2014: What's the biggest acquisition Berkshire would consider?
JAY GELB: This question is on acquisitions.
How large of an acquisition is Berkshire comfortable targeting currently?
And to what extent are Berkshire’s major equity investments in Wells Fargo, Coke, American Express, and IBM realistically a potential source of funds for deals?
WARREN BUFFETT: Well, they could be a source of funds. But it’s very unlikely they will be.
But — the — our goal is to buy really good businesses, and big businesses, and businesses where we like the management, and businesses that we think we can grow over time.
I mean, Berkshire is about building earning power. When we buy, as we did a day or two ago, agreed to buy that transmission line in Alberta, I mean, I’m looking at trying to add earning power to Berkshire.
And we try to do that every day or every week or every month. And we don’t get opportunities that often.
But if the opportunities were large enough and we needed to raise some money, you know, we can dip into a huge reservoir of securities and still have, you know, huge investments thereafter.
It hasn’t come to that. You know, when we’ve got 40-some billion of capital — or cash — and I’m willing to take it down to 20, it — you know, we’ve got a fair cushion there.
But if I needed to, we would do something, if it was attractive enough, and big enough, that it required us to.
So, that could happen. Could happen this year, could happen ten years from now. You never know.
Charlie, have you got any thoughts on that?
CHARLIE MUNGER: Well, no, I think the — our acquisitions have been irregular in the past. They’ll be irregular in the future.
I do think we’ll get more, sort of, automatic, intelligent redeployment of capital from our railroad and our utility subsidiary than we have in the past. And I think that’s good, good for the shareholders.
WARREN BUFFETT: I think people may think that what we get turned on is by finding some stock we’d like to buy. That’s fine.
But what really — there’s no comparison — what really turns us on is finding a business that we want to buy, and that fits well for Berkshire, and that’ll be earning money for Berkshire 10 and 20 and 50 years from now.
That’s what we’re — that’s what we’ve been trying to build for 49 years.
And marketable securities have played a big part in that, because the profits that we’ve made from them have helped do that, and it’s a great place to deploy capital on an — you know, it’s easy to do there.
But if you — what we’re really thinking about, at least Charlie and I — we’ve got Todd and Ted thinking about marketable securities — what we’re really thinking about is buying businesses. And that’s what it’ll continue to be.
We’re in no hurry to sell any of those stocks you mentioned. (Laughs)
They — there probably would be other stocks — if we were going to go out to raise five or 10 billion from stocks, they would not be the names you mentioned.