1996: What will Berkshire do with the class B stock offering proceeds
AUDIENCE MEMBER: My name is Gordon Shepherd (PH) from Montreal.
I wondered whether you had any plans for what to do with the money? (Laughter)
WARREN BUFFETT: Well, the answer to that is in the prospectus, but the — we have no immediate plans for the money. But we’ve faced that situation a number of times.
I mean, the money — the inflow of money and outflow of money should not be, in our view, attempted to be matched too carefully in this world, because you get investment and business opportunities at times that differ from the times that funds come in.
And one of the most important disciplines in running a business or managing investments is that — is to not get your — not to try to coordinate your actions simply with the availability of cash.
Over time, we found a way to use money. It’s much tougher for us to run 17 billion than it was when we had 20 million in the business. There’s no question about that. And we pointed that out many times. And it’ll get tougher still if we get larger, which I hope we do.
But the fact that, if 400 million comes in on this offering or whatever, that’s really no different than 400 million coming in in some other manner.
And when our float grows, we take in more money. When our earnings are retained, we take in more money. When we have — I forget what the check would’ve been on the Cap Cities transaction, but it was certainly well over a billion dollars that came in on a single day.
So, money’s fungible, and we have to keep looking for bigger and bigger things as we go along. And that’s what we do focus on.
But it doesn’t bother me to take it. It wouldn’t bother me if we weren’t taking it. It wouldn’t bother me if we took in three times as much. It doesn’t make a lot of difference.
And we will have — we — the constant challenge for Charlie and me is to allocate capital is we go along. And it’s a nice challenge. (Laughter)