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Register Now for the 10th Annual Value Investor Conference, May 2 - 3, 2013, held at the Univ. of Nebraska, College of Business, Omaha, Nebraska

Warren Buffett whispers answers to FAQs

As of 4/2, a few seats remain for the Value Investor Conference.

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Will Warren Buffett speak to our group/company/association? How do I contact Warren Buffett? Why doesn't Warren name a successor? Where is the best source of information about Warren Buffett and his investment and management philosophies? What happens after Warren dies? How are the Buffett CEOs compensated? Why did Warren invest in technology? Is Berkshire Hathaway a stock mutual fund? Can I purchase Berkshire Hathaway Stock direct from the company? How does Warren Buffett make his charitable donations? How does Warren Buffett live on $100,000 salary without ever selling a single share of his stock? How does he afford to travel by corporate jet? I have an idea for Warren Buffet and plan to write him a letter. Would you have any interest, via mail, email, or phone to review my idea and point me in the right direction? As the expert on all things Warren Buffett, I am hoping for some direction regarding whether it is possible, or even worth trying to contact Warren Buffett about a breakthrough technology? What are Berkshire Hathaway's Acquisition Criteria? Whom would I contact to find out if Mr Buffett gives individual donation? Warren Buffett, in a recent interview with CNBC, offers one of the best quotes about the debt ceiling: "I could end the deficit in 5 minutes," he told CNBC. "You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election." Warren Buffet is asking each addressee to forward this email to a minimum of twenty people on their address list; in turn ask each of those to do likewise.

17. What is the best way to meet Warren Buffett?

Will Warren Buffett speak to our group/company/association?

Each year Warren w rites his managers and asks them to decline all speech requests w ithout checking w ith him.

How do I contact Warren Buffett?

Simply visit his w ebsite http://w w w .berkshirehathaw ay.com for his Omaha mailing address and send him a letter. Warren does not have an email address. Please note that since he receives 250 - 300 letters per day, unsolicited investment proposals generally go unansw ered if they fail to meet the investment criteria he sets out in his annual letter to shareholders. Correspondence regarding charitable gift requests also receive NO response and are best sent to the Bill and Melinda Gates Foundation.

Why doesn't Warren name a successor?

Warren likes to tease that he plans to retire 5 years after his death and then conduct regular sances w ith his board of directors. Actually he is born to do w hat he is doing, does it for the smallest salary [$100,000] of any of the Fortune 500 CEOs, w ithout any stock options or w ithout ever selling a single share of his stock, and has the type of job [allocating capital and finding, selecting and keeping talented managers] that is actually done better w ith a few gray hairs. I have w ritten a separate chapter in The Warren Buffett CEO titled Berkshire Post Buffett detailing w hat selection criteria the board of directors may consider w hen choosing Warren's successor(s). A possible but not likely candidate is mentioned, along w ith the criteria for selection.

Where is the b est source of information ab out Warren Buffett and his investment and management philosophies?
Best to check his w ebsite for all things related to Warren Buffett. Start by reading his annual letters to shareholders and make a note to attend the mother of all annual meetings, the first Saturday in May in the heartland of Capitalism, Omaha, Nebraska.

What happens after Warren dies?

Warren's job w ill be divided into three. One person, most likely a Buffett family member and his son How ard, w ill be named chairman of the board to maintain the unique family style corporate culture. Another, most likely someone like Lou Simpson of GEICO, w ill be named CEO in charge of capital operations. And another w ill be named CEO of operations. This CEO business model is already successfully in place at GEICO Auto Insurance.

How are the Buffett CEOs compensated?

Each is paid a cash salary and additional compensation based on the profits of their individual business. If the business manager ow ned the business before selling to Berkshire, he or she may continue to ow n as much as 20 percent of the business and enjoy an annual earnings distribution. Stock options are never used as management compensation and the measurement and focus is on w hat is going on inside the business, particularly earnings and changes in book value.

Why did Warren invest in technology?

Q. I am perplexed in Buffett's investment in Level 3 because it runs contrary to everything he has ever w ritten and said and there is not predictability to Level 3 in any w ay. Even if you ask LVLT CEO James Crow e he w ill say that he does not know w hat his business w ill look like one year out in the future and thus there is no visibility. Why w ould Warren make an investment in an enterprise w here technology changes the business everyday? I know he likes to bet on CEOs (thanks to your book) but this business is really tough. If he w ere to make a technology investment it w ould be Microsoft, w hich certainly has much more visibility. What are your thoughts? A. My take on Level 3 is Warren bought a convertible bond paying an attractive rate of interest that has already doubled in value. This is the same w ay he got into many other investments, e.g. Gillette, US Air. The Buffett CEO in this case is Walter Scott. Without him I doubt he w ould have done the deal. If you remember Walter brought him the MidAmerican deal w hich is now one the largest and most profitable divisions of Berkshire. MidAmerican, in tw o short years, has revenue of $6 billion and earnings of $300 million. It is already larger than the flight services division. Energy, at the right price, may become the second largest component of BRK. He bought LVLT at the maximum point of pessimism and at $100 million it only represents the equivalent of one w eek's cash flow for BRK. Remember this is a high yield bond not an equity investment, although at Warren's option it may become one. What is amazing is that for about the same amount of money he bought the largest furniture store chain in Texas and no one ever talks about that purchase. LVLT fascinates most people because of the Walter Scott connection, technology relationship, the apparent contradiction to Warrens investment principles and the fact that so many Omaha and Berkshire shareholders have lost 90 cents of every dollar invested in this company.

Is Berkshire Hathaway a stock mutual fund?

No, Berkshire Hathaw ay is a conglomerate made up of over 100 w holly ow ned subsidiaries as w ell

as a handful of partly ow ned common stocks. It has significant property and casualty insurance businesses, cash and fixed income investments.

Can I purchase Berkshire Hathaway Stock direct from the company?

No. Berkshire Hathaw ay is listed on the New York Stock Exchange under symbol brka and brkb. The B shares trade and are w orth 1/1500th the economic value of the A shares. As an example, if the A shares trade for $150,000 then the B shares w ill trade for $100. You must purchase and sell your shares through a NYSE licensed online, discount or full service stockbroker.

How Does Warren Buffett make his charitab le donations?

Warren Buffett is in the process of donating the bulk of his estate to the Bill and Melinda Gates Foundation. The majority of his Berkshire stock (5 percent of his w ealth each year over the next 20 years) is being transferred to the Gates Foundation. The Susan Thompson Buffett Foundation sponsors an outstanding Omaha public teacher (K - 12) aw ards each year as w ell as a scholarship program for Nebraska college students. Each of Warren's three children also have their ow n foundations. Eldest daughter Susan A Buffett's charity is called The Sherw ood Foundation and is focused on children and family w elfare in low income neighborhoods in Omaha. How ard G Buffett Foundation is targeting global environmental and conservation needs. Peter Buffett w ith his NoVo Foundation is currently evaluating how they w ill distribute their funds to change, alter and invent. Warren's sister Doris also has her ow n Sunshine Lady Foundation w hich focuses on solving domestic violence. Read How Buffett's Giveaw ay Will Work.

How does Warren Buffett live on $100,000 salary without ever selling a single share of Berkshire stock? How does he afford to travel b y corporate jet?
From 1956 to 1969 Warren Buffett managed the Buffett partnership w hich gave him 25% of the profits after a 6% guaranteed return to his partners. With that arrangement Warren w as able to generate $25 million in net w orth, most of w hich w as invested in Berkshire Hathaw ay. How ever Mr. Buffett kept 1% of his money outside of Berkshire. That portfolio estimated at $400 million generates over $40 million per year in annual income. Which is how he and his family affords to fly as many as 300 hours per year on w holly ow ned subsidiary NetJets planes. As a side note, Warren personally pays for the use of the jet.

I have an idea for Warren Buffet and plan to write him a letter. Would you have any interest, via mail, email, or phone to review my idea and point me in the right direction?
Sorry I do not handle any correspondence. Best to w rite to Mr. Buffett directly. Remember Buffett is spelled w ith tw o t's. Good luck.

As the expert on all things Warren Buffett, I am hoping for some direction regarding whether it is possib le, or even worth trying to contact Warren Buffett ab out a b reakthrough technology?
You can send to Mr. Buffett at his company address found on his w ebsite http://w w w .berkshirehathaw ay.com/

What are Berkshire Hathaway's Acquisition Criteria?

They are listed in every BH annual report immediately follow ing Warren Buffett's Annual Letter to Shareholders: BERKSHIRE HATHAWAY INC. ACQUISITION CRITERIA. We are eager to hear from principals or their representatives about businesses that meet all of the follow ing criteria: (1) Large purchases (at least $75 million of pre-tax earnings unless the business w ill fit into one of our existing units), (2) Demonstrated consistent earning pow er (future projections are of no interest to us, nor are turnaround situations), (3) Businesses earning good returns on equity w hile employing little or no debt, (4) Management in place (w e cant supply it), (5) Simple businesses (if theres lots of technology, w e w ont understand it), (6) An offering price (w e dont w ant to w aste our time or that of the seller by talking, even preliminarily, about a transaction w hen price is unknow n). The larger the company, the greater w ill be our interest: We w ould like to make an acquisition in the $5-20 billion range. We are not interested, how ever, in receiving suggestions about purchases w e might make in the general stock market. We w ill not engage in unfriendly takeovers. We can promise complete confidentiality and a very fast answ er customarily w ithin five minutes as to w hether w ere interested. We prefer to buy for cash, but w ill consider issuing stock w hen w e receive as much in intrinsic business value as w e give. We dont participate in auctions. Charlie and I frequently get approached about acquisitions that dont come close to meeting our tests: Weve found that if you advertise an interest in buying collies, a lot of people w ill call hoping to sell

you their cocker spaniels. A line from a country song expresses our feeling about new ventures, turnarounds, or auction-like sales: When the phone dont ring, youll know its me.

Whom would I contact to find out if Mr Buffett gives individual donation?

To my know ledge Mr. Buffett does not make individual donations. Instead he makes annual contributions to five designated foundations (Bill and Melinda Gates, his late w ife and his three children) and then each of them makes grants according to their stated mission.

Warren Buffett, in a recent interview with CNBC, offers one of the b est quotes ab out the deb t ceiling: "I could end the deficit in 5 minutes," he told CNBC. "You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting memb ers of Congress are ineligib le for re-election." Warren Buffet is asking each addressee to forward this email to a minimum of twenty people on their address list; in turn ask each of those to do likewise.
Yes Mr. Buffett did say the above quote on solving the deficit.[Video] He did NOT say everything else contained in the chain email. Nor w ould he ask anyone to forw ard this email. Its one of the reasons Mr. Buffett does video interview s so that he cannot be misquoted. One tip off that the email w asn't from him is 'Buffet' is mispelled. Mr. Buffett also supports Simpson-Bow les, w hich is a bi-partisan proposal to raise revenue and low er spending.[Video resource]

Q. What is the b est way to meet Warren Buffett?

A. The best w ay is to enroll into a MBA program. Mr. Buffett w elcomes to his office in Omaha, Nebraska, graduate business students from 45 universities six times throughout the year. He answ ers questions for 90 minutes and then treats the visiting students to lunch. Tours are arranged to visit local w holly ow ned businesses including Nebraska Furniture Mart and Borsheims Jew elry. Each college is permitted to send 20 students, how ever 30 percent or more must be w omen. Best to contact his office for more details. Another w ay to see Mr. Buffett, although it is unlikely that you w ill meet him, is to attend his annual meeting, usually held on the first Saturday in May. More details can be found at w w w .berkshirehathaw ay.com

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