2004: Will Berkshire hold meetings with analysts in the future?

AUDIENCE MEMBER: Good morning, gentleman. My name is Larry Coats, from Durham, North Carolina.

Mr. Buffett, after last year’s meeting, my longtime friend and business partner George Brumley [III] sent you a letter addressing several issues. Having participated in the preparation of that letter and on his behalf, I thank you for your response.

WARREN BUFFETT: Thank you.

AUDIENCE MEMBER: In such, you suggested that many of those issues would be appropriately addressed in this forum. In his honor, I’d ask you to address just one of those, and that is the ultimate generational transfer of Berkshire away from its current base of long-term, self-selected, and well-informed shareholders, and the potential of instituting a series of analyst meetings to address the relative lack of interest in, and ownership, and understanding of, Berkshire by institutional shareholders and investors. Thank you and good morning.

WARREN BUFFETT: Well, thank you. I mean, George was a wonderful man. A great analyst and a friend.

I have some problem with having meetings with subgroups of investors, such as institutional investors. If we had something like that, I think we would want it to be open to everybody. And, you know, that gets to be quite a production.

But I can understand, you know, why A) you’d like to see our managers and hear what they have to say about their businesses. We try to convey a lot about the businesses in the report, but —

Charlie, do you have any thoughts on that?

CHARLIE MUNGER: I don’t think it fits our temperament at all well. Many corporations have a huge amount of effort spent in talking to groups of analysts. One of Berkshire’s strengths has been that we don’t spend time in that way.

That’s a very time-consuming process. And it does give some shareholders some advantage over others. We try and be more egalitarian in events like this and the way we write the annual report, et cetera.

WARREN BUFFETT: Yeah, we really like the group of shareholders we have. I mean, we’re not about enticing new people into it. But I know your point also is that the present shareholders could better understand Berkshire if they would listen to Bob Shaw talk about Shaw Carpet or Rich Santulli talk about NetJets. And the truth is, it is fun to listen to those people.

But one of the things we promise managers when they join up with us, too, is they that they don’t have to listen to bankers, they don’t have listen to investment analysts. They just get to run their businesses. They can devote a hundred percent of their time to it. And people like that, and they’re more productive because of it.

I mean, we really place no impediments in the way of our managers doing what they do best and what they like to do best, which is run their businesses.

And frankly, a number of them have expressed to me that they’re very happy because they existed in a different mode before. And in that mode, they would spend maybe 25 percent of their time on activities that they didn’t enjoy and they didn’t feel were very productive.

So we want to get across the information about our businesses to you. And believe me, when I write the report and Charlie looks at it, we say to ourselves, “Are we telling you what we would want to know about if our positions were reversed, if we were on the receiving end?” And we really try to put in the report everything that’s germane to evaluation.

Now, if you have a market cap of 130 billion, you know, it’s really not too important to get keen insights into some business that’s making a relative small amount of money. But anything that counts — and really, you have to look at them in aggregates — we want to get across to you.

So, you know, it’s — I’m very respectful of your suggestion. It’s conceivable to do it.

The Washington Post has a shareholder day, because their annual meeting is turned into a farce often because it’s largely dominated by people who are complaining about this story or that story. But the shareholder day is very useful and they do have their managers there and talk about it.

But I really think if we spend six hours here answering your questions about the business and we do a half-way decent job of writing the annual report, we should get across the essential information.

And we’re really not trying to get across — we’re not trying to talk to an audience that is trying to get some special insight into what next quarter or next year is going to look like.

We’re really looking for owners who join us in what we regard as kind of a lifelong investment. And I would say that certainly analysts, like your group, have exactly the same objective we do and want to understand the business that way.

But my experience, you know, in talking to hundreds of them, is that there are relatively few that are actually thinking about, “What do we buy and put away forever?” Like, we’d buy a farm or an apartment house or something. So we’ll consider it, but I don’t want to make any promises.