1998: Is Wesco a mini Berkshire?

AUDIENCE MEMBER: Good morning. Laurence Balter (PH), Carlsbad, California. Question for the two of you.

There was an article, I think about last year in The New York Times, that regarded Wesco as a Berkshire Class C share-type company, and I’d like to know your comments on that.

And the second question is, if I were to write you a check for the operating businesses that Berkshire owns, how much would it have to be?

WARREN BUFFETT: Big. (Laughter)

Charlie is the resident expert on Wesco, so I’m going to let him address that side. He gets very eloquent on this.

CHARLIE MUNGER: Yeah. We always say that, per unit of book value, Wesco is worth way less than Berkshire, and indeed the market is saying the same thing. It is not a clone of Berkshire. It’s a historical accident. (Audience mumbling)

WARREN BUFFETT: We want it to do well, obviously, for Wesco. We own 80 percent of it and we’ve got strong feelings about the people who are partners there, particular the Peters family, who, in effect, invited us in 20-odd years ago and trusted us to manage a big part of their money, in effect, by letting us buy control. So we’ve got strong fiduciary feelings about it.

It suffers in comparison with Berkshire because for one thing, anybody that wants a tax-free merger is going to want to come to Berkshire. You know, that’s just the way it is, unfortunately.

And we are looking for big ideas, primarily, and the big ideas are going to fit into Berkshire.

We would love to get ideas that fit into Wesco, and we had a very good one a couple years ago, thanks to Roy Dinsdale pointing me in the right direction. And we added Kansas Bankers Surety to Wesco, and it’s a gem. And it’s run by Don Towle, who’s done a terrific job.

But that’s the exception, unfortunately. Because if a FlightSafety comes along, it’s not going to fit Wesco.

So we will do our best for Wesco, but the nature of things is that most of the opportunities that make a lot of sense are going to come to Berkshire.

Charlie, do you have anything?

CHARLIE MUNGER: Nothing more.