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12:58
OWHmoney@OWHmoneyI've been resisting the urge to see what happens if I flip this "hockey horn" switch in the press box at #BRK2014 pic.twitter.com/8qKYwasBnC
1:00
Barbara Soderlin@barbarasoderlin@WarrenBuffett is back on stage and #BRK2014 will resume shortly. Follow our live coverage at Omaha.com
1:02
Barbara Soderlin (OWH): Warren Buffett is back on stage at the Berkshire Hathaway annual meeting here in Omaha and the afternoon Q&A is about to begin.
1:03
Barbara Soderlin (OWH): Warren says he sent out 11,000 more tickets this year than last. All the overflow rooms are filled here at the CenturyLInk Center and the Hilton. Substantial more attendance than in any year in the past. "I hope the spending patterns reflect that."
1:05
Barbara Soderlin (OWH): Question: Given Energy Future Holdings' likely bankruptcy, what assets in BRK's portfolio are subject to disruptive factors in the economy and technology?
1:06
Barbara Soderlin (OWH): Warren takes the credit/blame for that investment. He assumed, wrongly, that gas prices would stay as high as they were or go higher. Instead, they went a whole lot lower. "That was a basic error."
We look at all of our businesses as subject to change. Consider Geico. In 1936, it offered low prices, low costs for a necessity. Was first offered by mail to government employees. "They had to adapt over the years. They went from the U.S. mail primarily to the telephone and later went to the internet and on to social media."
1:07
Barbara Soderlin (OWH): They stumbled, and at one point were too aggressive about expanding.
"There are changes going on all the time and it's going on with all of our businesses. We want managers that are thinking about change and what's going to be needed for their business model in the future."
1:07
Barbara Soderlin (OWH): BNSF for example is looking into LNG fuel for its locomotives.
1:08
Barbara Soderlin (OWH): WB: "I will make mistakes in the future. That's guaranteed. We do not make anything like bet-the-company decisions that will cause us real anguish."
1:09
Barbara Soderlin (OWH): Recalls buying a department store in Baltimore in the 1960s. Fortunately they sold it. "The $6 million invested became worth about $45B in BRK stock as we did other things with the money as we went along. You have to be very alert with what is going on with your businesses."
1:10
Barbara Soderlin (OWH): Charlie: The trick of "scrambling out of your mistakes."
Considering the textile mill they started with:
"Think of how we might have done if we'd had a better start!"
1:13
Barbara Soderlin (OWH): Question: On Heizn, BRK's 50 percent ownership is included in results, which could be meaningful to BRK's earnings. What is Heinz' earning power?
WB: "Heinz will be filing its own 10Qs. The first quarter will be about due now. You will get to see Heinz' figures. Heinz was actually a very reasonably run food company with 15 percent pretax margins for many years. ... I would invite you to look quarter by quarter. I think the margins for Heinz will be significantly improved from those historical figures. ... They've just restructured the business model and I think the brands, which are all important, are as strong as ever." Won't name a number tho.
1:14
Barbara Soderlin (OWH): Question: Expand on how you think about comparing investment opportunity. You haven't been afraid to make a single position a large portion of your portfolio. ie. Coke. Could BRK have achieved its historical returns with a more simple, concentrated portfolio of your favorite names... versus the larger more complex collection of businesses that exist today?
1:15
Barbara Soderlin (OWH): WB: Looking back, he spent too much cash reserves too early in 2009 panic. We did fine on the expenditures we made during that period but obviously we didn't do remotely as well as we would if we'd kept the powder dry and spent it all at once at the bottom.
1:15
Barbara Soderlin (OWH): Overall, we did reasonably well going thru that period, but looking back, the most money would have been made just buying a bundle of stock.
1:16
Barbara Soderlin (OWH): Overall, what we really want to do at our present size and scope and the objective we've got for our shareholders, we want to buy good businesses with good management and try to build them over time.
As we start 2014, we've got a really good group of businesses. What we're trying to do is add on to them and make sure they don't issue any shares in the process.
1:18
Barbara Soderlin (OWH): WB: I feel the game is still a very viable one. It's still got some juice left in it.
Charlie: The private businesses have gotten to be a bigger portion of the company, compared to stocks. "I would guess that will continue, wouldn't you Warren?"
WB: Sure.
Says being right about businesses, versus stocks, doesn't show up as quickly. "It's a different sort of build-up of value. One is easier to see than the other. But the other is more enduring and does not require going from flower to flower. We've moved into Phase II."
1:19
Barbara Soderlin (OWH): Charlie: "We are forced by our own past success into these bigger positions. ... I think we've adapted pretty well to changes in our circumstances. Since change is inevitable, how well you adapt to it is terribly important."
1:21
Barbara Soderlin (OWH): WB: Felt comfortable buying Wells Fargo. Looking back wonders if he should also have bought banks with a worse record. They had the greatest recovery; having fallen so far.
1:23
Barbara Soderlin (OWH): Question on GEICO: Usage-based pricing and how that will affect the auto insurance industry. How do these changes affect the "moat" at GEICO.
WB: Says even if the future is challenging, he will not sell GEICO. Usage-based pricing, such as at Progressive, "there's no question that knowing how customers drive and how they use their cars is a valuable input to assessing the proper premium to people. And insurance is all about evaluating the propensity of loss to establish the proper premium."
Says it's easier with life insurance -- Jokes that a 90-year-old is more likely to die.
"Even at 83 they're more likely to die than someone at 20."
1:24
Barbara Soderlin (OWH): Progressive, is trying to better know the propensity of that particular driver to be in an accident. "We look at lots of variables, they look at lots of variables. We think we've got a pretty good system and so far that's been proven correct."
"I feel very very very good about GEICO's management and its ability to manage risk."
Says there's nobody better at it than GEICO.
1:25
Barbara Soderlin (OWH): The self-driving car? "That is a real threat to the auto insurance industry." If it reduces accidents, "It will be very good for society and very bad for auto insurers."
1:25
Barbara Soderlin (OWH): Still, "It would not cause us to be thinking for one second about selling GEICO."
1:26
Barbara Soderlin (OWH): Charlie remembers a presentation 30 years ago about movies on demand in the home. He thinks self-driving cars also "might take quite awhile."
People laugh when he allows, "That could be wrong."
WB: "If we're wrong, we'll be wrong together."
1:27
Barbara Soderlin (OWH): Question: Given the number of quality family owned businesses internationally, why aren't they investing more capital outside the region?
1:28
Barbara Soderlin (OWH): WB: They have no feeling they'd rather be doing something here, "We have not had as much luck getting on the radar screen of owners around the world as we have in the United States."
"Our best bet" is to buy a business from an owner or family member. He thinks most U.S. businesses think of them and would prefer them, but they do not have the recognition internationally.
1:29
Barbara Soderlin (OWH): "I've been a little disappointed that we haven't had better luck outside the country. We'll keep working at it."
1:30
Barbara Soderlin (OWH): He says Israeli metalworking company Iscar is doing great, however.
1:31
Barbara Soderlin (OWH): Question: From a San Franciscan: In the past Warren has advised people work within their "circle of competence." How does one figure out what one's circle of competence is?
1:32
Barbara Soderlin (OWH): WB: He and Charlie have been good at identifying the perimeter of their circle of competence. Warren has gone outside of it in retail more than in other areas. "It's easy to think you understand retail."
"You can say I was outside of my circle of competence when I bought Berkshire Hathaway." -- to buy control of the company, "Which worked out," he notes.
1:33
Barbara Soderlin (OWH): I certainly know of a number of CEOs who I feel have no idea where their circle of competence begins and ends. We've got a number of managers I think are just terrific at it. They really know the game and they're playing to win.
The ultimate was Mrs. B at the furniture mart. She told me she did not want stock (out of the deal). She knew a lot about what to do with cash.
1:34
Barbara Soderlin (OWH): Suggests getting your friends to tell you what you are good at, like Charlie has for him.
1:37
Barbara Soderlin (OWH): Question: from Carol. I think of you as running a rational company. But when looking at comparison of BRK value per share compared to S&P 500. What is the rationale of comparing an index against an operating company's book value? Why do you annually make this irrational comparison.
Charlie: The answer is you are totally right, and the answer is Warren wants to make things difficult for himself. It makes it hard for Warren to look good. It's insane, you right.
1:46
Barbara Soderlin (OWH): Question: Young man from New Jersey: I really connect with the idea of not investing in industries you can't fully understand. But: the concept of entrepreneurship is synonymous with technology today. If WB were 23 years old, what non-tech industry would he start a business in?
WB: Would still go into investment business. Would learn from experts. If he got interested in the coal business, would talk to coal industry CEOs, just like he did at that age.
"They felt a fellow from Omaha who looked like me couldn't be too harmful. They'd always see me."
I would ask them, if they had to put all of their money into any coal company but their own, and go away for 10 years, which one would it be and why? And, if they had to sell short in one coal company, which would it be and why?
You're not going to learn how to start another Facebook or Google that way. You have to have a real curiosity about it. You cant do it because you're mother's telling you to. It has to really turn you on.
1:48
Barbara Soderlin (OWH): WB: "You'll find what fascinates you. If you're lucky you find it early."
1:48
Barbara Soderlin (OWH): Charlie: Realized at CalTech that thermodynamics was not for him. "I've done that with field after field and pretty soon there was only one or two left."
WB: I had a similar experience in athletics.
1:49
Barbara Soderlin (OWH): Question: Elaborate on how WB's comments on a hotel shortage in OMaha contradict with free market capitalism.
1:50
Barbara Soderlin (OWH): WB: It;s very logical. If you think about most cities, the big events that come to their convention centers and use their hotels, they size themselves in deciding where to go. ... If you have an event which isn't sized by the people that are scheduling it, then you can totally outstrip rational supply of rooms. (For example ... the Masters in August, Ga.)
1:50
Barbara Soderlin (OWH): Omaha cannot size its hotel supply to the Berkshire meeting.
1:52
Barbara Soderlin (OWH): What really bothered me were the three-day minimums. There is something particularly irritating about somebody who's coming in for a one day event to have to buy three days.
He mentions moving the event to Dallas:
We're not going to move to Dallas. Omaha people love this event. It's an economic boon for Omaha, and people get a good impression of Omaha.
1:52
Barbara Soderlin (OWH): Calls Airbnb a "flex supply".
Charlie: "Nothing to add."
1:55
Barbara Soderlin (OWH): Question on GEICO: Will GEICO with 10 percent market share in auto insurance eventually overtake State Farm, which has 19 percent market share?
WB: "We passed Allstate this year. State Farm is a terrific company." Started by a farmer with no insurance experience.
"It has taken us since 1936 to become number two.
I have some projections that if I live to be 100 we should be number one. I tell GEICO that I am going to do my part. The rest is up to them."
Says GEICO must continue to take good care of customers and do a good job assessing risk.
1:55
Barbara Soderlin (OWH): State Farm has a strong agency force, lots of satisfied customers.
"It won't come fast, but I do think it will come."
1:57
Barbara Soderlin (OWH): GEICO culture: They really have their own idea about how it should be done, what should be done right?
Charlie: GEICO reminds him of COSTCO. "It's easy to talk the game, but living the game is something else." It's against the nature of retailers to get the price down.
1:59
Barbara Soderlin (OWH): Chicago man: Has WB's frugality hurt Berkshire?
Charlie says Warren is more frugal.
"Warren lives in the same house he bought for a very modest price in 1950 something?"
Warren: "I have everything in life I want. If there is anything money could buy that I wanted, I'd do it this afternoon. I do not think that standard of living equates with cost of living beyond a certain point. There is a point I think if anything you start getting inverse correlation. My life would not be happier -- in fact it would be worse -- if I had six or eight houses. Having everything I have, you can't have more than that."
2:00
Barbara Soderlin (OWH): Charlie says frugality is helping BRK.
Just look at the shareholders, who are frugal.
"We collect you people."
WB: "But forget about it this weekend! The more you buy, the more you save at these prices, folks. "
2:02
Barbara Soderlin (OWH): Question: Would he ever consider moving BRK overseas to save tax money, if it would create value for shareholders?
Charlie: That would not be a legitimate idea.
WB: We could not have done BRK in any other country. America has in a very very big way helped Charlie and I become very very very rich.
WB: Still -- when he gets done filing taxes, "We don't add a tip of 20 percent."
"We follow the rules but we don't begrudge the taxes we pay. We've earned a lot of money while paying U.S. taxes."
2:03
Barbara Soderlin (OWH): Considering UP's stake in a Mexican railroad, and the business potential in Mexico, how attractive do you find the Mexican frieght market?
2:04
Barbara Soderlin (OWH): WB: "There are good prospects there, but there are good prospects elsewhere too." Says "the math does not work for Mexico." They are thinking about Mexico but also other markets for moving more freight in the future.
2:06
Barbara Soderlin (OWH): Question: Los Angeles man: On intrinsic value, what differences do you have if any for calculating intrinsic value versus what was said in security analysis, and how does management fit into that evaluation?
Also, what company do you fear the most? Why is it that no one else has done what you have done? I mean, Coca cola has their Pepsi.
2:07
Barbara Soderlin (OWH): WB: The intrinsic value of any business, is the present value of all cash ever distributed by that business between now and judgment day. Aesop said a bird in the hand is worth two in the bush. The question is, how sure are you that there are two in the busy? How far away is the bush? What are interest rates?
2:12
Barbara Soderlin (OWH): If I had a silver bullet, what company would I shoot as being a threat to us?
I see private equity buying lots of businesses. At present they can borrow money very cheap. There are always going to be people competing with us to buy businesses. But I don't see anybody that's got a model, or trying to build a model, that will essentially go after what we're trying to achieve, which is to buy wonderful businesses from people who care about where their business goes and who generally want to keep running them.
Charlie: BRK has enough advantage it will keep going a long time. All the great businesses of yesteryear, how many of them got big and stayed big? Very few people keep going well. I think we'll be more like Standard Oil than other businesses. We will keep going. We'll keep learning from our mistakes. The people up here are no longer that important. the momentum is in place. The ethos is in place. You young people in the audience, don't be too quick to sell the stock.
2:13
Barbara Soderlin (OWH): Charlie says they don't get more copycats because it doesn't look easy.
Also, WB says, it takes a long time.
Charlie: "The difficulty of it being slow is, you're dead before it's finished."
WB: "Well, that's kind of cheerful."
2:15
Barbara Soderlin (OWH): Question on inflation: It seems like every central bank in the world is desperate to create inflation? How would BRK behave differently if it became clear the future was turning inflationary?
WB: Inflation would hurt us.
Let's say drones drop $1 million in every household.
"The one thing I can guarantee you is that BRK would be worse off." "You don't create wealth by inflation and a firm like BRK, our earnings per share would go up. ... But the value of your investment in real terms would go down,"
2:17
Barbara Soderlin (OWH): Charlie: "I don't like this huge confidence of, all you have to do is keep printing money and spending it. We can handle a little subpar growth for some stretch."
2:18
Omaha World-Herald@OWHnews Retweeted by OWHmoneyAll the best @OWHpictures photos from today's #BRK2014 meeting at @centurylinkoma: bit.ly/1hmGCmX pic.twitter.com/lTVktC2LG7
2:22
Barbara Soderlin (OWH): WB: On acquisition pressure:
We try very hard, Charlie and I, not to get eager to do a deal, but to get eager to do a deal that makes sense. That would get a lot harder if we had directors, strategy departments, all pushing us toward, what have you done in the last three months.
2:29
Barbara Soderlin (OWH): Shareholder question:
Do you believe a financial crisis will come about as a result of bringing justice to criminal activity on a large scale, or we have reached a point where criminal activity on Wall Street is being institutionalized, because they're too big to fail?
Charlie:: I think behavior on Wall Street is enormously improved as a result of the drama we've been through.
You're never going to have perfect behavior when human beings live in a miasma of easy money.
I do think a few criminal prosecutions do change behavior, and it looks to me like we'll get a few
WB: I lean more toward prosecution of individuals, than corporations. It's easy to prosecute a corporation and the corporation's going to write a check. Their calculus is such that it doesn't make sense to fight it if they can write a check.
2:32
Barbara Soderlin (OWH): Question on lack of insurance to cover a worst-case railroad accident scenario. How can BNSF protect itself?
2:33
Barbara Soderlin (OWH): WB: The four major RRs really have the capacity to pay a huge award if something terrible should happen.
It might be a very very significant financial hit to them but I think they have the capability if something really drastic happened to handle that kind of an award. And if they feel that they don't, they can buy insurance from Ajit.
2:35
Barbara Soderlin (OWH): Charlie: The big surprise for everybody was British Petroleum. Nobody believed that an accident from one well would have a lawsuit of so many millions of dollars.
I don't know about Warren but after that I would have less enthusiasm about drilling in the gulf.
2:37
Barbara Soderlin (OWH): WB: The big risk is some form of very effective terrorism or action from a rogue state. War acts are excluded from policies but you could have some kind of a terrorist act that could create damages like we have never seen. There is obviously a reasonable probability of that happening sometime in the next 50 years.
2:43
Barbara Soderlin (OWH): Question: Man from Chicago: Do you ever have any plans or would you be interested in buying a professional sports team or sports equipment manufacturing company, given where sports is in the global world today?
WB: No. "In fact, Charlie and I, you read that either one of us is buying a sports team, it might be time to talk about successors."
WB: Of sporting equipment,
"It's not been a particularly profitable business."
Says BRK should not own a helmet company.
"We would be the ultimate target" for lawsuits. Save that for someone whose net worth does not amount to "two figures."
"Charlie, here, are you looking at the Clippers?"
Charlie shakes his head no.
2:48
Barbara Soderlin (OWH): Question: What do you make of the larger trend of activism in corporate America?
WB: "I don't think it will go away and it scares the hell out of a lot of managers.
There are certainly cases where corporate management should be changed. You can't have thousands of corporate managers without that being the case. ... But -- activists are "certainly attracting more and more money" from hedge funds. "That means they can play the game on a bigger scale. Anything on Wall Street that looks like it's successful will generate a funds flow."
2:52
Barbara Soderlin (OWH): Question from San Francisco: What is the most intelligent question you have been asked recently on investing and what was your answer to that question?
Charlie says it was the one on how book value relates to index performance.
Warren says college students frequently ask the question.
Charlie: "I don't like the question, do you?"
2:52
Barbara Soderlin (OWH): There have been 54 questions so far, Warren says.
2:56
Barbara Soderlin (OWH): Question regarding MidAmerican Energy refers to p. 54 of annual report. Journalists in press box sigh. Audience giggles.
Questioner does a lot of math, then asks, "Why are we allocating capital to a business that in its best year generates a return on tangible assets of less than 1 percent?"
WB: You were doing great until you got to return on tangible assets.
We love the math that you described as long as we are going to get returns on the added capital investment. As long as we get treated fairly by regulators in the states where we operate, we will get returns on that. That's measured on operating earnings after depreciation.
2:58
Barbara Soderlin (OWH): Charlie: "If the numbers you cited came from a declining department store, we would hate it." But in a utility, "We have such confidence that the money we invested is going to do well."
2:59
Barbara Soderlin (OWH): Shareholders are starting to leave. Maybe only 85 percent of the seats are filled now.
3:00
Barbara Soderlin (OWH): Have they exhausted their tough questions? Or is there a big sale at Nebraska Furniture Mart?
3:06
Barbara Soderlin (OWH): Question: Man from China. What do you think about the education market in America and China in the future?
Charlie: "I think America made a huge mistake when they allowed the public school systems of many big cities to just go to hell. And I think the Asian culture are less likely to do that. To the extent that Asian cultures are avoiding some of our mistakes well i just wish we were more like them."
Warren relates a story about when he was worried about Charlie losing his hearing. Warren asked his doctor if he should confront Charlie.
The doctor recommends an experiment where WB talks to Charlie from across the room in a normal tone of voice. Warren tries it:
"I said Charlie, I think we ought to buy GM at $35, do you agree?"
The response: "Not a flicker."
So he got closer: Still, "Nothing."
So he got right up to Charlie's ear and asked again.
WB: "He said, for the third time, yes!"
Big laughs.
3:16
Barbara Soderlin (OWH): Shareholder from New York City: Has just started reading "Dream Big" the book in Portuguese about 3G Capital. What are your thoughts on whether your successors will have the same opportunities to do deals like BRK did with Heinz?
WB: "It will be the Berkshire brand that may have started with me but that will continue. Going on to our Brazilian friends, they're very smart, they're very focused, they're very hardworking and determined, they're never satisfied. When you make a deal with them, you've made a deal with them. They don't overreach; they don't overpromise. They've got a lot of good qualities."
"We want to be a good partner ourselves because we want to attract good partners. That will be part of the Berkshire brand."
Charlie: "I always say the way to get a good spouse is to deserve one. ... If you just behave yourself correctly, it's amazing how well it works."
3:21
Barbara Soderlin (OWH): Question: Hi Warren, hi Charlie. Man from Taiwan. 7 years ago I named my firstborn son after you, Warren. He says hi. He always says, Warren Buffalo.
WB: I've been called worse.
Question: We wish you continued good health and when both of you break Mrs. B's record of working until 103 years, that will be 20 years from now. If Berkshire breaks that record of doubling in the next 10 years and doubling again, what will BRK look like at that time, and can you get there sooner?
WB: There's no question that at some point we will have more cash than we can intelligently deploy I the business, and the question is, what do we do with the excess? That will depend on circumstance at the time."
May repurchase shares.
"Who knows what the circumstances will be? All I can tell you is that whatever is done, will be done in the interest of the shareholders."
Charlie: "It's not a tragedy if you succeed so much that future returns go down. That's success. That's winning."
WB: He'll name his next child after you.
3:22
Barbara Soderlin (OWH): Question about sharing-economy businesses and their disruptive effect:
WB: In the end, the better mousetrap usually wins. But the people with the second or third best mousetrap will try to keep that from happening. We try to stay away from that sort of thing. We know there will be change, but we don't know who the winners will be.
3:24
Barbara Soderlin (OWH): Charlie: I think the new technology is going to be quite disruptive to a lot of people. Retail in particular is facing some significant threats. ... I think BRK by and large is in pretty good shape.
WB: Where you do think we're most vulnerable?
C: I don't think I want to name it.
WB: Now you've got them all wondering.
3:24
Barbara Soderlin (OWH): Shareholder is concerned that youth are not financially literate. Do they think financial literacy should be standard curriculum and how early?
3:29
Barbara Soderlin (OWH): WB: Certainly the earlier, the better. Mentions the value of good habits. I get letters every day, from people who have committed some kind of financial lunacy. Digging yourself out of the holes that financial illiteracy can cause, you can spend the rest of your lifetime doing that.
He mentions the Secret Millionaires Club.
You want to talk to people at a very young age. Charlie and I were lucky, we got it in our families. We got it at the dinner table before we knew what was happening.
It's hard to be smarter or have better habits than your parents unless the schools intercede. It is really important to have good financial habits. Anything you can do very early thru the school system, you certainly have my vote.
Charlie: I'm not sure the schools are at fault. I place most of the fault with the parents. (Applause).
WB: The most important thing is the parents, but not everybody gets good parents.
Charlie: Says he can't "Fix all the people who have the wrong parent."
Charlie: There's a lot of "asininity" in the finance departments at colleges and universities. "If you really want to start fixing the world you shouldn't assume that when it gets high falutin', it gets a lot better."
3:30
Barbara Soderlin (OWH): Shareholder: Great party last night. I stood there for a half an hour and still couldn't get a drink. Great crowd.
3:34
Barbara Soderlin (OWH): Question: The guy who wants a drink also wants a dividend:
"Every year I see some of the old shareholders and they are waiting to get a dividend. I do not feel it's entirely fair for them to sell their shares. ... Is there a practical way for you to break up the company into four large groups, and unlock some of the values and still allow you to allocate the capital freely?"
WB: "We would lose significant value if we were to break it into four companies." Advantages in taxes, cash flow.
"BRK is worth more as presently constituted than in any other form that I can conceive of. ... It would be a terrible mistake."
Warren mentions the dividend vote -- "There is not a way to deliver a dividend to a few shareholders and not to others."
3:34
Barbara Soderlin (OWH): WB: "With that we will end the Q&A session. We will be back in about 10 or so minutes and we will have the annual meeting."
3:41
Barbara Soderlin (OWH): Looks like most shareholders are not sticking around for the actual business portion of the meeting.
3:41
Barbara Soderlin (OWH): They are even clearing away our luxury buffet spread in the press box.
3:43
Barbara Soderlin (OWH): It's cool how Warren himself is MC-ing this meeting. "OK, if you'll take your seats."
3:46
Barbara Soderlin (OWH): Walter Scott moves to approve the minutes. Motion carries.
Now they'll elect directors.
3:47
Barbara Soderlin (OWH): No surprises. All nominees elected.
3:48
Barbara Soderlin (OWH): Advisory vote on compensation as disclosed.
3:53
Barbara Soderlin (OWH): Passes.
Advisory vote on frequency with which shareholders have an advisory vote on company's named executive officers. Options: Every 1, 2 or 3 years.
Speaker from Boston suggests a vote of one year to change the policy -- believes company should report Ajit Jain's salary as well as some group managers.
"There should be more depth of disclosure" on retirement plans, "And this should be done next year, not three years from now."
WB: Agrees 1 year is not a bad idea. But does not think they should select people among managers to list compensation.
Vote results: Shareholders advise they should have an advisory vote every three years..
4:01
Barbara Soderlin (OWH): Students at Wartburg College in Iowa who manage a portfolio including BRK shares.
They support a proposal calling for Berkshire to adopt goals for reducing greenhouse gases generated by its utility companies.
BH Energy a "huge emitter of greenhouse gas." "It would benefit BH Energy to have a carbon reduction plan."
"Climate disruption creates profound financial risk for the global economy as well as for Berkshire."
Second student: The SEC has stated that carbon risks must be disclosed. Says BRK's core businesses are vulnerable to climate disruption. Says GEICO's biggest cost came after Superstorm Sandy. "It isn't a prudent or sustainable long-term strategy to impose on customers the costs of not planning for greenhouse gas reductions."
Proxy holders vote results: large majority against a motion. Proposal fails.
Walter Scott moves to adjourn. Meeting adjourned. See you next year.
4:05
OWHmoney@OWHmoneyThanks for following our live coverage of #BRK2014. Meeting adjourned. Up next: live chat with @buffettOWH 5 p.m. at Omaha.com/berkshire
4:26
Barbara Soderlin@barbarasoderlinI think I'll go out in downtown #Omaha ... Next weekend
4:34
Steve Jordon: OK, time for the B team to sign in -- let me know what you're thinking. I'll be here til 6 p.m.
4:49
Comment From marlin stockwell
will brk split the A shares
4:51
Steve Jordon: Already did -- you can get 1,500 B shares for each A share. But youcan't take 1,500 B shares and switch them to A shares.
B shares won't be split -- not in our lifetime anyway.
4:51
Comment From Jules
Great job, Barbara!
4:51
Comment From michael mclaughlin, Omaha
Quantify the advantage BRN has over other rail roads because their dividends paid don't leave the BRK family. Also, does that same advantage exist at MidAmerican Energy?
4:52
Steve Jordon: Certainly could be a true advantage. But the other railroads seem to be spending capital on improvements, too.
4:52
Comment From Chris
Hi Steve, how did Charlie & Warren look?
4:53
Steve Jordon: They looked about the same as last year, from my vantage point. I hadn't seen Charlie for a year and he looked pretty much the same. I've seen Warren from time to time so it's harder to spot changes. They had more questions this year, I think -- shorter answers, more topics. Pretty brisk.
4:55
Steve Jordon: An e-mail from Doug Kass, last year's "bear':
I generally found the questions to be tired and linear today - revealing little new in Warren's responses.
My advice, respectfully, is for warren to invite three bears in order to liven the meeting up with more penetrating questions that reveal value added information.
4:55
Steve Jordon: Also from Kass:
This year felt more like an Infomercial than ever before, Steve.
4:55
Comment From Chris
Steve, is the elephant contest still on or did it end with the purchace from two days ago ?
4:57
Steve Jordon: Nobody picked the Canadian utility acquired Thursday, so the elephant is still at large, contest-wise.
The rules: One entry per person, although you can change your guess at any time; pick the next company Berkshire will acquire for $5 billion or more; prize is a WH-Berkshire messenger bag. You can enter here or e-mail me your guess at steve.jordon@owh.com
5:00
Steve Jordon: If you're just logging in, we started the chat a bit early (why wait?) and you can scroll up to see where I came in, at 4:34, after Barbara Soderlin's excellent adventure at the CenturyLink Center. You can go back on this to 4 a.m., when she signed on! And all through the Buffett/Munger Q & A
5:03
Comment From Chris
Steve, judging from the tone of the meeting, I'm changing my pick from Mars Candy to Exelon (EXC) as the next elephant
5:09
Comment From Mrs. See
Steve, have you ever heard Warren or Charlie elaborate more about what they dislike about college business education in Finance? Do you think they mean getting away from the Ben Graham, "Secutiy Analysis" type training?
5:15
Steve Jordon: Charlie and Warren made come joking comments about MBAs during the meeting. That I think they're talking about someone who has strictly business school theoretical training and no practical experience. The topic was "cost of capital," which apparently is a figure that is used in business schools and supposed to be a calculation that helps businessmen make decisions. They said that basically cost of capital is the difference between what you decide to do and the second-best idea that you had. So they were saying it isn't as exact as the professors may tell the students.
5:25
Comment From Ricky
Both Warren and Charlie seemed as quick witted as ever, and Charlie seems to think there are a lot of dumb businessmen out there making life easier for Berkshire.
5:32
Steve Jordon: He also said "ignorance removal" is one of their advantages, that they learn from mistakes. Also said something like, the good news is that they have plenty of ignorance still available.
5:44
Comment From Ricky
Ha ha. The company would rather make one thirty billion dollars acquisition than 10 three billion dollar ones, and they like buying entire business's not just stock. And, they would buy a company from out side the USA but BRK is not on the radar of people over seas to pitch their company to BRK.
5:45
Steve Jordon: We were just talking about that -- lots of international shareholders, but so far not so much attention from international businesses that he could buy.
5:59
Comment From Mrs. See
I wonder if they are going to rename more of their companies with the Berkshire Hathaway brand name. I was a little surprised to hear that Mid America was renamed. Warren was still referring to it as Mid America.
6:01
Steve Jordon: Hard to break habits. The MidAmerican name lives in some subsidiaries, and when you say Berkshire now you'll have to specify which one.
I would think the name will spread slowly if at all. It works on real estate signs, but not on bricks.
6:01
Comment From Guesti
Didn't he buy some English company in the last 6 months?
6:01
Comment From Chris
With the weakness in Europe, I think that might be the next area
6:01
Steve Jordon: Could be. A good company with the price down would be up his alley, as they say.
6:09
Comment From Chris
There have been a lot of "add ons" in the past especially from Italy (jewlry)
6:09
Steve Jordon: Jewelry designers, especially.
6:09
Comment From Guest
Do you cover anything tomorrow?
6:10
Steve Jordon: I'm covering the "Invest in Yourself" run, but not as a participant. Should be fun, and don't have to wear a tie.
Somebody else is covering "crazy Warren" at Borsheim's.
6:12
Steve Jordon: Well, it's been a long day for me and Barbara -- 14 hours of cover it live! Must be a record for us. But I'll be back at the regular time Tuesday, 11:30 a.m. CDT.
One last elephant comment: Buffett said if he found a business for $50 billion, he'd figure out a way to come up with the cash. So now your universe of elephants to choose is bigger!
See you Tuesday.
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