Berkshire Hathaway 2013 Annual Meeting Audience Question # 22

Todd Combs and Ted Weschler has free reign to invest as they please except for a few minor restrictions

Warren Buffett:

OK. Becky?

Becky Quick:

This question comes from Andishi Tuzush who asks, “If Todd Combs and Ted Weschler, if they purchase stock in a company that you have reviewed before and did not believe to be a good investment, would you share your thoughts with them?”

Warren Buffett:

I would probably not know they were even buying it until, maybe, a month after they started.

I do not… they do not check with me before they buy something.

I gave them each another billion dollars on March 31st, and I do not know whether they’ve spent the billion or whether… which stocks they bought or…

Now, I will see it on portfolio sheets. I get them monthly, but they’re in charge of their investments.

They’ve got one or two things that they’re restricted on, in terms of…things that… for example, if we own a chunk of American Express, and under the Bank Holding Company law we would not be able to buy another share.

So there’s a couple things like that… restrictions they have. But otherwise, they have no restrictions on what they buy.

They’ve bought things I wouldn’t buy. You know, I buy things they wouldn’t buy. That part of the investment process.

I do not tell them how much to diversify. They can put it all in one stock if they want to. They can put it in 50 stocks, although that’s not my style.

They are managing money. And when I managed money, you know, I wanted to be a free agent.

If he wanted to give me… they could make the decision on whether they wanted to give me the money, but once they gave me the money, and I had the responsibility for managing it, I wanted free reign to do what I wanted. And I did not want to be held responsible for things with my hands tied.

And that’s exactly the position we have with Todd and Ted now.

It takes a lot of… it’s an unusual person that we will give that kind of responsibility to. That’s not something that Charlie and I would do lightly at all.

But we thought they deserved the trust when we hired them, and we believe that more than ever after watching them in action for a time.

Charlie?

Charlie Munger:

What can I say in addition to that?

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