Berkshire Hathaway 2013 Annual Meeting Audience Question # 21

Warren: “It will be a sad day when the Harley-Davidson notes mature”

Warren Buffett:

OK. Station 7?

Audience Member:

Good morning, Warren and Charlie. My name is Bill Hennessy and I’m from Milwaukee, Wisconsin.

I have a similar question. Back in 2009, you made a substantial investment in Harley-Davidson with the five-year term at 15 percent. I noticed that note comes due in 2014.

What are your plans or thoughts once that investment comes due?

Warren Buffett:

Well, what we’d like to do is not answer the mail, and just let him keep paying his 15 percent, but that won’t happen.

The… no, those were… we had a few private transactions during a period when the corporate bond market was basically frozen and received unusual terms, although the best terms those companies obviously could obtain at that time. And those deals are coming due, and I wish the five-year deals had been ten-year deals.

But, now those… that was a special time. And in effect, that’s a depleting asset that we have that’s left over from five years ago.

We won’t see anything like that for a while, but we’ll see similar things at some point in the future.

I mean, the world is given to excesses, and they have consequences, and we are always willing to act.

I mean, we did not think Harley-Davidson was going to go broke. I mean, it was that simple.

You know, any kind of company that gets its customers to tattoo ads on their chest can’t be all bad, you know, I mean…

But it will be a sad day when the Harley-Davidson notes mature.

Looking for an offline, PDF copy of all shareholder questions carefully arranged into specific topics such as How to properly evaluate a company for potential investment, Intelligent Investing and Secrets to achieving Success and Happiness? Click on the image below to learn more.

Q&A with Warren Buffett and Charlie Munger: A Compilation of All Shareholder Questions and Answers from The Berkshire Hathaway Annual Shareholder Meetings

Click here to return to the Q&A topic list. Alternatively, you can proceed to the next or go back to the previous question.

Don`t copy text!