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(2014-10-21 09:25:06)


From “Now Hear This”


October 23, 1989


Warren Buffett, 59, billionaire investor and chairman of Berkshire Hathaway, on why he borrowed $400 million and put the cash into Treasuries: “The best time to buy assets may be when it is hardest to raise money.”


Buffett Buys Junk


April 22, 1991



Wall Street has long wondered if star investors would find bargains in the disarray of the junk bond market. Enter Warren Buffett. In the 1990 annual report of Berkshire Hathaway, the billionaire CEO discloses that Berkshire has put $440 million into RJR Nabisco’s high-yield bonds. Buffett, who last year made an intensive study of the junk market, says in an interview, “There was even more carnage than I’d thought.”

He concluded that the RJR bonds were a better value than anything else he saw in the field because the company is well-run and its credit better than commonly perceived. Buffett estimates that the market value of his RJR bonds is now some $175 million above his cost.

Does he wish he’d bought more? Says he, “There are a lot of things I wish I’d done in hindsight. But I don’t think much of hindsight generally in terms of investment decisions. You only get paid for what you do.”



From “Now Hear This”


April 5, 1993


Warren E. Buffett, 62, billionaire CEO of Berkshire Hathaway, on why the cost of executive stock options should be recognized on companies’ income statements:

If options aren’t a form of compensation, what are they? If compensation isn’t an expense, what is it? And if expenses shouldn’t go into the calculation of earnings, where in the world should they go?”



From “The World’s Best Brand”


May 31, 1993


Excerpts from an article by John Huey

Says Buffett: “If you run across one good idea for a business in your lifetime, you’re lucky, and fundamentally this is the best large business in the world.[Its product] sells for an extremely moderate price. It’s universally liked—the per capita consumption goes up almost every year in almost every country. There isn’t any other product like it.”…

On Goizueta and Keough: “If you have the 1927 Yankees, all you wish for is their immortality,” Buffett says…“As long as we have the kind of people who are as focused as they are, I don’t worry about the business. If you gave me $100 billion and said take away the soft-drink leadership of Coca-Cola in the world, I’d give it back to you and say it can’t be done.”

Goizueta died in 1997, Keough retired, and the new CEO, Douglas Ivester, looked more like a batboy at the plate than a Ruth or Gehrig. In early 2000, Fortune published an exclusive story whose opening paragraphs follow:




From “Untangling the Derivatives Mess”


March 20, 1995


An excerpt from an article by Carol Loomis

Here are the last two paragraphs of this article:

Given the range of complications that derivatives present, outside directors cannot possibly achieve close communion with the contracts their companies hold. Most chief executives won’t master the game, either. In the end, the choice of what risks to hedge, what derivatives to employ in doing it, and how to draw the bright line between risk management and speculation will be largely left to financial people down the corridor—some of whom, recent train wrecks notwithstanding, may think of themselves as running a profit center. And on the other end of their phones will be derivatives salespeople trying to sell the latest innovation, which assuredly will not be a plain-vanilla hedge.

It’s not a particularly cheerful picture—not for a problem as big as derivatives. So maybe what we need is new thinking, a fresh approach, a suggestion so radical it goes off the page. Here’s one: Warren E. Buffett, chairman of Berkshire Hathaway, says he’d deal with derivatives by requiring every CEO to affirm in his annual report that he understands each derivatives contract his company has entered into. Says Buffett: “Put that in, and I suspect you’ll fix up just about every problem that exists.” In a market that seems to thrive on complexity and obfuscation, such a solution won’t happen. It’s too simple. But he’s right.



Two Items from “Now Hear This”


April 3, 1995


Warren E. Buffett, 64, chairman of Berkshire Hathaway, which sells its candy, shoes, and other products at the annual meeting:

Though we’d like to think of the meeting as a spiritual experience, we must remember that even the saintliest of religions includes the ritual of the collection plate.”


May 29, 1995


Charles T. Munger, 71, vice-chairman of Berkshire Hathaway, referring to litigation involving the company:

They subpoenaed our staffing papers. Not only didn’t we have any staffing papers, we didn’t have any staff.”



Gift That Gives—A Bit O’ Buffett


March 18, 1996



The $32,800 pricetag on Berkshire Hathaway has thwarted both owners who wanted to give (even one share would trigger gift taxes) and little outsiders who wanted to own Warren Buffett’s hot stock. On May 6, shareholders will vote on Buffett’s plan to sell at least $100 million of new Class B shares for a mere $1,000 or so each. Current shares, to be renamed Class A, can convert to B’s at any time. “We just want to attract those who are attracted to us,” Buffett says. To deter a slew of converts, he advises that the B’s are “a tiny bit inferior” to the existing A’s: They have fewer voting rights and lack the A’s input on corporate donations. But for gift givers and little guys, these baby B’s buy you real Buffett.


A Letter from Fortune’s Letters Column




March 26, 2001




The Value Machine” is a great article, but I’d like to quibble with one point you make: “Buffett isn’t searching for synergy.” Whether he’s searching for it or not, he has an uncanny record for delivering it. Time after time a good return on equity has become a great one under the Berkshire umbrella. Consider See’s Candy, Buffalo News, Scott Fetzer, and so on. Double the return on equity of a company, and you get much more than a doubling of the company’s intrinsic value.


While the record for synergy is interesting, the source of that record is important. Buffett is the only conglomerateur I can think of who doesn’t hew to the command and control model. To that extent, he has created a new management model.


Buffett is one of the greatest managers in history. He created the most successful of all the ’60s conglomerates, the most successful of all the ’70s inflation hedges, and he’s on the verge of creating the biggest category killer of all time (a collection of category killers). He should get his due as a manager.




Washington Island, Wisconsin



The Mash Note Everybody Wants




September 16, 2002




A Sidebar by Jerry Useem


The following sidebar ran in a post-Enron article describing the rush of corporations to make themselves into model institutions.


What are the most coveted words in corporate America today?


That’s simple: “Sincerely, Warren.”


With companies competing to clean up their act, a letter of praise from super-investor Warren Buffett has become the ultimate Good Housekeeping Seal of Approval. General Electric got one for announcing it would expense stock options. “For long, GE has brought good things to life,” Buffett wrote. “Now GE has brought good things to accounting.”


Standard & Poor’s got one, too, for its new “core earnings” measure. “Your move is both courageous and correct,” Buffett wrote in his letter, which S&P liked enough to post on its website. “In the future, investors will look back at your action as a milestone event.” Other lucky recipients have included Bank One and Amazon.


He’s the only person or entity out there that still has an unblemished reputation,” says S&P analyst Robert Friedman. Well, a few other voices still command credulity, such as John Bogle, the outspoken founder of Vanguard Group. But how did Bogle know that a speech about corporate accountability went over well? “[Buffett] gave me a very nice note after reading that speech,” he says.



A Letter from Fortune’s Letters Column




February 17, 2003




The bold type in “Playing the Dividend Market” (Investor’s Guide 2003, Dec. 9) saying “Not just any dividend payer is a good investment. Many of the most tempting are quite risky” rang a very loud bell. In January 1956, I bought some shares in a textile company because it appeared to be paying an 8.5% dividend. But it turned out that dividends hadn’t yet caught up with a decrease in net income. I sold the stock a year later for a 64% loss. That was the biggest mistake of my life. The company was Berkshire Hathaway, which Warren Buffett [took over] a few years after that. Please don’t tell me what the stock I sold is now worth.




Bishop, California



Where We’re Putting Our Money Now




March 17, 2003




A second excerpt from Buffett’s letter to shareholders


in the 2002 annual report


We continue to do little in equities. Charlie and I are increasingly comfortable with our holdings in Berkshire’s major investees because most of them have increased their earnings while their valuations have decreased. But we are not inclined to add to them. Though these enterprises have good prospects, we don’t yet believe their shares are undervalued.


In our view, the same conclusion fits stocks generally. Despite three years of falling prices, which have significantly improved the attractiveness of common stocks, we still find very few that even mildly interest us. That dismal fact is testimony to the insanity of valuations reached during The Great Bubble. Unfortunately, the hangover may prove to be proportional to the binge.


The aversion to equities that Charlie and I exhibit today is far from congenital. We love owning common stocks—if they can be purchased at attractive prices. In my 61 years of investing, 50 or so years have offered that kind of opportunity. There will be years like that again. Unless, however, we see a very high probability of at least 10% pretax returns (which translate to 6% to 7% after corporate tax), we will sit on the sidelines. With short-term money returning less than 1% after-tax, sitting it out is no fun. But occasionally successful investing requires inactivity.


Last year we were, however, able to make sensible investments in a few “junk” bonds and loans. Overall, our commitments in this sector sextupled, reaching $8.3 billion by year-end.


Investing in junk bonds and investing in stocks are alike in certain ways: Both activities require us to make a price-value calculation and also to scan hundreds of securities to find the very few that have attractive reward/risk ratios. But there are important differences between the two disciplines as well. In stocks, we expect every commitment to work out well because we concentrate on conservatively financed businesses with strong competitive strengths, run by able and honest people. If we buy into these companies at sensible prices, losses should be rare. Indeed, during the 38 years we have run the company’s affairs, gains from the equities we manage at Berkshire (that is, excluding those managed at General Re/Cologne and GEICO) have exceeded losses by a ratio of about 100 to one.


Purchasing junk bonds, we are dealing with enterprises that are far more marginal. These businesses are usually overloaded with debt and often operate in industries characterized by low returns on capital. Additionally, the quality of management is sometimes questionable. Management may even have interests that are directly counter to those of debtholders. Therefore, we expect that we will have occasional large losses in junk issues. So far, however, we have done reasonably well in this field.



From “The 25 Most Powerful People in Business”




August 11, 2003




Excerpts from an article by Jerry Useem


Editor’s Note: This article began with a description of a Sun Valley golf game in July 2003 that the writer thought might have established “a new record for aggregate economic might.” The players: “They included the CEO of the world’s largest company, the world’s most successful investor, and the world’s richest man. Picture all that clout piled into one battery-powered cart and you have the right visual for opening this Power Issue.”


Move past a dozen or so paragraphs about the meaning of power to the editors’ discussion of who should be first on the list. Said the article, and we quote several paragraphs:


After several months of internal debate about our power list, two things became clear: first, that power is a really deep topic; second, that any list we published would provoke the same howls of protest and counterprotest that filled our offices….And yet in one area a strange civility broke out. When it came to deciding the list’s highest slots, there was something close to unanimity. In fact, we’d narrowed the top three contenders to the trio who, coincidentally (hand on the Bible here), were set to play golf in Sun Valley.


We had our three biggest fish. That left the question: Who’s the kingfish?


There’s no debating who runs the most powerful company. Lee Scott’s Wal-Mart is reshaping about 20 industries at once and would probably qualify for a seat on the UN Security Council if that body’s membership weren’t limited to “countries.” Yet Scott may be the most replaceable of the three. Bill Gates, as lead brain in a company powered by brainpower, is still Mr. Microsoft—and as Huck Finn might have said, he’s got a powerful amount of green stuff to go with his gray. Yet the company’s $46 billion war chest is only potential, unrealized power unless it finds new behavior-changing ways to use it. Lately Microsoft has been parceling it out to investors as dividends.


Which brings us to our third golfer. Besides overseeing an empire known as Berkshire Hathaway, Warren Buffett has his hand in a lot of important pies (Coca-Cola, Gillette, the Washington Post Co.) and a personal fortune second only to Gates’. But the most arresting fact about Buffett may come from a recent Duke University survey of graduating MBAs. After their own father, the person the graduates admire most—more than the President, more than the Pope, more than Gandhi—is Warren Buffett. That remarkable stature gives him a power of moral suasion that’s been made all the stronger by his sparing use of it. It’s the ability to shape the behavior of people far beyond his direct reach merely through his words, and it’s added to Buffett’s image as American capitalism’s unofficial Lord Protector.


He’s got the rock, the scissors, and the paper, And now he’s got something else: the top spot on our list.




A Sidebar by Warren Buffett with Carol Loomis


How often have you seen a comment like this in articles about the U.S. dollar? “Analysts say that what really worries them is that foreigners will start moving out of the dollar.”

Next time you see something like that, dismiss it. The fact is that foreigners—as a whole—cannot ditch their dollars. Indeed, because our trade deficit is constantly putting new dollars into the hands of foreigners, they have to just as constantly increase their U.S. investments.

It’s true, of course, that the rest of the world can choose which U.S. assets to hold. They can decide, for example, to sell U.S. bonds to buy U.S. stocks. Or they can make a move into real estate, as the Japanese did in the 1980s. Moreover, any of those moves, particularly if they are carried out by anxious sellers or buyers, can influence the price of the dollar.

But imagine that the Japanese both want to get out of their U.S. real estate and entirely away from dollar assets. They can’t accomplish that by selling their real estate to Americans, because they will get paid in dollars. And if they sell their real estate to non-Americans—say, the French, for euros—the property will remain in the hands of foreigners. With either kind of sale, the dollar assets held by the rest of the world will not (except for any concurrent shift in the price of the dollar) have changed.

The bottom line is that other nations simply can’t disinvest in the U.S. unless they, as a universe, buy more goods and services from us than we buy from them. That state of affairs would be called an American trade surplus, and we don’t have one.

You can dream up some radical plots for changing the situation. For example, the rest of the world could send the U.S. massive foreign aid that would serve to offset our trade deficit. But under any realistic view of things, our huge trade deficit guarantees that the rest of the world must not only hold the American assets it owns but consistently add to them. And that’s why, of course, our national net worth is gradually shifting away from our shores.



The Market According to Buffett




May 17, 2004






How much would you pay to get close to Warren Buffett? In what must set a new record for business fandom, some admirers were bidding as much as $117 on eBay for a ticket to Berkshire Hathaway’s May 1 annual meeting. Determined to secure access for all, Buffett posted 10,000 tickets on the site, at $2.50 apiece (a bargain, given that one share of Class A stock goes for $93,500). But it’s hardly the only time Buffett-mania has reared its head. Below, a sampling of the robust Buffett aftermarket:



The best-selling Buffett tome


Buffett’s 20-year-old wallet, sold at a charity auction in 1999


Two tickets to Berkshire Hathaway’s annual meeting


Lunch with Buffett, sold on eBay in 2003


Dollar bill signed by Buffett, sold at a church auction in Nebraska in 2004


Bobble-head doll, sold on the Omaha Royals’ website

Editor’s note: The eBay auction for a Buffett lunch to benefit San Francisco’s Glide Foundation continues—and also jumps in price every year. In 2012, the winning bid, once again a record, was $3,456,789.



Buffett Backs GM—And Buys a Caddy




May 29, 2006






Warren Buffett isn’t one of those guys who always has to have the fanciest bling on the block. This is, after all, the billionaire who loves to dine at Dairy Queen. And his daily commute takes only five minutes. But after he saw Rick Wagoner, the chairman and CEO of General Motors, on CBS’s Face the Nation in early April, Buffett decided it was time to splurge for a new ride. He faxed Wagoner a note that praised him for being “candid, composed, and rational” in discussing problems that GM faced that weren’t of his making, and added a P.S.: “I don’t buy cars very often, but the next one will be a Cadillac.” Wagoner wrote back offering to help Buffett with the purchase, but it wasn’t necessary. Buffett dispatched his daughter to a nearby dealer so that he could, as he put it, cast “one vote for the guy.” She picked out a DTS—a sedan that is the model of choice for senior-citizen drivers and starts at $41,900. “I think I’ll become a car salesman, because I would have no trouble selling this car to anyone,” Buffett says. “I’m behind GM 100%.” In case you were wondering, he paid cash.



How Buffett’s Giveaway Will Work




July 10, 2006






The mind that built the fortune also came up with a complex plan to hand it off.


Warren Buffett holds only Berkshire Hathaway A stock (474,998 shares), but his gifts are to be made in Berkshire B stock, into which each A share is convertible at a ratio of 30 to 1. He will convert A shares to obtain the B shares he needs for his gifts.



Buffett is earmarking a set number of B shares for each of the five foundations he has chosen to receive his gifts. In 2006 he will give 5% of the designated shares to each recipient. Next year the gifts will be 5% of the residual shares, and so on for every year until either Buffett’s death or until certain conditions are no longer met at the foundations. At Buffett’s death, his estate will distribute, in a way not yet definite, the remaining earmarked shares.


Here are the recipients and the number of B shares to be allocated to them.


Bill and Melinda Gates Foundation


10 Million Shares


This foundation, the largest in the world, has around $30 billion of assets right now and has given away $8 billion in its 12 years of existence. Most of its money (typically funneled through partners) has gone to world health programs and to U.S. education. Buffett’s gifts to this foundation will continue only as long as either Bill or Melinda Gates is alive and active in its work.


Susan Thompson Buffett Foundation


1 Million Shares


Once called simply the Buffett Foundation and renamed in 2004 for Buffett’s wife, who died that year, this foundation has $270 million in assets. Most of its funds came from the estate of Susan T. Buffett, and $2.1 billion more is expected from that source. This foundation has focused on reproductive health, family planning, and pro-choice causes, and on preventing the spread of nuclear weapons.


Susan A. Buffett Foundation




This philanthropy is named for and chaired by Buffett’s daughter, 52, who lives in Omaha (and who has also chaired the Susan Thompson Buffett Foundation since her mother’s death). The daughter’s foundation, which today has $118 million in assets, has funded early education for children of low-income families. With her father’s new gifts, Susan Buffett expects to continue that work and expand into public-education and foster-care grants.


Howard G. Buffett Foundation




Now holding $129 million in assets, this foundation was set up by Buffett’s older son, 51, who farms 840 acres outside Decatur, Ill., and is on several corporate boards, including Berkshire’s. (His middle name, by the way, is Graham—for famed investor Ben Graham.) This foundation’s giving has been very international, taking in 42 countries and often aimed at conservation goals such as the protection of African wildlife habitats. But with its new money, the foundation plans to move much more heavily into clean-water projects, food relief, the plight of children entangled in illegal immigration, and other humanitarian areas.


NoVo Foundation




Named for the Latin word novo (meaning “I alter”), this foundation is run by Peter Buffett, 48, a musician and composer, and his wife, Jennifer, who live in New York City. Currently holding $120 million in assets, it has focused on funding individuals and organizations working to open up education opportunities, reverse environmental degradation, uphold human rights, and improve understanding and respect among various cultures and ethnicities.



Would You Like That $11 Billion in Twenties?




July 24, 2006






On July 3, Warren Buffett drove himself downtown, walked into the cavernous and nearly deserted central branch of U.S. Bank in Omaha, descended a flight of steps, and opened his large safe-deposit box. He took out a 1979-dated certificate for 121,737 shares of Berkshire Hathaway A stock, on that day worth about $11 billion—roughly one-quarter of his Berkshire fortune. Driving back to his office, he pondered the next step: getting that certificate and a few others (worth only tens of millions) to Wells Fargo in Minneapolis for conversion at a 30-to-1 ratio into around 3.75 million shares of Berkshire B stock. He considered FedEx and elected instead to turn one of the 16 people working at Berkshire headquarters into a courier.


As Fortune first reported last month, Buffett has begun to give his money to charity. Converting the astoundingly valuable 1979 certificate is an initial step in that process. When it is switched over, Buffett will have the B stock he needs for handing out the 602,500 shares he has committed this year—the first of his huge philanthropic program—to the Bill & Melinda Gates Foundation and four smaller foundations. Because of the size of that one certificate, he will also be up to his eyeballs in B shares, having manufactured enough to fill his giving needs for most of the next decade. (He’ll keep the excess shares in a brokerage account to be used as needed.)


Buffett says the whole exercise on July 3 made him think of the time almost 70 years ago, when he was 6 years old and his father, Howard Buffett, took him to the same bank to open a $20 savings account. The money was a gift, the bank was then called Omaha National, and the small passbook he got was maroon. After that, he says, it took him five years of gifts, chores, and money-earning schemes to build the account to $120. Having accrued this fortune, he bought, at age 11, his first stock: three shares of Cities Service preferred for $114.


Well, if you are going to amass $44 billion, you have to start someplace.



Buffett to Gates: Spend It!




March 19, 2007






Last summer Warren Buffett stunned the business world when he told Fortune that he would give away the bulk of his $44 billion Berkshire Hathaway fortune to charity.


Now comes the news…that in the latest Berkshire annual report Buffett states strict rules about what should happen to any Berkshire shares he retains when he dies—rules that challenge the way most charitable foundations are run. As he previously said, these shares will go to charity, but the new stipulations are all about speed. Once his estate is closed, which he estimates will take three years, every dollar of his gifts must be used within ten years.


By establishing this timetable, Buffett has thrust himself into a long-running debate: Should foundations focus on spending their resources or perpetuating them? And because of his reputation and the scale of his wealth, Buffett’s endorsement of the latter is a landmark moment in philanthropy.


The vast majority of large foundations operate with the intent of lasting forever and therefore rarely exceed the minimum spending ratio of 5% (calculated on an organization’s asset value of the previous year) which they need to retain tax-exempt status. According to data compiled by Buffett’s staff, 28 of the 30 largest foundations paid out less than 5% of assets in grants in 2005. (They reached the 5% threshold by counting operating costs).


But a small number of foundations both past and current have decided to follow a spend-down model. Why? Many want greater control over how their money is used. As Buffett writes in the Berkshire annual report, “I’ve set this schedule because I want the money to be spent more promptly by people I know to be capable, vigorous, and motivated.” Buffett’s gifts are going to the Bill & Melinda Gates Foundation, three foundations run by his children, and the Susan Thompson Buffett Foundation, named after his late first wife. (The Gateses, too, have put a time limit on the spending of their donation, stipulating that their foundation must disburse all the money within 50 years of their death).


As foundations grow over time the risk of bureaucracy and mission drift grows,” says Harvey Dale, director of New York University’s National Center on Philanthropy and the Law. Dale is also the former president, CEO, and now director of Atlantic Philanthropies, an oft-cited modern example of a spend-down foundation. Adds Dale: “[Spending down] focuses the mind.”


But don’t expect the Ford Foundation to go on a wild spending spree or to go out of business anytime soon. “Foundations set up in perpetuity aren’t looking at this,” says Gene Tempel, executive director of the Center on Philanthropy at Indiana University. It’s a lot more common with younger donors who are setting up new foundations.”


Or donors who are young at heart. Buffett is 76. And he’s also overseeing a charitable obligation that’s increasing in size. Last June, when Buffett unveiled his plan to give away 85% of his Berkshire shares, the gift was worth $37 billion. Since then the stock has risen about 15%.



Marking to Myth




September 3, 2007






Fortune asked a baker’s dozen of financial thinkers to share both their reactions to the tightening credit crisis and their insights about the road ahead. Here are Buffett’s comments:


Many institutions that publicly report precise market values for their holdings of CDOs and CMOs are in truth reporting fiction. They are marking to model rather than marking to market. The recent meltdown in much of the debt market, moreover, has transformed this process into marking to myth.


Because many of these institutions are highly leveraged, the difference between “model” and “market” could deliver a huge whack to shareholders’ equity. Indeed, for a few institutions, the difference in valuations is the difference between what purports to be robust health and insolvency. For these institutions, pinning down market values would not be difficult: They should simply sell 5% of all the large positions they hold. That kind of sale would establish a true value, though one still higher, no doubt, than would be realized for 100% of an oversized and illiquid holding.


In one way, I’m sympathetic to the institutional reluctance to face the music. I’d give a lot to mark my weight to “model” rather than “market.”



The Oracle’s Credit Crisis




March 31, 2008






Warren Buffett may be the world’s richest man, but you might have a better credit score. When the Berkshire Hathaway CEO recently checked his credit history, his FICO score in one report was 718, slightly below the U.S. median. “I’ve been telling my family for years that my credit was sort of shaky,” Buffett insists. He’s kidding, of course, referring to his self-proclaimed stinginess with his kids. In truth, the score may have been due to an imposter; the report cites 23 missed payments on a $294 loan at an HSBC branch in Nevada, where Buffett says he has never had an account. A 2004 study found that 25% of reports contain serious errors, which is why watchdogs say low scores shouldn’t be cause to deny a loan. Fortunately for Buffett, he was able to pay for his last car, a Cadillac DTS, in cash.



From “What Obama Means for Business”




July 2, 2008




An excerpt from an article by Nina Easton


Already [Obama’s] circle of advisors has expanded beyond a small core of academics to include veteran capitalists inside the Democratic Party….He is frequently on the phone with billionaire CEO Warren Buffett (“one of my favorite people,” says Obama, “he’s just completely down-to-earth and as smart as they come”), a critic of the financial industry and of tax breaks for the rich who also happens to understand capital markets better than just about anyone.



From “Riders on the Storm”




April 20, 2009




An excerpt from an article by Adam Lashinsky


Warren Buffett delights in telling an anecdote about Wells [Fargo]’s banking relationship with his own company, Berkshire Hathaway. In 2001, when Berkshire and a partner bought Finova, a bankrupt lender, it solicited banks to become part of a loan syndicate. “Wells wasn’t interested,” says Buffett, who is Wells’ largest shareholder, with 315 million shares, or a 7.4% stake. The others offered to lend Berkshire money at the ultralow rate of 0.2 percentage points above its cost, a loss leader intended to win follow-on investment-banking business from Berkshire. Not Wells. “I got a big kick out of that because that’s exactly how they should think,” says Buffett, with a hearty guffaw….“The real insight you get about a banker is how they bank. Their speeches don’t make any difference. It’s what they do and what they don’t do. And what Wells doesn’t do is what defines its greatness.”



From “Who the Admired Admire”




March 22, 2010




An excerpt from an article by Anna Bernasek


In its annual Most Admired issue, Fortune asked six CEOS heading admired companies to say what CEO each most admired. Ken Chenault, of American Express, picked Buffett, saying:


He embodies this incredible blend of high intellect and business judgment with the ability to emotionally engage with people.





A Sidebar by Bill Powell


Last year Warren Buffett and Bill Gates visited Beijing for what they thought would be the least controversial of reasons. They had arranged to have a private dinner with a group of rich, successful Chinese businessmen, and to talk with them about a subject that seems innocuous: philanthropy. The Chinese blogosphere caught wind of the dinner and erupted in chatter. “And not all of it,” acknowledges Peter Buffett, “was positive.”

That’s putting it mildly. The subject of rich folks giving away their money to charity might be uncontroversial in the U.S., but in China it’s not. In fact, Peter says, when he comes to China to perform and speak to groups of students and young professionals, “the subject of second-generation wealth always comes up. They always want to talk about it.”

There are two reasons philanthropy gets people riled up in China. First, a fair number of rich folks there believe giving it away is antithetical to Chinese values—which stress family above all. It’s why some Chinese were upset when they heard (mistakenly) that Buffett and Gates were coming to tell rich Chinese how to give away their wealth. Many young Chinese were stunned when Buffett said he was giving most of his wealth to the Gates Foundation.

But the second reason wealthy Chinese haven’t been racing to donate more of their money, particularly this year, is less obvious: Charitable foundations in China are dogged by the whiff—and sometimes more than that—of corruption. Management fees for charities in China are often up to 10% of donations collected, compared with around 3% in the West. Earlier this year, the mere photograph on the web of a young woman identified as a manager of the Red Cross in China sent the blogosphere into a frenzy. The reason? The photo showed her driving a fancy car and carrying a Hermès purse.

The agency insisted that the woman in question did not, in fact, work for the Red Cross in China. (She was the girlfriend of what the agency murkily called a “business partner.”) The denials didn’t matter. Donations to RCIC in the first half of 2011 plummeted and, according to some Chinese press reports, slowed considerably to the charitable sector as a whole.

That pointed to the lack of trust that exists in the charitable sector in China. Several prominent Chinese businessmen and philanthropists—led by Cao Dewang, owner of one of the largest glassmaking companies in China—have now publicly insisted that the domestic charities they donate to have to become more transparent and cost-effective. “This doesn’t have anything to do with values, Western or Chinese,” Cao has said. “To increase charity now in China is a matter of trust.”


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