Berkshire Hathaway Annual Meeting Extensive Notes

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say I’m more inclined towards action than you?

CM: You once called me the abominable no man

WB: We don’t really care where the $20bn min cash sits, as far as which entity. We don’t count cash in the regulated energy business or the railroad. We count the money we can call in immediately.


On 4/23/14, WB said he hopes he gets questions that probe at our weak points. What are the weak points?

WB: We are very disciplined in some ways and by ordinary business standards, very sloppy in other ways. A pure weakness of mine is I am slow to make personnel changes. One of our managers we took too long to replace because we liked him

CM: Teledyne and Litton swept every dime every day but it created a tone that is less desirable than ours.

WB: Sometimes our lack of supervision over subs will cause us to miss something. We also thing giving them freedom gives them ability to perform well. One day something will happen where if we had very strict procedures, we wouldn’t have missed something. But Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) has also gained because of the freedom we give managers.

CM: By regular standards, we overtrust. But we have done better. Many places work better when they create a culture of deserved trust.


See’s Candy is small but has long been one of your favorite businesses. Profit growth seems to have stalled since 1999. 5mm in pretax profits at purchase to 74mm in 1999.

WB: The boxed chocolate business is basically not growing. Going back 100 years, each large city had candy shops. The predecessor company to PEP was one had that most candy shops in NYC. The owner acquired PEP for a few thousand dollars. There used to be loads of candy shops back then. Boxed chocolates have lost position dramatically, primarily to solid snacks of various types. See’s has done remarkably well. Russell Stover did well for a while with a different business model but ran into their own problems. We can’t do much to increase the size of the market. We have tried to move out of our strong geography multiple times. In 1970s, we thought about trying to replicate CA profits but we didn’t do as well as we did in CA. There are regional differences.

See’s opened my eyes to the power of brands. We probably made a lot of money in KO because we OWNED a brand in See’s. We bought See’s in 1972 and bought KO stock in 1988. I think they were connected.

CM: See’s helped remove ignorance at BRK. Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is a long history of ignorance removal. We were pretty stupid when we bought See’s. If there is a secret here, we are good at ignorance removal. We have a lot of ignorance to remove.


You changed your BAC investment such that they can use BRK’s money as t1 capital. Why does this help Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)?

WB: A few months ago, CEO called WB and asked if BRK would be willing to change the deal from a cumulative preferred to a noncumulative preferred. Fan/Fred preferred holders are finding out that they are a terribly weak form of security. Because they are a weak form of security, they can count differently in bank regulatory capital rules. If we were willing to change to noncumulative, BAC said they would make it non-callable for 5 years. In a world of 5bps rates, I get 5 years of 6% return that is noncallable. It was mutually beneficial. This was all done before BAC said they miscalculated capital. That error they made does not bother me. You do the best you can.

CM: Agree


10 years ago Netjets was mentioned as an exciting growth oppty. 5 years ago it had some issues. What are the current prospects?

WB: It’s a perfectly decent business. It peaked with

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