After revealing his diagnosis with stage one cancer, Warren Buffett says he feels great and “as if I were in my normal excellent health and my energy level is one hundred percent”. Whitney Tilson, T2 Partners, and Carly Fiorina, former Hewlett-Packard CEO, discuss Buffett’s health and its impact on Berkshire Hathaway’s succession plan.


Transcript:

also in our headlines, legendary investor, warren buffett business closing to the public he’s been diagnosed with stage one prostate cancer. he said the good news is that i’ve been told by my doctors that my condition is not remotely life threatening or even diliing in anyway. i received my diagnosis last wednesday. i then had a cat scan and a bone scan on thursday followed by an mri. buffet said he feels great. this sass if he was in his normal excellent health. his energy level is 100%. he also says he plans to begin a course of radiation treatment in july. his doctors he says are very comfortable with him pushing that off not doing it right away. in fact he said if he wanted to push it off later they would have been fine with that as well. the timing of that two month treatment he said was chosen to keep from interfering with previous commitments he made including travel. buffet said his doctors have no qualms about delaying that treatment and he says elves great. in his annual let buffet said the board had chosen a successor. they had not named that person. buffet said there’s no change in that succession plan. joining us right now to talk more about warren buffett and berkshire hathaway is whitney tilson and our guest host this morning for the entire show is carly fiorina. she’s the new chair of good 360 an online donation marketplace that connects corporation donations with nonprofits. whitney, let’s start off quickly talking about berkshire hathaway, because you do have a pretty large position in berkshire hathaway. it’s a mid-teen position in your portfolio? yes, it is. what did you think of this news last night? of course,immediately, we thought of him personally. our hearts went out to him and as we kept reading the press release we were very relieved to hear that he’s feeling great and the prognosis is great, there’s no other cancer in his body. we did a quick google search anthony. this is medically speaking a complete non-event. we saw the stock sell up a little bit last night. what do you think? buffet is 81. he’s not going to live forever. it remind people of the succession issue which concerns a lot of people, doesn’t concern us at all, but warren buffett is irreplaceable. he’s one-of-a-kind. no combination of successors is ever going to be able to fully replace someone like buffet. but that said this isn’t news to us. we knew this before the announcement yesterday. we didn’t need a reminder. in fact, we knew all of these factors as we were adding to our largest position just in recent weeks. so, you know, it’s quite a remarkable thing. being reminded that in the investing world, using your brain and actually applying logic is a huge advantage and not responding to the whims of the market and people, you know, other investors overreacting to something that’s really emotional but has no absolutely bearing on berkshire hathaway’s value or where the sto will go in the next few years. that’s what we care about as investors. you said a lot of people are worried abou succession but you’re not. why not? most importantly if you look at an actuarial table, it’s highly likely buffet will manage berkshire for the next five years, maybe ten years and today or yesterday’s announcement doesn’t change that at all. that’s number. when we value berkshire hathaway we don’t include any warren buffett premium. we take the cash in investment, put a pre-tax multiple on the operating earnings of the business that berkshire owns. we come up with almost $180,000 per share and the stock is trading a little under 120 pre-market. you have 50% upside in one of the world’s greatest, safest businesses and the business is going gang busters. i’ll remind you all the news and turmoil by steve jobs’ illness and he passed away six months ago, apple stock is up 65% since then. what matters is the underlying performance of the business. we have talked about corporate gonks from this perspective. whitney just mentioned steve jobs. when i spoke to buffet last night i asked why are you putting this out if it’s not life threatening. he said his criteria would be if you’re hospitalized or incapacitated it’s important to let shareholders know. but because of the c word, the cancer word it has a lot of different connotations to people. warren buffett did a lot of right things. as cancer survivor myself i chose to be very transparent. i think he did the right thing. this kind of thing will leak out eventual when he starts going to daily radiation, people will comment on the change in his schedule. i think this is much more reassuring to shareholders to know the whole story right upfront and while a diagnosis of cancer is always frightening this is truly the most curable form of cancer there so. he has caught it at the very earliest stages, so i think this announcement should be very reassuring to shareholders, actually. whitney, doug cass has a point. doug, he has a love/hate relationship with berkshire. he points out that, you know, not this latest news, perhaps with the stage one prostate cancer but the mortality of mr. buffet and the suck seg of mr. buffet which has been in all of our mind for the past couple of years that the price to book on berkshire has reflebed, it’s 16 which is averaged over the last couple of decades. there’s something to that that there’s concern that there won’t be another guy like buffet ever again running berkshire. these guys are great but maybe he is truly irreplaceable. we are quite open that about the irreplaceability. i think the pan that he’s laid out and the number of incredible people and managers that are in place to replace him on the operating side, he’s already identified two people on the investing side, two great managers. but i think,ou know, he’ll be — he can’t be fully replaced by 90% or 95% replaced sure. that’s a question of what’s already in stock price. as doug points out an incredible businesslike birk shier should be trading at one and a half times anyway and it’s trading at 15 times book and giving you and opportunity in our view to own the stock. it’s safe,

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