2003: Why did Berkshire buy Level 3 bonds?

AUDIENCE MEMBER: I wanted to ask what prompted you — considering your general aversion to technology — what prompted you to invest $100 million in Level 3 Communications convertible bonds?

WARREN BUFFETT: In terms of Level 3, we like the people. We think they’re smart people, and they owed too much money, you know. And they recognized it. And they’ve done some very intelligent things, in the way of attacking that problem, and, you know, we bet on the people.

Charlie knows way more about the physical world than I do, but, you know, I have yet to see an electron. And I just have no working relationship with them at all. I can’t identify with them. So, I do not know a lot about the technology. I never would.

I mean you could explain it to me and I could probably regurgitate it on some test or something, but I wouldn’t really understand it.

But I think I understand the people involved, and we were quite willing to make that bet. It’s of a different sort than we usually do, but we did it and we’re happy we did it.

Charlie?

CHARLIE MUNGER: Nothing more to say.