Berkshire Hathaway 2013 Annual Meeting Audience Question # 50

Will the selling of Berkshire shares to fund Warren’s philanthropy hurt its stock price?

Warren Buffett:

OK. Becky?

Becky Quick:

This question comes from James Brodbelt Harris of Columbus, Ohio.

He says that your enormously generous multibillion charitable gifts of Berkshire Hathaway stock over the past decade have, and will continue to be, sources of salable assets for the charities linked to the Buffett, Gates, and Munger families.

Could annual sales of billions of dollars’ worth of donated stock by these charitable foundations be a reason why shares have traded under 120 percent of book value, and will announced share repurchase plans fully address this selling by the charitable funds in the coming decade?

Warren Buffett:

Yeah. I give away 4 3/4 percent of my stock, we’ll say, every year, and let’s say that’s $2 billion worth of stock, roughly. That’s 1 percent… a little less than 1 percent… of the market value of Berkshire.

Many companies in the New York Stock Exchange trade over 100 percent a year. A 1 percent sale annually of the outstanding capitalization is absolutely peanuts, and you can even argue, in some cases, that it can aid, in terms of market price, because the availability of stocks sometimes determines whether people get interested in buying.

But a supply of 1 percent annually is not going to change the level at which a stock trades. I mean, it just it’s insignificant compared to the volume.

Berkshire… I think Berkshire’s volume, A and B combined, is… probably averages, what, 4 or $500 million a day, so 2 billion spent over a year is not going to affect things.

And you can argue that, you know, everybody else has a right to sell their stock or give it to a charity. I don’t think I should be totally tied up, in terms of being able to give the stock away.


Charlie Munger:

Well, there’s nothing so insignificant as an extra $2 billion to an old man.

Warren Buffett:

I’ve never given away a penny that in any way changed my life. Have you, Charlie?

Charlie Munger:

No, of course not.

Warren Buffett:

We never even thought of it.

Charlie Munger:

It would be unthinkable.

Warren Buffett:

It’s… it has a lot more utility in the hands of other people than it does in my safe deposit box.

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!