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Warren Buffett: I Can't Recall When I Bought An IPO

May 05, 2014 | About:
Fox Business

Fox Business

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FOX Business Network's (FBN) Liz Claman spoke with Berkshire Hathaway Chairman and CEO Warren Buffett (Trades, Portfolio), Microsoft founder Bill Gates (Trades, Portfolio) and Berkshire Hathaway Vice-Chairman Charlie Munger (Trades, Portfolio) in a wide ranging interview following the Berkshire Hathaway shareholders meeting. Regarding whether he was interested in the Alibaba IPO, Buffett said, “I can’t recall when I bought an IPO, literally in 50 years maybe I have.” Regarding his succession plans, Buffett said “the candidates are all internal. And I've said that they're male at the present time, although that would not necessarily be the situation, in the future.” When asked about Amazon founder and CEO Jeff Bezos buying the Washington Post Buffett said, “I hope he succeeds like crazy. If anybody has a chance to do so I bet on Jeff.” Buffett also spoke about the insurance business saying, “We won’t sell Geico. No. Never.” Bill Gates (Trades, Portfolio) commented on supporting Microsoft CEO Satya Nadella if he wanted to spinoff the company saying, “Absolutely” but “I can’t see that making sense to break it off.”

Here is the link to the video.

Excerpts from the interview are below:

Buffett on whether his is interested in the Alibaba IPO:

“I can’t recall when I bought an IPO, literally in 50 years maybe I have.”

Munger on possibly investing in Alibaba:

“It’s out of my realm.”

Buffett on who his successor will be:

“Well, the candidates are all internal. And I've said that they're male at the present time, although that would not necessarily be the situation, in the future.”

Buffett on whether his successor will be a female:

“It could, sure. I'll bet someday it does. I mean, but right now, they're male and they're internal. And I think it's a virtual certainty that they'll be internal forever.”

Buffett on what he will require from his successor:

“Well, I can't require anything because I won't be here. But in terms of our culture, I think that there's no question that my successor will be someone that is bought in 100 percent to the culture. Now, they'll do things their own way. And they should. But we have a distinct culture. And we set out our economic principles in the back of the annual report. They haven't changed, virtually, for 30 years. And we're a certain type of business. That's not the only way to run things, but it is the way we run things at Berkshire. And I can't imagine a successor changing that in a material way.”

Buffett on whether he will require his successor to live in Omaha:

“I think it's - the probabilities are almost 100 percent.”

Buffett on activist investor Carl Icahn (Trades, Portfolio):

“Carl goes into different companies to some extent than we do and I think he kind of enjoys the game too well, but we’re not doing the same thing Carl Icahn (Trades, Portfolio) is doing.”

Gates on Warren Buffet’s investing:

“I don’t believe in promoting stocks. Even like good companies like Berkshire (BRK.A)(BRK.B) and Microsoft (MSFT). Warren promotes the products and I love to promote the products.”

Buffett on whether the U.S. Dollar will go away:

“I believe the U.S. Dollar will be the world’s reserve currency for a long long long time.”

Gates on Warren’s Buffett’s Coca-Cola decision on executive compensation:

“He did state his opinion. I wish there was more people like Warren who were speaking out about executive compensation.”

Gates on whether Satya Nadella is a good fit to run Microsoft:

“Absolutely. He’s off to a great start. He has used more of my time than was the case before and I’m enjoying going and giving some advice. He’s re-examining all of the things, he’s already made some really good changes, it’s exciting to have young blood and new thinking.”

Gates on whether he will separate Microsoft into two separate companies:

Well certainly the Bing technology has been the key for us learning how to do large scale data centers. And Bing let us see what’s going on in the internet so that as people are interested in various topics, we know what’s new. We know when they’re typing text what it might mean so I see that as a pretty fundamental technology for the company. Even for its office business that’s a very, very core business. We have done spinoffs historically, Expedia was a company that got started inside Microsoft, Slate magazine did and we’re thinking about are there pieces that are separable, but our basic research including the stuff that goes into Bing I can’t see that making sense to break it off.”

Gates on whether he would separate Xbox:

“Well we are taking PC gaming, windows gaming and Xbox gaming and bringing those a lot closer together. The power of the PC chip, the graphics chip which means you can do great games there, so I’m sure Satya and the team will look at that and you know it’s up to them.”

Gates on whether he would support Microsoft CEO Satya Nadella if he wanted to spinoff the company:

“Absolutely.”

Buffett on Amazon founder and CEO Jeff Bezos buying the Washington Post:

“I hope he succeeds like crazy. If anybody has a chance to do so I bet on Jeff.”

Warren Buffett (Trades, Portfolio) on whether he has spoken with Amazon founder and CEO Jeff Bezos since buying the Washington Post:

“I haven’t talked to him since he bought it, but I will talk to him from time to time but, no I have not talked to him.”

Munger on whether he still feels Bitcoin is rat poison:

“It is. I was holding back a little.”

Munger on whether Bitcoin should be regulated:

“I wish it would go away.”

Buffett on whether he would prefer investing in Blackberry or Bitcoin:

“I’d probably short them both.”

Gates on Bitcoin:

“Bitcoin is mostly about anonymous transactions and I don’t think, over time, that’s a good way to go. That is, I am a huge believer in digital currency. In fact, the Gate Foundation is very involved in trying to get that going in poor countries so we can have cheap financial services even for people without much money. But doing it on an anonymous basis I think that leads to some abuses. So I am not involved in Bitcoin.”

Warren Buffett (Trades, Portfolio) on whether he will have the shareholders meeting in Dallas, TX next year:

“I really won't. I mean it is true that physically, Dallas could handle it better than Omaha. But we'll find a way to hold it in Omaha. I can't leave Omaha from behind.”

Buffett on whether there are any financial currencies on the Berkshire Hathaway books:

“Right now there aren’t but we own a lot of businesses that do business all over the world. So we are affected by foreign currencies daily. We have insurance liabilities and foreign currencies, but we have no currency position at all.”

Munger on the situation with Russia:

“I don’t like modern countries trying to change borders. The United States has intervened in some foreign countries, but we haven’t tried to change borders since the Panama Canal. We’ve seen this movie before and it didn’t have a good ending.”

On how the administration is handling Russian President Vladimir Putin:

Buffett: “It’s dangerous when boundaries start getting changed. It can set a dynamic in motion that really is impossible to predict. I don’t like uncertainties about things like that.”

Gates: “There are things being done, you always have the question are you escalating the problem in getting into a negative sum situation. Everyone hopes that we are not going to have a situation in the Baltics cause then you have the NATO guarantee comes in.”

Buffett on the possible “scary” situation in the Baltics:

“There are going to be in 50 years lots of scary situations…we face scary situations and some days we are more conscious of those than others. But they are out there all the time.”

Buffett on whether there will be a chemical attack in the future:

“Sometime in the future yes, I just hope it’s a long way off.”

Buffett on the impact driverless and safer cars will have on the insurance business:

“If they really work well then they are good socially. But sure, they could reduce the cost of insurance. Anything that improves, reduces accident rates, reduces death rates will reduce the cost of insurance. That’s basically a good thing for society. Overall the world would be better off if we didn’t have any car accidents.”

Buffett on whether he’d consider selling Geico should the insurance market take a hit due to advances in technology:

“We won’t sell Geico. No. Never.”

Munger on whether the Chinese government will mandate the need to drive electric cars:

“They’ve already started in that direction. That is a case where bad news in Chinese pollutions is good news with BYD. I think eventually China will decide they shouldn’t be killing people with the air in their cities and I think they will intervene big time and I think it will help BYD.”

Buffett on the impact the move to cleaner energy will have on Burlington Northern:

“If there’s a choice about something that’s good for Berkshire or good for the world, we’ll vote good for the world absolutely.”

Buffett on whether he’s still looking to invest in a Chinese company:

“I am looking for a company anyplace.”

On a possible global tax on the wealthy to diminish the wealth gap:

Munger: “I am all for fair taxation but I am not afraid of unequal outcomes. I just think the world works better if you allow it… I am not working hard to try to close the gap I am trying to increase it because I want to get richer so I can give more away.”

Buffett: “We want to have unequal outcomes. We want equal opportunity. If you have equal opportunity you are going to get very unequal outcomes.”

Buffett on the Sallie Mae student loan debt :

“I don’t worry about it causing a bubble. I worry about it causing individual problems where people are taking it on. When the classes come out to Omaha I ask them how many have significant debt and a lot of them do and they have made the decision that the education they are receiving is worth taking on the debt and I think in many cases they are right and in some cases they are wrong. But it’s a choice to be made. Do you want to trade away part of your future income for increasing your skills now and that’s a good trade for many people and not a good trade for others.”

On whether they support redistribution of wealth:

Munger: “Not much.”

Buffett: “More than Charlie.”

Gates: “Same as Warren.”

Buffett on their investment strategy:

“We look for the best opportunity available in any given time. If 3G [Capital] came to me today and say they have a wonderful idea and would we like to join them. The odds are very very high that I’d say yes and whatever I was doing before I’d drop from the list at that point to be doing that. I like owning businesses over the long term better than I like owning stocks just because it keeps building for Berkshire. But stocks are a marvelous alternative…stocks will always be an important part of our capital allocation activities. Buying a business outright is what we are really looking to do. And we get a chance to buy in with a wonderful operating partner like 3G, that’s almost too good to be true.”

On Heinz:

“If you have excess people in the company it’s better not to get them in the first place…The people that are running Heinz are running it the way it should be organized. There are plants that were in the wrong places and there were people that weren’t needed. But now essentially they’ve got a business model that is perfect for the future.”

Buffett on whether he’d support Hilary Clinton if she ran for president:

“A 100 percent.”


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