Gustavo Ballvé on May 7th, 2012
Capital goods, Corporate Governance, Corporate Strategy, Food for thought, Home, Industries, Insurance, Mental models

Reading other sources after the meeting I found a few tidbits worth mentioning. H/T Century Partners.

On Ted Weschler and Todd Combs, there’s more detail on their compensation (also repeated inside) in this story.

About Todd Combs and Ted Weschler:

“Asked about investment managers Todd Combs and Ted Weschler, Mr. Buffett says they are “perfect” for Berkshire. Each makes $1 million in annual salary plus 10% of the sum by which their portfolios beat the S&P 500, on a three-year rolling basis. Each one gets paid 80% based on their performance and 20% on each other’s. “I don’t think you can have a better structure,” Mr. Buffett says, likening it to the one he used to pay Geico’s Lou Simpson, who recently retired after several decades of investing for the auto insurer. Each has $2.75 billion under management and little oversight from Mr. Buffett, he says, adding that when they buy a new stock he likes to know what stock it is.
The investment managers have a “much bigger universe” of stocks to pick, Mr. Buffett says, because of the sums they manage, which pale next to the $150 billion or so that Mr. Buffett oversees. “I think we’ve got a good system,” he says.”

About Mid-American and capital allocation:

“MidAmerican Energy may have an opportunity to deploy as much as $100 billion over the next 10 to 15 years at “very reasonable rates,” Mr. Munger says, which is reason number 234,731 as to why Berkshire won’t be paying a dividend any time soon.”

About Politics vs. running a public company:

“Shouldn’t Mr. Buffett keep his political views “muted”? No, he says, unsurprisingly. “When Charlie and I took this job we didn’t put our citizenship in a blind trust,” he says. He says someone who thinks otherwise “should own Fox” rather than Berkshire Hathaway. Fox, as it happens, is a unit of the News Corporation, which publishes this blog and something called The Wall Street Journal.”
— touchy, huh?

Whitney Tilson’s question:

“Hedge-fund manager Whitney Tilson, who has perfected the trick of getting a question in by going to an overflow room, asks if Mr. Buffett would ever raise the price at which he’s willing to buy back shares. Mr. Tilson says he’d rather Mr. Buffett had bought Berkshire shares in the first quarter at 115% of book value (Buffett’s buyback price is 110%) instead of investing in other companies’ stocks.

Buffett starts his answer by saying he would have preferred to buy Berkshire shares too. But he disputes a hypothesis from Mr. Tilson that the buyback price might also serve to limit the upside on the shares.

Nor does it set a solid floor, Mr. Buffett says.
“There could be circumstances under which we would buy a lot of stock but I don’t think they are highly likely,” he says. One thing the buyback price indicates, according to Mr. Buffett: “I do think it signals to a lot of people that don’t have a lot to lose” by investing at the current price.”

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