Will Warren Buffett speak
to our group/company/association?
Each year Warren writes his managers and asks them to decline
all speech requests without checking with him.
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How do I contact Warren
Buffett?
Simply visit his website
http://www.berkshirehathaway.com for his Omaha mailing address
and send him a letter. Warren does not have an email address.
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Why
doesn't Warren name a successor?
Warren likes to tease that he plans to retire 5 years after
his death and then conduct regular séances with his
board of directors. Actually he is born to do what he is doing,
does it for the smallest salary [$100,000] of any of the Fortune
500 CEOs, without any stock options or without ever selling
a single share of his stock, and has the type of job [allocating
capital and finding, selecting and keeping talented managers]
that is actually done better with a few gray hairs.
I have written a separate chapter in The Warren
Buffett CEO titled Berkshire Post Buffett detailing
what selection criteria the board of directors may consider
when choosing Warren's successor(s). One of four possible
candidates is mentioned, along with the criteria for selection.
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Where
is the best source of information about Warren Buffett and
his investment and management philosophies?
Best to check his website for all things related to Warren
Buffett. Start by reading his annual letters to shareholders
and make a note to attend the mother of all annual meetings,
the first Saturday in May in the heartland of Capitalism,
Omaha, Nebraska.
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What
happens after Warren dies?
Warren's job will be divided into three. One person, most
likely a Buffett family member and his son Howard, will be
named chairman of the board to maintain the unique family
style corporate culture. Another, most likely Lou Simpson
of GEICO, will be named CEO in charge of capital operations.
And another will be named CEO of operations. This CEO business
model is already successfully in place at GEICO Auto Insurance.
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How
are the Buffett CEOs compensated?
Each is paid a cash salary and additional compensation based
on the profits of their individual business. If the business
manager owned the business before selling to Berkshire, he
or she may continue to own as much as 20 percent of the business
and enjoy an annual earnings distribution. Stock options are
never used as management compensation and the measurement
and focus is on what is going on inside the business, particularly
earnings and changes in book value.
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Why
did Warren invest in technology?
Q. I am perplexed in Buffett's investment in Level 3 because
it runs contrary to everything he has ever written and said
and there is not predictability to Level 3 in any way. Even
if you ask LVLT CEO James Crowe he will say that he does not
know what his business will look like one year out in the
future and thus there is no visibility. Why would Warren make
an investment in an enterprise where technology changes the
business everyday? I know he likes to bet on CEOs (thanks
to your book) but this business is really tough. If he were
to make a technology investment it would be Microsoft, which
certainly has much more visibility. What are your thoughts?
A. My take on Level 3 is Warren bought a convertible bond
paying an attractive rate of interest that has already doubled
in value. This is the same way he got into many other investments,
e.g. Gillette, US Air. The Buffett CEO in this case is Walter
Scott. Without him I doubt he would have done the deal. If
you remember Walter brought him the MidAmerican deal which
is now one the largest and most profitable divisions of Berkshire.
MidAmerican, in two short years, has revenue of $6 billion
and earnings of $300 million. It is already larger than the
flight services division. Energy, at the right price, may
become the second largest component of BRK. He bought LVLT
at the maximum point of pessimism and at $100 million it only
represents the equivalent of one week's cash flow for BRK.
Remember this is a high yield bond not an equity investment,
although at Warren's option it may become one. What is amazing
is that for about the same amount of money he bought the largest
furniture store chain in Texas and no one ever talks about
that purchase. LVLT fascinates most people because of the
Walter Scott connection, technology relationship, the apparent
contradiction to Warren’s investment principles and the
fact that so many Omaha and Berkshire shareholders have lost
90 cents of every dollar invested in this company.
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Is
Berkshire Hathaway a stock mutual fund?
No, Berkshire Hathaway is a conglomerate made up of over 100
wholly owned subsidiaries as well as a handful of partly owned
common stocks. It has significant property and casualty insurance
businesses, cash and fixed income investments.
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Can
I purchase Berkshire Hathaway Stock direct from the company?
No. Berkshire Hathaway is listed on the New York Stock Exchange
under symbol brka and brkb. The B shares trade and are worth
1/30th the economic value of the A shares. As an example,
if the A shares trade for $120,000 then the B shares will trade
for $4,000. You must purchase and sell your shares through
a NYSE licensed online, discount or full service stockbroker.
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How
Does Warren Buffett make his charitable donations?
Warren Buffett is in the process of donating the bulk of his
estate to the Bill
and Melinda Gates Foundation. The majority of his
Berkshire stock (5 percent of his wealth each year over the
next 20 years) is being transferred to the Gates Foundation.
The Susan
Thompson Buffett Foundation sponsors an outstanding Omaha
public teacher (K - 12) awards each year as well as a
scholarship program for Nebraska college students. Each of
Warren's three children also have their own foundations. Susan
A Buffett Foundation is focused on early childhood education
in low income neighborhoods in Omaha. Howard G Buffett
Foundation is targeting global environmental and conservation
needs. Peter Buffett with his NoVo
Foundation is currently evaluating how they will
distribute their funds to change, alter and invent. Warren's
sister Doris also has her own Sunshine
Lady Foundation which focuses on solving domestic
violence. Read How
Buffett's Giveaway Will Work.
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|
Robert
P. Miles.
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