1997: Would Buffett buy Berkshire stock now?

AUDIENCE MEMBER: Gentlemen, I’m John Tarsney (PH), a shareholder from Omaha, Nebraska.

People have already asked any sophisticated question that I might have, so I’m reduced to my simple ones.

I first became a shareholder through FlightSafety, and at that time I wasn’t sure that I wanted to be bought out. However, I decided that any man who could agree with me on FlightSafety might be a good man to go along with.

CHARLIE MUNGER: (Laughs) Well, that’s one way of doing it. (Laughter)

Maybe you’d fit in well at headquarters. (Laughter)

AUDIENCE MEMBER: I have a couple — well, I don’t use Gillette products, either, as those of you who are close to me can see. (Laughter)

My questions, my simple ones then, are, a couple of years ago, or within the recent times, you had said you would not necessarily buy Berkshire Hathaway. And I’d like to know whether you still feel the same way.

Secondly, since I came to you through FlightSafety I’m wondering if there’s any other positions I should be looking at in that same — (laughter) — same light.

And thirdly, there was a very distressing sign to me — sign that I saw when I drove in. And I don’t know what the meaning of it is, or if you do. And it said something about abortion. And I just don’t have a clue.

If you do — now, you can use yes or no answers to these and save your voice. (Buffett laughs)

Or suit yourself and elaborate.

WARREN BUFFETT: Yeah, we’ll work backwards.

I think the signs probably relate to the contributions to Planned Parenthood. (Applause)

Thank you.

We follow a policy, as you know, at Berkshire of corporate contributions being designated by shareholders. We have some made by our operating companies to their local communities, and the local managers do what they think appropriate within their communities and with their own businesses.

So Tony Nicely at GEICO — I have no idea what GEICO contributes to, but they make those decisions at GEICO.

But in terms of the parent company, we let the shareholders designate the contributions. We have a number of shareholders who designate Planned Parenthood. We have other shareholders who designate organizations that are — would be opposed to the ideas of Planned Parenthood. We make no judgment about those. (Mild applause)

And in terms of — I designate the Buffett Foundation every year, and then the Buffett Foundation, in turn, gives money to other things, including Planned Parenthood.

And so, in the sense that those funds come indirectly from Berkshire, they come in direct proportion to ownership the same way as everybody else gets a chance to do with their shares.

And we’ve had people write us about it. You know, I — there’s no way in the world we would — you know, in fact there’s some that would say that we should be boycotted because I do this.

And we would not dream of questioning, you know, the people that we buy our almonds from, or walnuts from, or chocolate from, as to what their beliefs were, you know, before we bought that, or whether we would hire somebody that they’d have to agree with our beliefs, so —

It seems to me perfectly appropriate for people to express their views on it, and they probably don’t like — clearly they don’t like — what I do on that. But it’s where my reasoning and, you know, my own judgment leads me.

But they’re out there, the few people out there expressing their views on it, and they’re entitled to do that. And I don’t have any problem with that.

I think when they start saying, you know, “We don’t want to hire you because you have a different view than we do,” or “We don’t want to buy your products,” I think that’s a little different position to take. I wouldn’t do that. But again, it’s their right to do that.

WARREN BUFFETT: Going back to whether we would buy the stock, I would say this a year ago — well, it was about March 1st because that’s when I wrote the annual report in 1996 — the stock was 36,000 and I said it was not undervalued at that point.

And since we were more or less forced to have an offering by the unit trust, which I’m very glad in retrospect we did, but it was not our idea, we felt that it was only appropriate in connection with that offering to point out that we had said it was not undervalued, and since Charlie and I like to buy undervalued securities, that we would not buy it ourselves at that price or recommend that others do.

And in the ensuing year, the intrinsic value of Berkshire changed quite dramatically. And the price didn’t change. In other words, the stock, after years of overperforming the business somewhat, underperformed the business. Which, of course, it’s bound to do.

And we’re glad that they got back more in tandem. So we said this year that we regarded the stock as being much more appropriately valued than it was a year earlier, which is obvious.

And I would say that the caution I made about securities generally would apply. I would not except Berkshire from that caution, but I would rather own or purchase Berkshire myself than I would most other securities. I can tell you that.

Charlie? (Applause)

Charlie gives to Planned Parenthood, too, so he has to — (laughs). They didn’t put his names on those signs, but I’ll take care of that. (Laughter)

CHARLIE MUNGER: I’m perfectly willing to have that limelight passed, as well as the opportunity to say more on the subject.

WARREN BUFFETT: Did I miss one question up there? I think there were three of them, and I addressed two of them.

AUDIENCE MEMBER: About any other area I should be looking at.

WARREN BUFFETT: That’s the reason I skipped it. (Laughter)

Yeah, we don’t direct people to any specific investments.