One on One with Warren Buffett, Chairman, Berkshire Hathaway
Monday, May 05, 2008
|
|
|
|
SUZANNE PRATT: Thousands of Berkshire Hathaway shareholders made their way to Omaha this weekend to hear from Chairman Warren Buffett. The billionaire investor weighed in on everything from the U.S. economy to his plans for a successor. NIGHTLY BUSINESS REPORT's Susie Gharib was in Nebraska for the Berkshire annual meeting and to witness Warren's world first hand.
SUSIE GHARIB: It was the usual party atmosphere at the Berkshire Hathaway annual shareholders' meeting, the spectacle long known as "Woodstock for capitalists." Warren Buffett inspected a huge portrait of himself, then signed the masterpiece. He posed with a giant gecko. He strolled with soap opera star Susan Lucci. And fellow billionaire Bill Gates, a Berkshire director, added star power to the festivities. But the real reason that people came in record numbers was to hear the Oracle of Omaha's predictions about the markets, the credit crisis and the economy. Buffett says that the party is over for the U.S. economy and it's already in a recession.
| Watch the 2008 Berkshire Hathaway Report | ||
|
|
WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: I don't spend a lot of time thinking about the economy. Nevertheless, what I see would indicate to me that this is not a short-run phenomenon.
GHARIB: And he has a similar outlook for housing.
BUFFETT: It still has a ways to go. I mean, there's a huge inventory of houses around and they went up too far. In many areas they went up to crazy levels. The money isn't going to be enough, able to -- available to finance crazy prices anymore.
GHARIB: During the six-hour Q&A session with shareholders, Buffett fielded questions on a variety of topics. He said the Federal Reserve did the right thing to bail out Bear Stearns. He expects the U.S. dollar will weaken further over the next 10 years. And he says he has no idea where the stock market goes from here. He also explained why he teamed up with candy maker Mars to buy Wrigley, the famous chewing gum company.
BUFFETT: Wrigley's and spearmint have been around for half the life of the country, half the life of the country. Those are products that have enduring value in good times and bad. People like them. They travel around the world. So, it's a great business.
GHARIB: That Wrigley deal shows that Warren Buffett is hungry for acquisitions. He'll be going to Europe in two weeks to scout out possible deals. He'll meet with the heads of big family owned businesses and he'll have plenty of money for shopping -- more than $30 billion in cash.
BUFFETT: I'm looking for a business I can understand. It has to be something that I can get my mind around. It has to have durable competitive advantage. It can't be a hula hoop company or something like that. It has to have a management that I trust and admire. And then it has to be at a sensible price and preferably it has to be big. And every now and then we get a chance to do that.
GHARIB: How big is big?
BUFFETT: Well, the bigger the better. But certainly we'd like it to be a couple of billion. You know, if it's $20 billion I'm going to like it even better.
GHARIB: Big Berkshire shareholders like Mario Gabelli are waiting eagerly for Buffett's next investment move.
MARIO GABELLI, CHIEF INVESTMENT OFFICER, GABELLI ASSET MANAGEMENT: Well, we're always interested just because he's the master at three- dimensional chess.
GHARIB: And Morningstar analyst Justin Fuller says one of the things that makes Buffett so successful is patience.
JUSTIN FULLER, EQUITY ANALYST, MORNINGSTAR: He wants to wait for that opportunity to act decisively and fast and get a business that you couldn't recreate even if you wanted to.
GHARIB: But with Buffett's 80th birthday just two years away, the even bigger question is who will fill his shoes. Although Buffett has no immediate plans to retire, he detailed succession plans in his recent letter to shareholders in the Berkshire annual report. He said he has three outstanding internal candidates to replace him as CEO and on the investment side, he has identified four candidates. He says they are young to middle aged and well-to-do to rich.
BUFFETT: They all want to come to work for Berkshire, but they're willing to wait until I'm not here and they're very happy in their present jobs. They're all wealthy, so there's no sense having them here now while I'm doing the job. But the board knows exactly who they are and when the time comes they'll get a phone call.
GHARIB: For Berkshire shareholders, it's been a bumpy year so far. Berkshire "A" shares are down more than 9 percent. But that doesn't worry money manager Peter Kenner whose family has owned Berkshire stock for 40 years.
PETER KENNER, CEO, TIVOLI PARTNERS: I personally think that the stock will be $200,000 a share by the end of 2010. So the appreciation is basically you're talking about better than 50 percent in a few years. That seems pretty good to me.
GHARIB: Buffett cautioned shareholders that Berkshire's stock performance is likely to be more modest in the future compared with stellar gains in the past. But for now, investors here are still very confident in the moneymaking skills of the Oracle of Omaha. Susie Gharib, NIGHTLY BUSINESS REPORT, Omaha, Nebraska.
PRATT: You can see all of Susie Gharib's interview with Warren Buffett on our web site. Go to NIGHTLY BUSINESS REPORT on pbs.org and click on learn more.
