Five questions for Warren Buffett
This weekend marks perhaps the most widely watched shareholder meeting in the world. Up to 40,000 shareholders could show up in Omaha, Neb., to hear Warren Buffett talk about Berkshire Hathaway. Liz Claman, FOX Business Network anchor, interviewed Mr. Buffett prior to the meeting. On Friday, she shared her insights into his thinking. Here鈥檚 an edited version of what she said:
1. Is Buffett still bullish?
He said everything is looking better except his housing businesses. Berkshire has dozens of businesses: Acme Brick, Clayton Homes [prefab homes]. He owns Benjamin Moore paint. The businesses that are involved in housing don鈥檛 look better. I pressed him on that: not even a little? He said no. Everything else is better.
2. He鈥檚 buying chemicalmaker Lubrizol for $9 billion. Where else is he going to invest?
He will look at every company that comes his way. He will pore through its financial statements. He鈥檒l ask: Does it make a lot of cash? Does it have a moat of income security? That鈥檚 why he loves Posco, a Korean steelmaker. That鈥檚 why he loves Coca-Cola. He wants companies where no one does it better.
People always ask: Do you like Korea [to invest in]? That鈥檚 a dumb question for Warren Buffett. He doesn鈥檛 care where the company is headquartered.
3. The Lubrizol purchase, and the personal profit made by former heir apparent David Sokol, has clouded the succession picture at Berkshire Hathaway. With Mr. Sokol out, who will take over?
Other journalists feel there鈥檚 a list. I don鈥檛. On Fox Business, his children confirmed to me that their father is very disappointed [with Mr. Sokol].
So who鈥檚 going to run the company? Tony Nicely [chairman of GEICO, owned by Berkshire]? Warren Buffet says he doesn鈥檛 want an old guy to run the company. Matt Rose [CEO of Berkshire鈥檚 Burlington Northern Santa Fe] on Fox Business Network said flat out: 鈥淚 want to run my railroad.鈥� Ajit Jain [head of several Berkshire reinsurance businesses]? He loves insurance. He鈥檚 based in Connecticut. My sources say he bought an apartment in New York recently. I don鈥檛 think he wants to run a thoroughly Omaha company.
4. Is Buffett the kind of person to give up the reins, anyway?
Shareholders 鈥� are googly-eyed about Warren Buffett, so he can do what he wants. When he鈥檚 gone, they鈥檙e going to demand things. He won鈥檛 go, unless something happens. He loves this company so much.
This [succession issue] may force the board to become much more active. I talked to [Microsoft chairman and Berkshire director] Bill Gates [who said]: 鈥淲arren calls us after he makes the purchase. Warren makes the decisions.鈥� That鈥檚 very unusual for a board. I think this Dave Sokol thing has woken up a lot of people.
5. How important are the charges of ethics violations and insider trading against Sokol?
I want to ask Buffett: Are you going to completely overhaul your corporate governance policies? It鈥檚 not just this little upstairs/downstairs drama in Omaha. These people [at Berkshire] are privy to major inside information that can sway shares of companies. People may look at what he does and change their own governance policies.
