Buffett Health Concerns on Investor’s Minds

Health Okay, But Concerns Remain in Investor’s Minds.

OMAHA, Neb. — Warren Buffett worked to reassure shareholders that he’s feeling good after his recent prostate cancer diagnosis, and that Berkshire Hathaway is ready to replace the revered 81-year-old investor when the need arises.

Based on the questions Buffett got from the crowd of more than 30,000 at the company’s annual meeting in Omaha on Saturday, Berkshire shareholders are taking him at his word.

Despite the fact that Buffett just disclosed the condition last month, he didn’t face the first question about his health until well into Saturday’s questioning. Many of the questions at the meeting either focused in on technical aspects of Berkshire’s many businesses or dealt with general economic or political topics. One highlight of the discussion was the revelation that he recently attempted to make a more than $20 billion acquisition.

“I feel terrific. I love what I do,” he said. Buffett told shareholders that the survival rates for prostate cancer look so good that he thinks the diagnosis is a “non-event.”

It would hardly be the first time that Buffett’s assessment would be trusted. Widely known as the Oracle of Omaha, Buffett, 81, is considered the greatest celebrity in investing because of his many profitable decisions. Buffett has said his four doctors caught his cancer early, and it doesn’t represent a serious threat to his health. He plans to undergo radiation treatment in July, but the treatment should have little effect on his daily routine.

“I may have a little less energy, but that may mean I do fewer dumb things,” Buffett said jokingly.

Still, the diagnosis is forcing shareholders to confront the fact that one day Buffett will no longer be at the helm of the conglomerate, which includes an eclectic mix of companies such as Geico insurance, MidAmerican Energy, the Burlington Northern Santa Fe railroad, Shaw carpet, Helzberg Diamonds, the Nebraska Furniture Mart and Pampered Chef. Several questions dealt with related topics, such as who will replace Buffett when the time comes.

Buffett told shareholders in this year’s annual letter that the board has picked someone to succeed him as CEO if the need arises immediately, and it has two backup candidates. But Buffett hasn’t publicly identified his successor. During the business portion of the meeting, Berkshire shareholders overwhelmingly rejected a proposal that would have required annual updates on how the company is preparing to replace Buffett.

However, Buffett did address a challenge that his successor may face and talked about the way his successor will approach the job.

One of the first questions of the day was about whether his successor will be able to make the same kind of deals he has, such as the $8 billion Berkshire invested in preferred shares of Goldman Sachs Group Inc. and General Electric Co. during the crisis of 2008. Goldman and GE both wanted Buffett’s stamp of approval along with Berkshire’s money.

“I don’t think that every deal I have made could be makeable by a successor,” Buffett said.

But Buffett said his successor will still be able to make big deals because Berkshire has nearly $40 billion in cash on hand and is willing to invest large amounts quickly.

Buffett said deals like the ones with Goldman and GE haven’t been as important to Berkshire as investing in Coca-Cola Co. or IBM stock or buying entire businesses such as Iscar metalworking and Burlington Northern.

His eventual successor will maintain the company’s culture and continue to let key managers run Berkshire subsidiaries with little interference, Buffett said. He’s known for his hands-off, decentralized management style.

“You do not need to worry about my successor,” he said.

Shareholder John Zerngast, of Olathe, Kan., said the stock market might be uneasy about Buffett’s age and that of 88-year-old Vice Chairman Charlie Munger, but it shouldn’t be because of how much Berkshire’s 80-odd subsidiaries and investments are worth.

“I don’t worry about Warren and Charlie because the underlying value is there,” Zerngast said.

Besides all the companies Berkshire owns outright, it has major investments in such companies as Coca-Cola Co., IBM and Wells Fargo & Co. On Friday, Berkshire said its first-quarter profit more than doubled to $3.2 billion from last year’s $1.5 billion because this year’s results weren’t hurt by major disaster losses in Berkshire’s insurance units.

Buffett says the growth in the stock’s book value – the company’s assets minus liabilities – has outpaced the Standard & Poor’s 500 index in all but eight years since 1965 while delivering a compounded annual return of almost 20 percent. In recent years, Buffett has repeatedly warned investors not to expect that type of return in the future because Berkshire’s size makes it nearly impossible to keep growing at that rate.

That’s fine with George Jensen and his wife, Setara Jensen, who bought Berkshire stock as a stable option in retirement. The Jensens traveled from Hong Kong to attend the shareholder meeting and visit friends from when Jensen worked for Union Pacific railroad before retiring.

“We bought it because it’s a good value,” Jensen said. “There are certainly things that might have a higher rate of return, but at this stage, we wanted something safe and stable.”

Buffett said that he recently was negotiating a $22 billion acquisition that didn’t work out. He wouldn’t disclose the details, but he used the transaction as an example of the biggest acquisition Berkshire would make right now.

The company acquired Burlington Northern railroad in 2010 in a cash-and-stock deal valued at $26.7 billion that was Berkshire’s biggest acquisition ever. Buffett has always hated using stock in acquisitions, and he said Saturday that he now thinks it was a mistake to do so in the BNSF deal even though he is glad Berkshire owns the railroad.

Buffett also defended Berkshire’s purchase last year of the Omaha World-Herald Co. He said even though he has highlighted the challenges newspapers face, the deal still made sense for Berkshire, which already owned the Buffalo News and a large stake in the Washington Post Co. Newspapers are usually still the primary source of local information, and that’s an advantage in places where community is important, he said.

Buffett also defended political comments he has made while supporting President Barack Obama and lobbying for higher taxes on wealthy investors like him.

“When Charlie and I took this job, we did not agree to put our citizenship in a blind trust,” Buffett said.

Buffett always plays the role of Berkshire’s chief marketing officer at the annual meeting by showcasing products made by the company that are being sold in the 200,000-square-foot exhibit hall. On Saturday, he revived the newspaper tossing skills of his youth, promising anyone who can throw a folded Omaha World-Herald – one of Berkshire’s latest acquisitions – closer to the porch than him, a Dilly bar from Dairy Queen.

As Buffett roamed the exhibit hall, shareholders mobbed him, trying to take pictures with their cellphones. He spent time singing “There is No Place Like Nebraska” with the University of Nebraska’s cheerleaders at the Justin Boots stage before checking out the Burlington Northern Santa Fe railroad and BYD electric car displays.

The resolution submitted by the AFL-CIO to require updates on how the company would replace Buffett attracted about 32,000 votes while 672,000 votes were cast against the idea. The board and Buffett had opposed the idea.

The labor union’s Ken Maas said the group didn’t want Berkshire to publicly identify the 81-year-old Buffett’s successor. It just wanted an annual update on the planning.

Buffett said he doesn’t see any need to create a formal report on succession planning because he talks about it in his annual letter to shareholders and in interviews. Plus, the subject regularly comes up at the annual meetings.

“We spend more time on that subject than any other subject that might come before the board,” Buffett said.

Buffett has said Berkshire plans to split his chairman and CEO job into three parts with a chief executive, a chairman and several investment managers.

Buffett has said he believes his son Howard, who already serves on Berkshire’s board, would make an ideal chairman.

And Berkshire has hired two hedge fund managers, Todd Combs and Ted Weschler, over the past two years who Buffett says eventually will be capable of running the company’s entire portfolio. Buffett said Saturday that both Combs and Weschler were excellent hires, and the two men are now managing $2.75 billion each while Buffett oversees the remaining roughly $150 billion.

Buffett has said he remains in good health, and has no plans to retire because he enjoys running the conglomerate he built.

Warren Buffett Donates $1.52 Billion To Bill And Melinda Gates Foundation

10 July 2012 -

Warren Buffett is continuing to make good on his promise to donate most of his $44.1 billion to charity.

The third richest person in the world gave about 18.4 million of his company’s Class B shares, valued at $1.52 billion, to the Bill and Melinda Gates Foundation, Bloomberg Businessweek reported Saturday.

Giving generous donations to the Gates Foundation, which aims to improve education and health care has become an annual tradition for Buffett, a plan initiated in 2006, according to the Associated Press.

Besides giving to his own foundation as well as his children’s foundations, Buffett also gave shares worth nearly $20 million to eight unnamed charities, and 10 shares each to 15 elementary school children that were finalists in a business contest, according to the AP.

Buffett, who has long touted the obligation of the rich to share their wealth with those in need, teaches by example.

Last year, the mogul gave $1.78 billion to four charities, with the majority of it going to the Gates Foundation, according to Reuters.

But the chairman and chief executive officer of Berkshire Hathaway Inc. is just as intent on donating as he is on motivating others to do the same.

Together with Bill Gates, Buffett has inspired 81 billionaires to join the giving pledge, an initiative that asks the mega rich to give over half of their fortunes to charity.

“Philanthropy alone cannot repair all of the social injustice in our country or the world,” Buffett wrote on the Giving Pledge’s website. “It can, however, inspire good will, spark innovation and provide thought leadership.”

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Cost of Lunch with Buffet

OMAHA, Neb. (AP) — The cost to dine with investor Warren Buffett has apparently spiked in value, with one deep-pocketed bidder forking over nearly $3.5 million during a charity auction.  (YHOO)

The annual auction for a private lunch with the Nebraska billionaire closed following a flurry of activity in the final hours Friday night. In the end, the highest bid was a record-breaking $3,456,789.

The auction benefits the Glide Foundation, which helps the homeless in San Francisco. Buffett has raised more than $11.5 million for the group in 13 past auctions. The event provides a significant portion of Glide’s roughly $17 million annual budget that pays for social services to the poor and homeless.

“We just had a most amazing, shocking experience occur in our great city,” Glide’s founder, the Rev. Cecil Williams, said in a statement Friday night. “We are shouting, dancing, rejoicing and celebrating.”

The organization said Friday’s winner bidder wished to remain anonymous. Williams said 10 people actively engaged in bidding.

Buffett became one of the world’s richest men while building Berkshire Hathaway into a conglomerate. But he says most of the questions he gets at the lunches aren’t about investing.

As in past auctions, the bids didn’t reach astronomical levels until close to the end. Within the final hour of the auction’s 9:30 p.m. CDT closing, bids jumped from $1 million to the final $3.46 million.

Buffett has supported the San Francisco organization ever since his late first wife, Susan, introduced him to Williams. Buffett says Williams is a key reason why Glide has been able to help so many people after the world had given up on them.

“He’s changed thousands of lives that would not have been changed otherwise,” Buffett said before the bidding closed.

The previous four winning bids have all exceeded $2 million with records set every year. Last year’s winner, hedge fund manager Ted Weschler, paid $2,626,411.

In fact, Weschler paid nearly $5.3 million to win both the 2010 and 2011 auctions, and he wound up getting hired by Buffett last year to help manage Berkshire’s investment portfolio. Buffett says he doesn’t expect to find another new hire through the auction.

Buffett’s business brilliance and remarkable record of investment success as Berkshire’s chairman and chief executive is a big part of the draw for bidders, though he won’t talk about potential investments.

And Buffett has also made a mark on the world of philanthropy, so past winners of the lunch have also wanted to discuss giving. Buffett has slowly given away his fortune since 2006, and he plans to eventually divide most of his shares of Berkshire stock between five charitable foundations. The largest chunk will go to the Bill & Melinda Gates Foundation.

Buffett and Gates have also been encouraging other wealthy people to give away at least half of their fortunes. Nearly 80 of the nation’s wealthiest families have signed the pledge.

The Glide auction’s winners traditionally dine with Buffett at New York’s Smith and Wollensky steak house. The restaurant donates at least $10,000 to Glide each year to host the auction lunch.

Past winners of the auction have said they believe the time with Buffett was well worth the price they paid in the auction. The lunches often continue for several hours as Buffett answers their questions.

Buffett says many of the questions he gets at the lunches are about nonbusiness subjects such as family and philanthropy.

Buffett’s company owns roughly 80 subsidiaries including insurance, furniture, clothing, jewelry and candy companies, restaurants and natural gas and corporate jet firms, and has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.