Berkshire Hathaway 1994 Annual Meeting Audience Question # 41

Is Berkshire a “Rich Man’s Mutual Fund”?

(This is Warren’s answer to the second question asked by the same audience who asked the previous question)

Warren Buffett:

The question about Berkshire being I think it was, was it rich man’s mutual fund or something like that?

We don’t look at it that way at all. We look at it as a collection of businesses, and ideally we would own all of those businesses.

So it’s, to the extent that a mutual fund owns stock in a lot of companies and diversifies among businesses and we try to own a lot of businesses ourselves, I guess that’s true. But I guess you could say the same thing of General Electric, or an operation like that.

We are more prone to buy pieces of businesses than the typical manager, but we are trying to do, in a sense, the same thing Jack Welch is trying to do at General Electric, which is try to own a number of first-class businesses.

He gets to put the imprint of his own management, which I think is very good, on those businesses, and we are more hands-off, both in the businesses we own outright and in the ones that we own pieces of.

But we’re going at it the same way. And General Electric has been very successful under Jack’s leadership, and doing it his way.

We think, in terms of what we bring to the game, and the problems of putting money to work all the time, that our own system will work best for us.

Charlie?

Charlie Munger:

Yeah, I’ve got nothing to add to that.

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