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AM 2012 Berkshire Hathaway Annual Meeting With Warren Buffett, Charlie Munger – Full Q&A

Full Q&A morning session from the 2012 Berkshire Hathaway Annual Meeting with the world’s richest man and most successful investor, Warren Buffett and his partner, Charlie Munger.

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2012 Berkshire Hathaway Annual Meeting

AM 2012 Berkshire Hathaway Annual Meeting With Warren Buffett, Charlie Munger - Full Q&A

Transcript

Good morning I'm more than this hyperkinetic fellow as Charlie. And we're going to conduct this pretty much as we have in the past. We'll take your questions alternating among the media and analysts and the audience until three thirty with a break around noon for an hour and then we'll have the regular meeting of the of the shareholders beginning at that time. Feel free to drift away and shop in the other room we have a lot of things for you there. We only have one scripted part of this meeting and it's See's Candy as placed on all of the seats. A a little packet and what we'd like you to do. We're going to. We'd like to videotape everyone eating their pop at the same time for posting on Facebook and for use by the media. And today's meeting so if each of you will open up the lollipop. Now first of all you got them open. We like you. I you know hold them up above your head. We're going to get a shot of 18000 Guinness. Here we come. And we'll get a few shots of that. We've got it all melee. OK. And now you can take off the cover and the good part comes and Charlie and I have we have Fudgie up here and we have peanut brittle and I said the meeting would run till three thirty if we've consumed 10000 calories age we sometimes have to stop a little early at that point.

The only the only slide we have at this point is we did put out our earnings first quarter earnings yesterday and in general all of our companies are with the exception of the ones in the residential construction business which was the case last year and that's the case this year that all of the companies except those in that area pretty much have shown good earnings and in the case of the bigger ones. The five largest and Henri and insurance companies earned all had record earnings last year aggregating of those five companies something over 9 billion pre-tax and in the annual report. I said I thought they would they would the business didn't take a nosedive this year that they would earn over 10 billion pre-tax this year and certainly nothing we've seen so far would cause me to backtrack on that prediction the the insurance if you read AR10 hue and turn to the insurance section you will see that there was an accounting change mandated for all property casualty insurance companies which are rather technical and won't get in the details of a change something that's called the Deferred policy acquisition cost called Deepak and has no effect on the operations at all on the cash. But it did it did change the earnings downward by about 250 million pretax for Geico in the first quarter. Was based on whether you defer some advertising and has Geico had a terrific first quarter had a real profit margin of almost 9 percent edge points and the float grew and everything good happened at Geico in the first quarter we had good growth but we did make that accounting change an accounting change also affects to a lesser degree the second quarter and it may even trail just a bit into the third.

But the underlying figures are somewhat better than the figures that we've that we've presented there. And so overall I feel that about a year maybe we should even though we'll do it again at the meeting but we should probably introduce the directors and I don't know whether the audience can see the people who turn up the lights or something so they can we'll start off of course with Charlie Charlie Munger and then alphabetically of the directors that just I was going to suggest that you withhold your applause until the end but I know he's sort of irresistible so we'll make an excuse for him for the remainder of the directors if they stand and remain standing. And then you can applaud them at the end if you will. We've got Howard Buffett Stephen Burke Susan Dacher Bill Gates David Grossman Charlotte Guymon Don Keough Tom Murphy Ron Olson and Walter Scott Jr.. Now you know while now we'll start with the questions and what we will do is we'll we'll start over here with the media with one of them moved to one of the analysts and then move to one of the shareholders and we'll go buy stations with the shareholders. And if we get sometimes we've had as many as 60 or 62 questions if we get to 54 at which point each person on the panel here has had a shot at six questions then from that point on we'll will do nothing but the. But from the shareholders. From 54 on. So we'll see how that goes. And with that we'll start off with Carol Lomas of Fortune magazine. Good morning.

I'll make my mini speech which the most important point is that either Warren or Charlie have an idea what we're going to ask. The other thing is that we received hundreds if not thousands of questions. We don't know the exact count. So he certainly couldn't use everyone if we didn't use yours. We're sorry. So for the first question Warren two shareholders wrote me about the heavy responsibilities that will fall on your successor and his or her ability to deal with them. So I'll make this a two part question from Chris Ng. Mr. BUFFETT You have stated that you believe the CEO of any large financial organization must be the chief risk officer as well. So at Berkshire does the leading CEO candidate for successor as well as a backup candidates.