Fox Business Network Interview Before Berkshire Hathaway Meeting: Buffett Feels "better" about His Goldman Investment

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May 01, 2010
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WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY: I don't know the answer to that. I know we sent out more tickets than ever and I know the lines were longer this morning than ever. So, I would expect around 40,000, but we never have it totally accurate, you know, they come and go and it's -- but that's a good guess.

LIZ CLAMAN, FBN ANCHOR: The Burlington Northern effect, you can feel it at this meeting. It's your biggest acquisition to date and what do you think is going to color the meeting as it pertains to Burlington Northern?

BUFFETT: Oh, I think people will be very interested in why we did the deal and I will be shortly singing "I've been working on the railroad," and they'll say why the hell did he buy a railroad if he's going to do that to us?

CLAMAN: It was a big purchase and you had to split the stock, and you and Charlie hate to issue Berkshire stock.

BUFFETT: Yes, but we wanted to be fair to all holders of Burlington, and we wanted to buy the Burlington.

CLAMAN: Speaking of all of the companies ...


CLAMAN: ...the three that give you the best indication that the economy is coming back?

BUFFETT: Well, I would say that ISCAR and Marman are the two because they hit so many industries. And it's instant time; nobody's buying those little tools at ISCAR to put them away for Christmas or something like that. So, we know what's going on in real time with big, capital goods businesses all over the world.

And Marman is in 130-some businesses. And again, their customers, generally speaking, are responding to what they're seeing right now and they're not stocking inventory or that sort of thing.

CLAMAN: Conversely, the companies that you wish were doing a lot better but are affecting the numbers at Berkshire in a negative way?

BUFFETT: Well, all of the things to do with home building are still slow, but that's good. I mean, in the sense that we have had an overhang of residential housing, very significant. We built too many houses in relation to the household formation. We have to work that off. And so, the quicker we work it off, the sooner our home building related businesses will come back. So, that doesn't bother me at all, but they have not come back yet.

CLAMAN: But Clayton Homes, then, is not going to be getting rid of inventory in that regard.

BUFFETT: Well, we get rid of inventory because we don't build too much. It's really the households at the other end. There were too many houses out there, particularly in some localities. That's getting solved, Liz, and I predicted in the annual report that except for a few spots, a year from when I wrote that report, February next year, I think we'll be a long way back to normal.

CLAMAN: I talked to Carol Loomis, of course one of the journalists who will be issuing up questions today at the meeting. And she said as of yesterday, she was still getting late questions about Goldman Sachs; it's almost the top topic of the day, you know. As it pertains to that $5 billion investment that you made in Goldman Sachs, do you feel as good today about the Goldman Sachs investment as you did back in 2008 when you made it?

BUFFETT: I feel better. I mean, I love that investment because we have $5 billion in a preferred paying us 10 percent. That's $15 a second. So tick, tick, tick, $15 every time I say that. And I have no worries about getting that $900 a minute, you know, $500 million a year. Plus, we've got some very interesting warrants. So, I -- that's one of my favorites.

CLAMAN: It doesn't sound like you're worried about the overhang of investigations that swirl around this country.

BUFFETT: Well, nobody likes investigations and I went through that at Salomon and who knows how everything comes out on that. But I know that Goldman -- I did my first trade with Goldman in January of 1956, 44 years ago. They've raised money for me lots of times, helped create jobs in that respect. We've made acquisitions through them. I've done all kinds of things, and I have been very well served.

CLAMAN: Are you disappointed, though, in what you've seen so far as far as the emails that have been released? I mean, it's just something that a lot of people question at this point.

BUFFETT: Yes, well, I would say this, if I saw the emails of everybody in business or government or maybe even the clergy, who knows what I would find.

CLAMAN: Then, the question remains, people ask is capitalism under attack? There's been some bashing recently. Do you get a negative sense in this nation that capitalism's in trouble?

BUFFETT: The American people believe in capitalism. I mean, they may get very upset about this or that, but they believe in our democracy. They may get upset with Congress from time to time. But this country works. I mean, it works for the citizens, it works for business. It's a remarkable place, I mean when you think about it. And it has lots of imperfections. We try to get rid of this one and that one as we go through life of the country and it's a better country now than it was 50 years ago or 100 years ago.

CLAMAN: Well, I'll tell you, Americans here believe in you, and then that leads to what people really want to know is your succession plan. And you keep saying you've got these three names under wraps in your office. Do you feel in a way that you ought to let people make the decision of who those three people are, whether they want to keep the stock?

BUFFETT: Well, they aren't under wraps in the office. I -- the Board of Director spends more time talking about a succession. and we have a board meeting on Monday; we'll talk about it more than anything else. And if I drop dead tonight from overeating or whatever it may be, tomorrow morning, there will be a successor in place, and the board knows exactly who. And if for some reason that person dropped dead, there's a second choice.

So, there's actually could be easily more than three choices now. There happen to be three, and they'll come from within. I mean, we want -- and they'll be reasonably young, because we want them to have a long shot at it. But we have never been better prepared for succession.
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