Berkshire Hathaway 2009 Annual Meeting Audience Question # 22

Why a shareholder can’t just sell Berkshire shares and buy what Berkshire is buying

Warren Buffett:

OK. With that, we’ll go to Becky.

Becky Quick:

This is a question from Humin Timadin in Seattle, Washington. He’s got a two-part question. But he says, “From time to time, you purchase shares of public companies.

“Presumably, you feel that those shares are a better investment than Berkshire shares at the time, since you never buy back Berkshire shares.

“If Berkshire shareholders can purchase shares in the same companies for the same price as you, why shouldn’t they shell… sell their Berkshire shares and buy what you are buying?”

And secondly, he wants to know why, because he, “like thousands of other shareholders, is unable to attend the annual meeting, how come Berkshire does not webcast the meeting? I am aware of the irony that I will not hear your answer.”

Warren Buffett:

Well, our meeting does get written up, at least it gets written up a lot with various blogs and everything else. It gets written up pretty well in its entirety by Outstanding Investor Digest.

And there are others that prepare extensive reports. And they pop up on the internet. So he will, in all likelihood, find out the answer.

We could webcast. I get asked the same question about webcasting the meetings I have with students. You know, why not do that? It’s so much easier and everything.

I think there is something gained by personal contact. I certainly know that when I was studying and all of that, I gained a lot by personal contact.

Even though I’d read Ben Graham’s books, just going and being with him. And I follow that practice in teaching. And I think that…

I like the turnout we get. I like our partners to show up and see the products we sell and all of that. This is not something where we’re going to go and hide and hold our meeting, you know, in some hamlet, you know, in western Nebraska or something to discourage attendance.

We’ve got a different attitude. And I think that that… I hope that comes across. And I think that if we webcast it, you know, it was something like turning on a television show, I don’t think it would be quite the same.

In terms of the first part of the question about buying the securities we buy, plenty of people do that. And some of them… but they… incidentally, they’re not buying it with free float that’s available from insurance.

So if they have $58 billion that they can get interest-free, they will be in the same position we are in buying those securities. But they are… on the other hand, they have some tax advantages we don’t have. So I don’t quarrel with people who do that.

We have to publicize to some extent what we own. Some things they wouldn’t be able to buy because we make direct purchases.

They wouldn’t be able to buy into the businesses we own. But they might very well do better piggybacking us in some way. And they’re certainly free to do it.


Charlie Munger:

Yeah, generally, I think it’s quite smart to do what you’re talking about… is to identify some investors you regard as very skilled, and carefully examine everything they’re buying, and copy what you please. I think you have a very good idea.

Warren Buffett:

Yeah, I used… when I was 21 years old, I had to mail away to the SEC in those days… and you had these crummy copies about a week later and paid a lot per page to get them… but I used to get the semi-annual reports of Graham-Newman Corp before I went to work there.

And I would look at every security that was listed there. And I got some of my ideas that way. So it’s a… there’s nothing wrong with that.

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