Value Investing

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

Full Q&A afternoon 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

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

Transcript

OK round two. GUERRIER I up here. OK a question on General Re if I look back at the General Re property casualty claims that's been cut in half roughly from 10 years ago maybe a little more stable recently. Can you give us some idea of how you've had to adjust the personnel over that time. And then also what opportunities are there for General Re to grow as we go forward. Yeah. Gendry I think got off the track in May it probably was off the track when we bought it and I didn't spot it was yeah okay. I was in charge of that part and they had I think they got more concerned about growth than satisfying certain personnel in terms of their activities that they had about emphasizing profitability. And it took us a while to figure that out. And when Joe Brandon came in he operated 100 percent in terms of focusing on on underwriting profit instead of instead of premium volume. And Tad Montreaux us as follow through on that with terrific results. But it did mean getting rid of a lot of business that didn't make any sense. They did an awful lot of what I would call a combination business. So it's true that the PC volume drop very significantly during that period but it's not volume that we miss the life business kept growing consistently during that period in their life business. It strikes me as very very good that they get little long term care mixed in there that we which we didn't have.

But I think Gendry as it's it's right size in terms of people it's got an underwriting discipline to it. And I wouldn't be surprised if it grows at a reasonable rate in the future. But there was a major change that had to be made and the culture generally. And you don't make that overnight and you don't keep a lot of the business that are some of the businesses you got through a wrong culture. When you when you do straighten it out it's a terrific asset to us now and I think that I think the life business will continue to grow and I would bet the PC business grows too but it will only grow if we see the chance to do it out of on a profitable basis. That's one we feel enormously better. We had some years back. Johnny Well it was a major fix up operation but we finally got it done. We don't go looking for those. No OK station one. Dan Lewis from Chicago. I wanted to get your thoughts on two of my concerns about a post buffet Bircher. Do you worry that some of your key operating and investing managers might leave for more lucrative opportunities once they realize they're working for one of their peers instead of a legend. And you think it's possible that a large investor or hedge fund could ever gain control of Berkshire to force a change in that unique culture and structure. Yeah I think that I had virtually no that the successor we have in mind will not be the kind that will turn off our managers because that the manager has in mind is a successor in mind has got the culture as deeply embedded as I do.

They would not our managers would not. I don't think it be a question of leaving for more lucrative jobs. I think it would be because they love the kind of environment in which they exist and if that environment didn't exist it wouldn't be a question of whether the alternative was more lucrative. Many of them a majority could retire. It wouldn't need to work at all. They're only going to work if it's more fun for them to work than to do anything else in the world because they've got the money to leave them in a great many cases the conditions. So same reason I work I mean I'm 81 and I am doing what I find the most enjoyable thing to do in the world. And there are a couple of reasons for that. I get to paint my own painting and I know I have a lot of fun working with the people I work and our managers work for the same reason they do get to paint their own paintings and my successor will understand that just as well as I do and there would be a lot of people that might very well manage other companies that I think have stuck in my position would lose a fair number of managers they just have a different style and our managers don't don't need that style.

In terms of a takeover I think that really gets unlikely that size is a huge factor and even because of the and shares the shares get converted to the shares when I give them away and even ten years from now it would be likely that I would own or my state would own something in the area perhaps of 20 per cent of the votes or thereabouts. So the Buffett family will probably have ten times the voting power for a long time of anybody else so I really think it's extraordinarily unlikely for both those reasons size and the concentration that will exist and the longer we go the larger will get sadly as the voting power aspect goes down the size aspect goes up. So I don't think there will be a takeover of Berkshire and I really do not need to worry about my successor. In many ways the old will be better than I am. It will be totally imbued with the culture. The company is imbued with the culture it would reject anything that the board of directors reflect that culture and its ever every place you look around. Berkshire stands for something different than most companies and that's not going to change. Charlie what I said last night was the first 200 billion was hard and the second 100 billion with the momentum in place is likely to be pretty easy compared to what's been accomplished in the past. So I don't think it's going to hell at all. I think the momentum's are in place in the right kind of people are in place and the culture is by and large pretty well loved I would say by the people who've chosen to be honest. Nobody's going to want to change the businesses that in to take it to 400 go in the business. We have diligences to take up to four billion.