Berkshire Hathaway chairman and CEO Warren Buffett and vice chairman Charlie Munger spent more than five hours Saturday answering questions from shareholders, reporters and stock analysts.
Here is a sample of their comments on a variety of topics:
Buffett has said one of his most important jobs as the head of Berkshire is to manage risk and make sure the company is not exposed to catastrophic problems. He said his eventual successor will also have that job.
Buffett said Berkshire's board won't ever choose a CEO who doesn't have the skills needed to evaluate the complicated insurance and derivative transactions Berkshire sometimes enters into.
"We're not going to have an arts major in charge of Berkshire," Buffett said.
Buffett said his eventual successor at Berkshire will maintain the company's culture and keep key managers of its subsidiaries happy.
"You do not need to worry about my successor," he said.
Many of the managers of Berkshire companies are independently wealthy themselves. They work only because they enjoy it, and Buffett largely lets them operate their companies independently.
"The successor we have in mind will not be one who will turn off the managers," Buffett said.
Buffett said the subsidies Berkshire Hathaway's utility companies get for their wind and solar power projects are important because the projects might not get built without them.
"I don't think any of our projects would make sense without subsidies," Buffett said.
Buffett said Berkshire can consider acquisitions up to about $20 billion. Larger deals are tougher to complete, he said, because Berkshire doesn't want to issue new stock and doesn't want its cash to drop below $20 billion.
Recently, Berkshire was negotiating a $22 billion acquisition, but Buffett said the numbers didn't work out.
To complete a deal bigger than $20 billion, Buffett said he would sell off some of Berkshire's stock investments to raise cash.
But Berkshire still doesn't want to pay a dividend anytime soon because Buffett and Munger believe they can invest the $38 billion cash on hand profitably.
"We'll think about that when we're older," said Buffett, 81.
INVESTMENTS TO AVOID:
Buffett said it's silly to think that initial public offerings of stocks will be attractively priced because so much effort goes into promoting those stocks. Munger said investors should pay attention to the kind of commissions a broker will earn on a specific investment. "If it's got a really high commission on it, don't bother looking at it," Munger said.
WAL-MART BRIBERY SCANDAL
Buffett said Wal-Mart Stores Inc. appears to have mishandled the scandal over allegations that it used bribes to speed its expansion in Mexico.
The scandal will certainly occupy a great deal of the time of Wal-Mart's managers. But the allegations don't change the way Buffett views Wal-Mart as a business.
"I don't see that as changing the earning power," Buffett said.
At the end of last year, Berkshire held 39 million shares of Wal-Mart stock.
Munger said there is a great deal of disgraceful behavior to regret in the mortgage financing mess that contributed to the housing bubble.
"We departed completely from sanity and morality and decency in mortgage lending in the United States," Munger said.
Buffett said the Republicans and Democrats can't seem to agree on what the mortgage-financing system should look like. So Fannie Mae and Freddie Mac will likely remain under government control for some time.