Jeremy Glaser: For Morningstar I'm Jeremy Glaser. This year Morningstar Analyst Greg Warren was on the panel asking questions of Warren Buffett and Charlie Munger. I'm here with him now.
Greg thanks for joining me.
Greg Warren: Thanks for having me.
Glaser: First could you just describe the experience a little bit of what it was like to ask the questions directly this year.
Warren: It's little surreal because you are in front of an audience probably of around 20,000 people. The setup itself the stage, the way it's set up with Warren Buffett and Charlie Munger on the big stage and then the analysts and the reporters sort of flanking it, you really sort of get focused in on the questions you are asking and the questions that the other analysts are asking. So it sort of lends yourself to not being nervous which is a good thing.
But overall I thought there were a lot of good questions asked today. I thought the analysts, the reporters, the shareholders came up with a lot of good questions for Warren and Charlie. I think we got some good questions in overall, trying to get some more details about some of the operating businesses that we cover, but overall it was a great experience.
Glaser: How do you narrow it down from, what I am certain there were lot of questions you could ask, to the ones that you settled on?
Warren: I think that’s probably the greatest challenge of what we were doing here today, is you are probably going to get six questions in, knowing that other people are going to ask probably the same questions you are. You got to come up with a list of 30 to 40 questions to sort of be able to narrow it down. And during the course of the meeting as these other questions get asked you are scratching them off on your list and in some cases you are losing some good tier-one questions. But at that point you can step and improve your tier two questions, and maybe feed on what's been talked about there in the hall during the course of the meeting and be able to make up what was originally a tier-two question really better overall.
Glaser: You mentioned that there were some good questions. Did you get any insight into some of the big questions you had going in, on things like succession, on asset allocation. What were some of your big takeaways?
Warren: I think on the succession issue, again we are definitely getting a little bit more clarity over time. And what we have seen is, it lends yourself to us believe that Ajit Jain is probably the guy who is going to take over. I mean between the stuff, during the introductions, between some of the comments that were made during the course of the meeting, he really is sort of natural fit. He's really going to be able to fill into that role of a capital-allocator-in-chief.
Then we tried to get some more clarity on where Todd Combs and Ted Weschler were, as far as how much money they are managing right now, what the ultimate pile of money is going to be that they will be managing, and then the whole notion at what point they will be up on the stage and answering questions? While the crowd liked that question, Warren and Charlie just sort of didn’t answer that last part of it. But overall I think there is bit more clarity given in that regard.
Glaser: Were you surprised that they aren't giving Todd and Ted more of these, more managerial responsibilities outside of investing.
Warren: No, I think it's a wise move. I really do. I think more of those guys get involved in lot of the other investment decisions that are being made, not just the stock investment decisions, I think it helps the business longer term, and it also helps the guy that comes in as a CEO because again as Warren said [the new head] is going to be capital-allocator-in-chief longer term. And the more people he can rely on and work with and understand what the core business model is for going on doing deals, the better off the firm is going to be longer term.
Glaser: For an investor who perhaps is considering Berkshire Hathaway, after this meeting how should they think about the stock? Does it change your view on valuation, on competitive advantage, or anything like that?
Warren: No, no, not overall. I mean we actually recently raised our fair value estimate to $225,000 on the Class A shares and that was just a result of some of the work that our railroad guys have done on Burlington Northern, which raised their fair value. And at this point right now with stock's trading at about 15% discount to our fair value estimate; we still think it's a relatively good value especially in this market.
Warren's going to step in and buy the stock at 1.2 times book value. So there is definitely floor on it at this point. Anything that was said today really was kind of additive to what we are doing, we definitely have some more clarity on things like for example they are not going to build any acquisitions into Burlington Northern because they are basically sort of a notch on that kind of idea. We have a better idea where they may be going with some of their utilities and energy investments, so overall it was a good meeting.
Glaser: Greg I appreciate your insights today.
Warren: Thank you.