1995: Is Berkshire issuing stock in anticipation of an acquisition?

AUDIENCE MEMBER: I’m Tom Morrow (PH) from Laguna Beach, California. And the question I have to ask pertains to the issuance of the new stock.

And again, as Charles mentioned, is there some potential gold mine out there that you have specifically in mind with the — some large acquisition that you have specifically in mind at this time, without revealing any strategic secrets?

WARREN BUFFETT: Yeah. There are things we would like to do. Whether we ever get a chance to do them or not is another question. But you know, I will be surprised if, in the next five years, we haven’t used some preferred stock one time or another.

As I mentioned in the report, we had one last year that if we’d done it, it would’ve involved the issuance of maybe a billion dollars’ worth of — no, more than that, I’m sorry — a couple billion dollars’ worth of preferred.

That one isn’t going to happen, in my view. I mean, it — there’s one chance in a hundred it’ll — it could happen or something of the sort — but, probably, it isn’t going to happen.

On the other hand, we want to be prepared for it. Something will happen. That’s always been our experience.

You know, we have sat through some dry spells. And this is true in both the stock market and the acquisition business.

You know, I closed up the partnership in 1969 because there was nothing that made sense to do. And I’m glad I did because that situation prevailed in ’71 and ’2.

But in 1973 and ’4, you know, there were all kinds of things to do.

And that will happen from time to time. People will behave, particularly in markets, just as foolishly in the future as they have in the past. It’ll come at unexpected times. But we will get a chance to do something.

Now, that’s more of a cash-type purchase, obviously, in the market. But we will get a chance to use the preferred.

And we will try to think about big things. We may not find them. But Charlie and I, the larger something is, the more interested we are.