they can put more capital to work internationally over the years.
[00:21:26] Adam Mead: I’ll just quote my hero and say I have nothing to add. It’s fun to speculate, but I have no idea.
[00:21:33] Chris Bloomstran I got the Chevron, right? [unintelligible] I don’t think it’s a bank.
The Apple position
[00:21:39 Macrae Sykes: OK. All right, so. We’ll be talking about some stocks tomorrow. Obviously, any questions and over the years there have been some companies that have been untouchable. American Express is one of them.
Apple was a wonderful pickup by the conglomerate and obviously doing very well today and generating significant returns. And then two years ago, I think, Mr Buffett highlighted the position almost like a captive business for the business, but most recently the firm has decreased its share ownership.
It’s quite a large position, so almost 50% of the overall portfolio. Maybe we can just start with Jacob now. Just could you talk about what you expect Berkshire to give feedback on in terms of addressing questions about the size and the previous sales as well as in terms of tomorrow’s meeting?
[00:22:30] Jacob McDonough: Yeah, I think Buffett would love to hold Apple forever. That seems like one, you know, he’d love to have stuck around, but I think the real answer will come from the future managers of Berkshire and I don’t think they’ll be under any pressure to, you know, continue on with what was done in the past.
They’ll be able to make their own decisions. And so we’ll have to wait and see on that. But I just think that’s an important point that the future managers of Berkshire going to make their own impact on the organisation with their own personality and their own skill set, and there’s never going to be another Warren Buffett.
So it would be a mistake to try to, you know, keep living under his shadow and try to do what he would do instead. I think the managers are going to have, you know, founder mentality and be able to manage the company as they want to. And I think they’ll be able to make their own decisions with that going forward. But I think in the short term, I think Buffett would love to keep that one as long as they can.
[00:23:25] Adam Mead: I think it’s right to look at it like an operating subsidiary. If you look at Berkshire’s ownership, I think, is 5.9% so right around 6% call it. That’s on Apple’s earnings. Maybe a $6 billion look-through earnings. That position would be comparable to Burlington Northern. The real rate. So looking at it like a subsidiary in that way, I think makes sense.
The other thing in terms of selling it, you know we have this huge embedded gain now in the Apple position with this cost basis, you know multiple times but below where that value is today. So if Berkshire were to sell that and incur the tax on that. That’s a big hit. So I think the way to look at it at least for me, you know, and thinking about it, Mac, is. 6 billion of look-through earnings.
The position was 157 billion recently. If you were to sell that position and incur that tax. You would have to pay, I think 35 billion, somewhere around there. So you’re talking, maybe it’s 25 billion. You’re down to 135 billion of net proceeds, so you’ve got a realisable value of, call it 135 billion, with this asset that’s earning, look through earnings of 6 billion.
So you have this entity that is essentially generating a pretty decent look-through return, you know it’s maybe valued at 20 times earnings when you adjust for net cash, that’s on Apple’s balance sheet for Berkshire’s look-through position.
So I think well, it looks pretty expensive on a headline basis. I don’t see Berkshire really selling it, I think it’s going to stay as sort of this forever holding as American Express has been as Coke has been overtime and it’s a phenomenal business and it has, you know, even at 20 times earnings, you’re getting a 5% look-through yield. You know if inflation is 3%, you know you only really need 2% real growth in there.
That’s a business that can deliver that over time. So I don’t think it’s as overvalued as it might seem on a headline basis. It’s kind of where I conclude.
[00:25:55] Chris Bloomstran: Go back to the bias of the Apple position. Starting in 2016, there were a billion dollars bought. I think that was Todd or Ted. And if you listen to a recent podcast with Todd. And Warren would be there on Saturdays to kind of walk through the logic of why Apple was going to be durable and a great business. [unintelligible] The BigBuy is $35 billion where [unintelligible] Warren sold 10% of the position than 20.
Took the position from a billion shares to 900 million and changed. Then said it was a mistake. So I think he’s kind of backed himself into maintaining that position. So my guess is this latest sale was probably the initial Todd or Ted sale. At 30 to earnings with not as much growth, Apple is just a very large business.
They haven’t grown to the top line in the last year and a half. You know, Warren said after the fact that he probably should have sold the Coke position in 1998 as big as it is. And as fully valued as it was trading at the peak it’s going to be up a bunch this morning. It wouldn’t bother me if he sold the position down and paid some tax with it.
[00:27:11] Peter Slegers: Yeah, it was Warren who also said, well, anyone who says size doesn’t hurt the performance of selling. So I think that’s also the case here with Apple. And one thing to add probably is, yeah, but it also says, well, I don’t know the business model and the mode of Apple as well as I do, the one of Coca-Cola, for example.
Well, I know consumer behaviour and know that some people would sell their second car to buy a new iPhone. That’s a very strong sign. So I completely agree. I also don’t think that Berkshire will sell Apple anytime soon. Well, when you look at the reasons why he trimmed the stake a bit, I think from my side I see two potential reasons with one, the most likely, well, the first reason is share buyback.
So Apple is a cannibal stock as a money per buyer likes to say. So they are heavily buying back shares just because they don’t know what to do with all the cash pouring out of the business probably. And just like us, as an investor, well, when you buy back shares as a company and the company is overvalued, you hold a strong shareholder value. So that might be a reason, but Apple is a wonderful business, so I don’t think this is the case and I don’t think Warren thinks that Apple is hugely overvalued, like a huge state.
Another reason is well, they trimmed their stake with 1.1% if I believe. And last year, for example, Apple bought back around 2.5% of their shares. So net, their stake and Apple still increased. They own around 6% of the business, which is already quite substantial for one of the largest companies in the world, right? So I would think that’s the most likely reason why they slightly trimmed it this year.
Missing Charlie Munger
[00:28:54] Macrae Sykes: All right, so I’m going to ask one more and we’ll get Todd into the mix here. And I think this will be discussed quite a bit tomorrow. But Charlie Munger obviously was still running intellectual marathons when he passed away last November.
His presence will obviously be missed. We all know that you provided material elements to the fundamental progress of Berkshire but they do have a, you know, pretty deep bench. Maybe you could provide some feedback, Todd and then I’ll pass it on to the other managers here.
But what does the management change mean in the interim, both for some of the meeting dynamics as well as the longer term? And then what do you expect in terms of feedback from the trio tomorrow in terms of his legacy? And you know, do you see more progression there in terms of participation in the meeting going forward?
[00:29:46] Todd Finkle: I wanted to just briefly tell a little story on my way here. Yesterday, I was on the plane and I saw these two older ladies from California sitting next to me. And of course, I had to talk to them. I asked them if they were going to the Berkshire meeting and they said yes. And so we got into this really deep conversation and this one lady said to me that her niece was she had MS. And that she wrote Warren Buffett a letter because she loved Warren Buffett. Everybody loves Warren Buffett. That’s why we’re all here, right? And Warren responded.
You know, he probably gets a million letters a day and he responded to her and then they started a relationship. He started calling her. She’d be driving somewhere, and here’s Warren Buffett calling this lady who has MS, and he would call her twice a week. Warren Buffett, you know like one of the richest men in the world is calling this lady and, you know, I just met these ladies on the on the plane, and they’re telling me this.
I thought it was a great story. It’s a great Warren Buffett story. Because Warren Buffett is so much more than money. This is wearing a classic Warren Buffet. The type of person that I want to be the story that we don’t hear about. And I just wanted to share that today. I know that wasn’t the question, but you know Mac knows me by now that I kind of go off on a tangent. And sometimes I’ll say what I think is important.
Don’t get me wrong. You know the managers and all that stuff is important and we’re all going to miss Charlie. We all love Charlie and definitely, Greg is going to need somebody to write some comedy for him when he takes over. Who’s the guy on Saturday Night Live? What’s that guy’s name? One of those guys. How about Mario Gabelli to help him out with some of the things, you know, let’s get Mario involved in this.
But seriously, you know, they’re all set. You know, they’ve had this going on. They’ve got the right people in line. The only thing that I wish is that they had a little bit more diversity, especially on the board of directors. A black woman would be really nice to have that on the board, but I’ll let these guys talk about it. Go ahead.
[00:32:55] Adam Mead: Yeah. I think Charlie would be the first to say that if Berkshire was harmed by his departure, they weren’t doing their job before this point. I’ve had the opportunity to speak to some of the Berkshire managers, you know. No, inside access. I mean, just go across the street here today or tomorrow.
And, you know, they’ll be the managers, the CEOs, the chairman of these subsidiaries walking around you. Just talk to them. And what you get from those conversations is that this culture that Warren and Charlie talked about is 100 miles deep. It really is something special. And you know, we’ve seen a little bit of management turnover at BNSF, with Karl Rose or Carl Ice now Katie Farmer over there. You’ve seen See’s Candy have a couple of managers turnover.
Patty Egan came from the energy business, and Adam Wright, who runs Pilot, was an energy guy. You know, there’s a pretty deep bench and I don’t think that’s quite as appreciated. Maybe even, certainly outside of these, you know, outside of Omaha. But I feel good about the managers and in particular, Greg, you’ve probably read Ron Olson had some pretty, pretty good words of praise for Greg in terms of his handling of the Pilot lawsuit.
And you know, these things just continue to give me confidence that we are in really good hands going forward.
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[00:34:39] Jacob McDonough: In succession, something I’ve been thinking quite a bit about lately, and one thing that comes to mind for me is the future managers at Berkshire will probably do things Buffett never would have done.
And to me, that’s a good sign because Buffett did things Buffett never would have done. He was almost a different investor, a different businessmen through the years. In the 1950s, Buffett looking for asset bargains probably would not have bought the high-quality See’s Candy in the ‘70s. And I doubt Buffet envisioned himself buying Apple in the ‘90s. Apple itself changed. The industry changes.
Opportunity sets out there constantly change, and Buffett kept changing as he continued learning and growing. So if there’s no change in the future, I think that’d be a major red flag in terms of succession. And one story, if you’re interested in looking further into a Sears, Roebuck and Company had really successful success in their first three CEOs had tremendous success and Richard Sears founded the business in 1892.
He stepped down 16 years later, but he was an expert salesman and entrepreneur. Julius Rosenwald was next, who’s an expert organiser and orchestrator and he really helped them scale. And then the third CEO, General Robert Wood helped them pivot from just a mail-order catalogue to physical retail.
He also helped form the Allstate Insurance Company internally there. So just one example of how very different personalities from the founder, I mean, the leaders, the CEOs, but they each treated themselves like a founder doing bold entrepreneurial moves, but they made their mark in the organisation with their own unique personality and skill set and I think that’s just a great example and I could see that following something similar at Berkshire too.
[00:36:20] Peter Slegers: Obviously, the loss of Charlie Munger has been huge for Berkshire, has been huge for the entire community, I guess, because indirectly and also directly has probably created a lot of wealth.
But I think the thing I like the most about Berkshire, the thing I like the most about Warren, about Charlie, is that over the years, well, they have probably built something that is bigger than themselves.
They have built something that is going to last for many decades after they’ve gone, so the culture is there and even obviously awareness is it’s 93. We all know that even when Warren would pass away one day, well, the culture isn’t going to change anytime soon. So I think that’s for me the most important thing the succession is in place. And I think they just need to keep doing what they are doing probably.
[00:37:13] Chris Bloomstran: We are all in the room and the arena tomorrow and everybody in the Berkshire community owes a huge debt of gratitude to Charlie and Warren, for being teachers. We come here, I mean there are no other meetings that are like this.
You come here because the place has been run with such integrity, morality, and rationality. Those of us who are investors are better investors. I think we’re all better human beings for these guys and for that culture that Charlie, the stamp he put on it. And Warren, I think this meeting will persist for a long time.
I think the culture of Berkshire runs the way it’s run will persist. Greg’s a rock star. The bench is deep. You won’t have the same humour at the meeting, but I think we all come here for the reminder every year to be rational and I hope we’re all here 10, 20, 30 years from now doing the same thing and I think if there’s any place that can do it that way would be at Berkshire.
Questions from the audience
[00:38:25] Macrae Sykes: So no comments on the 11 tonnes of See’s Candy that’s sold every year that’s not at risk? We’re going to take this time to go out to the audience with questions, please raise your hand.
The best ideas
[00:38:42] Audience: Last year was my first. But I work full time through school, so I can graduate debt-free and I was able to convince my mom to let me skip graduation and graduate in the winter so I could come to this.
Now, looking back that you guys have experience, you know Warren has said that he advises college students to have a punch card and if you keep your investment ideas to at least 20 punches, you’ll do very well in your lifetime because you’ll, you know, put your best ideas on there. So I carry my punch card here with me, but including it for you, Mac, do you guys agree with that idea like, now that you have experience looking back, are your best ideas only a handful of ideas? Thank you.
[00:39:27] Chris Bloomstran: Well, I wouldn’t take the punch card twenty thing literally. I mean the roster of companies and investments that they’ve made over the years is much deeper. The point is, don’t deploy money in dumb things.
And really have done your work and be sure you’re right and when you are right get a lot of money into it. I think the danger when you don’t have the experience of Warren and Charlie is jamming a lot of money into things and not really knowing what you’re doing and you’re trying to build a track record and blowing it up.
But you know, they’ll say and you look at national indemnity and in some of the big investments that have been so successful, they really this place was created on just a handful of really good ideas. And they’ve said it in depth, and I think that’s right. But it’s not 20. You’ll be okay if you own 21 over a lifetime.
[00:40:26] Adam Mead: I think it’s a good framework, so patience, but with Chris, don’t take it literally.
[00:40:33] Jacob McDonough: Yeah. And it’s true. Only a handful may really move the needle over the years. So you know, it’s rare to find that great investment. And so that’s maybe where the punch card comes into. But yeah, it’s a good, good mental framework to have.
[00:40:49] Peter Slegers: Plus Charlie probably also once said that when you would take away or take out the 15 best investments of Berkshire, well, we won’t probably won’t be sitting here and nobody would work. No Berkshire Hathaway.
So I think that’s also true. So we also all know that well let your winners run and cut your losses and well rule number 1 don’t lose money and rule number 2 don’t forget rule number 1. So that’s also the case for me here, for me this weekend.
The Berkshire weekend. It’s not so much about what will be said in the meeting tomorrow, but more, some kind of integrity check in the sense that I also do that at my office. I have a poster of Charlie Munger and Warren on the two sides of my infrastructure there. They’re just when you’re looking at a company, just ask yourself, OK, if you would need to propose this investment idea to Warren or Charlie, and then 60 seconds or 90 seconds, well, what would they say? Would they try to kick it off right away?
And for me personally, it helped me to find the reason to say no really, really fast. So I completely agree with you indeed. I also think 20. It’s very tough for most people. But yeah, when you’ve found wonderful companies, the best time to sell is probably never or almost never. So I’m also in that camp.
[00:42:11] Todd Finkle: I just want to say something about my friend Chris Bloomstran: here. Yeah, every year he writes an annual letter and you can get it online. This year was 149 pages long. And you know each page it takes you quite a bit of time just to comprehend what he’s saying, but it’s wonderful material and you’ll all have a PhD in Berkshire Hathaway because of this guy and all the time that he spends. And it’s free.
[00:42:50] Macrae Sykes: I would just, you know, I admire your 20 ideas and I think when I was your age I was more, and not reflecting you, I was very confident that I could come up with 60 incredible ideas and I’ve evolved over time in my experience, core competencies and experience. Just seeing, you know, roadkill the wrong way as well.
And now I agree that we are kind of, you know, these 20-lifetime ideas and what’s amazing, maybe in my list that 20 ideas and I’ve been around for a few years, that a lot of them would be very applicable 20 years ago and they weren’t as obvious to me.
And I think one of the great lessons I learned in grad school and a great professor, you know, you said look, you the best due diligence is just going back look 10, 20 years and just use that as a guide for what you’re looking at.
And it just seems almost too obvious that something could be in plain sight like an American Express, it just has been an incredible business over time. You know, easy to understand and so there you go. You have a great idea there.
And so I would just say now in hindsight. I think that the 20 ideas or some component of that, but I also believe that we’re entering a period where quite extraordinary potential creators of wealth will be going on just given this productivity wave that we’re going to be going through.
And I think you also have to identify those periods as well where you know you’re going to have a more challenging market which we did a couple decades ago. Flat returns and you know growth and economics fundamentals etcetera. But you have to be able to identify and that does come with experience.
So I think great stocks are always easy to understand and you know read the documents that we get all from this weekend and understand that but also be able to identify times where you can really seek out the returns and those great emerging businesses just based on what you knew previously.
Greg Abel
[00:44:46] Audience 2: Hello. I have a question that I think perhaps goes to Chris first others could take it in their domain if they want to. But in Chris’s annual letter, you often have football analogies in the football world. Frankly, we don’t have too many Super Bowl-winning coaches retire and get replaced by another coach who comes back out and wins another Super Bowl.
And I’m wondering, is sports actually the right analogy for the business world? I think sometimes yes, and sometimes no. And specifically, Greg Abel will be continually facing a lot of questions about, well, he’s no Warren Buffett. And I think what I’m hearing today is, well, we don’t want them to be another Warren Buffett, we want them to be a great Greg Abel.
What kind of challenges do you see him facing as he gets the inevitable comparison with our Super Bowl-winning coach Warren Buffett?
[00:45:49] Chris Bloomstran: Well, I hope Greg’s body is in better shape than mine. From the football, very simple, it’s all I know. For all I knew, Greg’s outstanding. If you talk to anybody in the Berkshire world, he’s a phenomenal leader. He’s gotten his arms around all of these operating businesses outside of insurance.
Wonderful reputation. I think the $40 billion of operating cash flow net of depreciation that he has to work with, Warren has said he’s going to he is and he’s going to be a great capital allocator. I think he’s doing that at the subsidiary level. You’re right. There’s no other Warren Buffett and the media is often unmercifully hard on Warren and oftentimes thinks that they can tell him how to run the business.
Greg is going to get that in spades. Fortunately, they’ve got a wonderful board that I think can preserve the culture and Greg’s just going to run the place the way it should be run. And he’ll do a great job.
The bench under him will be great and, you know, the key is the profitability of the business, the durability of the business, not what somebody else thinks about, whether he’s Warren or not, whether anybody’s suitable for that role, nobody’s suitable for that role and they’ve broken it up. I think properly. Todd and Ted are going to do great short-term comparisons of the S&P 500. It really doesn’t matter.
Berkshire has enormous surplus capital in the insurance. Operation and they’re managing $350 billion in common stocks. There is a universe of stocks they can invest in. They’re pretty limited. You don’t want to buy things in a punch card world where you don’t know what you’re doing. Both those guys are good, accomplished investors.
You’ve got a very good team underneath Warren here and Berkshire will be profitable kind of at a steady state the way it’s being run today for a long time. I think it’d be really hard to break this thing. It will take a very long time to break Berkshire for what it is and you know, run it with blinders. Just do the right thing if you’re great.
[00:47:49] Todd Finkle: Charlie said something last year. I tried to listen very closely to everything he said last year and he said, this was funny, he said, you’d have to be a moron. We’ve set this up so good you’d have to be a complete moron to screw it up. And here were the other guys sitting right next to him when he said it. It was hilarious. Typical Charlie.
[00:48:19] Adam Mead: I think back, you know, I said this in my book. I think when Warren is no longer around and Greg is running the show, the responsibility for Berkshire is really on all of us. I mean, we really need to pay even more attention.
We need to be talking about Berkshire and really preserving that culture from the shareholder side. I mean, I feel like there’s so much that’s internal to the company that us as shareholders, you know, keeping the faith, if you will, is super important going forward. So I wouldn’t undervalue each and every one of you who own Berkshire, your individual role in Berkshire’s success post-Warren Buffett.
[00:49:06] Jacob McDonough: That’s a great point, Adam. They spend a lot of time trying to cultivate a great strong base of shareholders and that’s why these meetings are here. It’s very unfair in the media when you know there are magazine covers with, Is this the next Warren Buffett or the next Michael Jordan?
And it’s always impossible to live up to that. And so I know Greg, we’ll have to face that a little bit, but I think the culture is in place strong enough where he doesn’t have to worry about that too much.
[00:49:36] Peter Slegers: When we at what drives stock prices, when we look at the data indeed in the short term. So let’s say one year what 5 stocks prices it’s valuation so multiple expansion-contraction, right? Medium and long term let’s say 5 to 10 years, the growth of the intrinsic value. So free cash flow per share, growth and so on.
But when you look at the very long term, for 20 years and even longer. Well, what drives stock prices? It’s usually the culture. And like already mentioned, well, Berkshire or Warren has built something bigger than itself. It’s built to last.
And also there when you look at the data, for example, you have a study from Harvard Business Review, which states or it states that well-funded lab businesses are performed by 3.9% per year on average. Study of Credit Suisse which states well family.
Businesses are performed by 3.7% per year on average, but obviously, Berkshire Hathaway is an example of that. Tom Gayner Markel’s going for target constellation and so on and so on. So many great companies like that. And I also agree. Well, will there be a next Warren Buffett? Well, no. Warren Buffett was unique.
And if someone thinks he can be like Warren, well, read Alice Schroeder’s book, The Snowball and think again. But I think what sets them apart, the culture is there, the framework is there. So the hardest thing already happened and it will be really, really hard to change the culture and it will remain in place for many years and decades if you ask me.
[00:50:59] Macrae Sykes: And I would just add one quick thing or two things to your coach analogy. First, it was a great interview with Warren and Greg when they did the Japanese investments and you really got a good perspective.
I think feedback from Greg and really gave me confidence in his entrepreneurial thinking, his curiosity for businesses, especially when you’re talking about collaborations with a lot of individual businesses and then there’s a lot to unlock and get excited about and those partnerships.
And so to me, those are all the traits that you had seen and you’ve really got a great sense of that through that interview. It’s I think it’s probably still on the line. And then when you think about the great coaches of the world and the intensity of that competitiveness.
You know you can all think of all the great coaches we know. You know, just listen to Craig Abel, his demeanour, his approach. It’s all of those. And I just think, as you say, good coaching analogy, you want somebody very strong and well versed at the top there and you know to grow and evolve. Without a doubt, that’s my initial impression too. I mean, he’s been a great leader. So I think that shows up, especially in that interview.
[00:52:08] Chris Bloomstran: Do you think we’ll have Greg and Ajit for the entire session, morning and afternoon tomorrow?
[00:52:13] Todd Finkle: I think just morning. And I think, Greg, in the afternoon.
[00:52:16] Chris Bloomstran: Yeah, I think Greg will be [unintelligible].
Todd and Ted
[00:52:24] Steve Clapham: Hi. Steve Clapham from Behind the Balance Sheet in London. I’ve written about the cash in Berkshire being worth a premium when it’s being managed by Warren Buffett and when it’s not being managed by Warren Buffett, it might not be worth quite so much.
I was interested in Chris’s remarks about Todd and Ted being very accomplished investors, which undoubtedly they are the Financial Times article yesterday suggested that they were producing a performance of something like half the S&P when they’re not managing the full capital base, they’re managing about 10% of the capital.
How concerned should we be about their ability to deliver returns on that enlarged capital base in the future and what should Berkshire be doing to give us confidence and comfort that they are as accomplished as we believe they are?
[00:53:16] Chris Bloomstran: Steve, I’ve come to the conclusion that given the size of the stock portfolio, the advantage of having half of nearly half of all the capital in the reinsurance world and writing a fraction of the premium volume allows Berkshire to have a stock portfolio with the preponderance of its insurance reserves, its invested assets.
And so if you lag the S&P 500 by 100 basis points over the next 15 years and if the S&P does 10, I don’t think the S&P will do 10 for 10. But if you underperform by 100, but you outperform fixed income in cash by three or 400 basis points, what an enormous, enormous advantage, I mean that that’s how Berkshire got to be what it is by having much more exposure to the equity class. And then you had Warren’s brilliant, deft stock picking overtime. I mean the alpha overtime even without the leverage from float was awesome.
His big stock picks, the Apple and all the big ones throughout time, but you don’t have to have that. I don’t think Berkshire needs that. You know you’re running such an enormous pool and the S&P has been wickedly tough to beat over various intervals in the last 10, 15 years driven by seven companies driven by maybe 50 or 100 companies, and if you didn’t own those in scale proportion. But if you own businesses, your returns approximate the economic earning power of the companies that you own and you bought them intelligently at reasonable prices. You’re going to generate a better result in your investment portfolio than the rest of the insurance world combined, and that’s the Berkshire advantage.
[00:54:59] Jacob McDonough: And I would just add that I would not compare Berkshire to like a mutual fund or our stock portfolio. I would keep in mind, that I view it more as an insurance business, but obviously, there are many other businesses too. And so there’s no insurance company with as much capital.
So they have a big competitive advantage there. But they’ve really built up an organisation that has very high-quality underwriting and that can be somewhat rare in the insurance industry too. And so I would really focus on their businesses, mostly wholly owned businesses like insurance and compare that maybe to other insurance companies instead of, you know, thinking about just how the stock portfolio is going to perform versus S&P or mutual fund. That’s at least how I view it.
And I think shareholders have got to be very happy with how it’s set up with the insurance business and it’s in a good, good place right now.
[00:55:51] Peter Slegers: Yeah. So, I think also it goes without saying that size hurts performance, right? And Buffett also says, well, When I would only manage 100,000 or $1 million, well, I would have no problem to get a return of 50% a year. And Charlie said on that, well, that’s what I agreed and that’s also something I took away.
You may hear my accent, I live in Belgium and before I would go went working for myself. I used to work for a Belgium as manager involved in managing a 200 million asset management. So from a global perspective, that’s really peanuts, right? But even you could only look at the large-cap companies, so the market is way more efficient there.
And if you can do something really make your own work in a smaller mid-cap space, well, once again, Warren said go where competition is weak and competition is probably weaker in the smaller mid-cap space. To come back specifically to that to the insurance business, well, for me personally, the insurance business, I think it’s something really interesting and something I really want to dive deeper into this year.
And there are probably two things that matter most in insurance. It’s one of your combined ratios. So some of your loss ratio and your expense ratio, right and then the return on equity and like Berkshire has a huge asset, well, Ajit.
When you’re underwriting is way better than your peers or your combined ratio is way lower, so you’re way more profitable and you can do it at a high return on equity, well, that’s something really favourable that something would happen with GEICO, which took their market share for 3% to some other people in the panel will know way better than myself.
But probably the mid-teams, right? So still really attractive and yeah, and the writing policy of Berkshire. Thanks to Ajit, it’s probably way better compared to most peers.
Questions to Warren
[00:57:49] John Norwood: John Norwood from TBL Ventures. So if you’re at the microphone tomorrow and you get a chance to ask a question, what would that be?
[00:58:03] Peter Slegers: Could you please repeat? Oh, it’s a tough one. Should give a thought to that one. Well, to be honest, like I said, I don’t have a specific question for Warren and Charlie probably indeed.
Well, one of the questions I would make from a professional point of view because most of us are in the field indeed, is what’s the biggest mistake you’ve made in your private life and in your business life? What’s something that you really need to avoid? That, for example, well, last year I spent three months reading everything I said and wrote.
It’s a document of 5000 pages, and when you do something like that, probably it will teach you more than any course you could take. It’s so much wisdom. Any university studio you did and so on. So just keep studying. Charlie Munger and Warren is the best thing you could do. And my book list tomorrow probably will be to get a new copy of Poor Charlie’s Almanack. And then I have something to do on my way back to Belgium and so it’s amazing.
[00:59:14] Chris Bloomstran: We’ll see if Becky asked my question on inflation, but if Charlie were still with us, I think he would be willing to talk about Sherry Redstone’s obligation to the common shareholders, all asset classes, voting or non-voting at fair amount.
And her fiduciary obligation. Be interesting. Mario was on CNBC this morning and spoke to it. The Berkshire has two classes of stock, one with superior voting rights. But this place is never abused, but shareholders and there are places where you get a disparity in voting rights and the shareholders are abused. Charlie would talk to that, I believe. I don’t think Warren would, but that would be the question. I’d love to ask if Charlie were with us.
[01:00:01] Todd Finkle: I would want to know about the debt. You know, nobody’s like talking about it, worried about it. That was Charlie’s biggest complaint was our debt. That’s what he was worried about. That and the nuclear issue. Warren’s number one thing is the nuclear issue. But our debt just keeps them. I don’t know what to say.
[01:00:29] Adam Mead: Well, I would. I’d like to know a little bit more about the governance at the subsidiary level. So I don’t think it’s widely appreciated that Berkshire subsidiaries have boards of directors. They’re not, you know, as full or operate like a full, you know, sort of the public company level, but they have boards of directors.
When Tony Nicely stepped down from running GEICO, he remained as chair of GEICO. Todd and Ted have each chaired. I think they still chair a subsidiary. So I’d just like I’d love to get some more, more insight into how that works from talking to some of the managers over time. It more or less functions as an advisory board, but just give us a little bit of a peek behind the curtains there and how it operates and how it runs.
And then aside from that, I would just love to see them. I say them, well, Greg could too, but just reminisce about the old days. I mean, I think some of the most fun moments of the years with Charlie and Warren towards the tail end of the meeting, they start bantering off of each other and these wonderful stories come out of this. And so I’d love to have Warren in reminiscing mode and tell us some, maybe, maybe some fun stories about Charlie that we’ve never heard.
[01:01:56] Jacob McDonough: No specific question for him, but I would love to hear from Ajit Jain more. He’s a legend in the insurance industry and a big reason why Berkshire has been successful in that field. And there’s a lot less on him in the public domain versus Charlie Munger, our Warren Buffett, in terms of interviews or writing. So over the next handful of years, I’d love to just hear as much as we can from Ajit Jain. And hopefully, on Saturday we get some of that.
[01:02:20] Macrae Sykes: And I think I’d like to learn more about the Japanese investments, whether you know stock specific, a real goal that people are international and also the derivative effects, who’s partnering with those companies and co-investing and doing other things. I’d love to hear more kind of on their thinking around those.
[01:02:40] Speaker 8: Mac, I think we have one over here.
Corporate governance
[01:02:43] Bob Robotti: Hi. Bob Robotti, Robotti and Company. You touched on it a couple of different times. Governance. It seems to me like that’s an interesting question and a dynamic because you have corporate governance in a company where we now will have a different chairman from the rest of the board because we need to because we’ve had corporate governance that we don’t need at Berkshire Hathaway, right?
When Warren Buffett, the CEO of the company, is a large shareholder, the board serves a certain function. When he’s not there, the board will play a different function. So the relationship between the board and how it has to step into the role of functioning oversight. You really kind of didn’t need that when Warren was around. How does that dynamic?
Then enter into the managers and how they think about their businesses and clearly the boarders need to make decisions and changes over time. It inevitably will happen. So it seems to me that’s a really interesting dynamic. Corporate governance will ascend itself here, where it’s never been needed.
And how does that interplay with the managers? We hear a lot about the managers and how they do things whenever they because inevitably one of those managers will have a problem, how does that interplay work out? And isn’t that an interesting corporate governance management dynamic that has implications? And I don’t know what those are. Do you have ideas?
[01:04:03] Adam Mead: I mean, I think Warren star is so bright that we don’t fully appreciate it. You know, we talked about Greg, but the board as well, you know, you’ll hear Ron Olson talk from time to time.
Chris Davis, a relatively new Berkshire board member, gave an excellent interview recently and I again have full confidence in this board who have not been given their shares. They’ve purchased their shares with their own money and you know, I won’t go as far as Todd and say, you know, I want to have this person on the board.
Berkshire already has its criteria in place. They want someone who’s owner-oriented, has a significant stake in the company and business business-minded. So I think we already have that. Warren has set that table. Now the ranks have been shrinking with some deaths over the recent years. But I’m I feel good about the governance at the top and I feel good about the governance at the subsidiary level and undoubtedly there will be issues over time. But I think they’ll work themselves out and you know, I think we’ll be surprised at how well things actually work 10 years from now.
[01:05:16] Chris Bloomstran: Bob, as you know, the directors are paid the ghastly sum of, I think $300 per meeting. And if you’re on the audit committee, you’re paid an extra $1000. These people don’t join the board like anybody else in corporate America to get rich.
They’re already rich. Generally, they already own a lot of the stock and I think the elections of late as Warren lost a lot of his great friends. The replacements are terrific people. They’re going to be as shareholder-oriented as anybody you’ll find. It will be a more active board. You’re not going to be able to go throw 5 and $3 billion at GE and Goldman Sachs in a weekend.
It might take a week, but you’ve got very competent investors. And shareholder-oriented people on the board, but it’s a hugely important point, but I mean compared to any other public company and you’ve got the gold standard here.
[01:06:18] Jacob McDonough: Yeah, it’s a model board for what the reasons Chris just said. But it’s a model board for pay reasons and for the members that are on it. But one of the most important things the board will have to do in the future is make sure the right leaders are in there, which obviously they have not had to worry about for the history of Berkshire. So that will be a big change. But it is a model board, so I trust the board to get the job done right.
[01:06:44] Peter Slegers: Also in a podcast recently in the sense that for the board of Berkshire, the fun part is now and has been over the past 10 years, right? Because they had the opportunity and still have the opportunity to talk with Warren to chat with Charlie in the past and so on.
But for me, the most important part is probably indeed the incentive structure and everyone on the boards, well, they buy their own stake. They think as an owner-operator and paraphrasing Charlie Munger here, I always understood the power of incentives and have always underestimated them, and I think that the incentives at Berkshire are right.
The incentives within the board are right. The incentives within lower management are right and that’s why I also don’t worry too much about governance. And once again, I think Berkshire is built to last.
[01:07:34] Todd Finkle: Oh, no, 300 bucks is a lot of money. I mean, that’s like 10 dinners at Garats.
[01:07:42] Macrae Sykes: I think they paid them less for the Zoom meetings during COVID. Here’s 100 bucks.
[01:07:51] Macrae Sykes: On the $300 note, thank you to the panel today. It was delightful. And behalf of Gabelli Funds, we thank you again and we’re going to start off in about three to four minutes. Thank you.
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