1997: What is Buffett's opinion of investing in foreign stocks?

AUDIENCE MEMBER: I’m David Day from Coppell, Texas. And I’m a Berkshire shareholder.

Mr. Buffett, what is your opinion of investing in foreign company stocks?

WARREN BUFFETT: Well, we have a number, well, at least several major businesses, three or four at least, five, six, I mean, as I count along, that derive very significant percentages of their earnings from international operations.

Coca-Cola earns 80 percent or more from international operations. Gillette would earn two-thirds or more from international operations.

So if you look to where earnings are coming from, we get a lot from international companies. They don’t have to be domiciled outside the United States.

It’s a slight advantage to us to have them domiciled in this country. For example, their dividends are treated better. We get better treatment on the dividends if they are domestically based rather than based someplace else, just because of the way the U.S. tax laws work.

But if Coca-Cola were domiciled in Amsterdam, or Gillette were domiciled in London, they had the same basic businesses, we would be attracted to them to virtually the same degree we are as having them domiciled in Atlanta and Boston.

We look at businesses outside this country that are domiciled outside this country. Many don’t meet our size requirements. But that’s true here, too. We have to look at very big companies. But we have nothing against buying into companies that are domiciled — or even buying the entire business of a company — that’s domiciled outside the United States.

We feel slightly less familiar with the tax laws and the corporate cultures, perhaps. But that would not be a huge factor in a great many countries. And, you know, we will keep looking. We need to look everywhere with the kind of money that we have available for investment.

Charlie?

CHARLIE MUNGER: Again, we’ve had a wonderful way of playing the rapid development of economies outside the United States. And so far, we haven’t seen anything that attracted us as being better.

And if you can sell Coca-Cola, you know, do you really want to get into steel in Malaysia or something? (Laughter)

WARREN BUFFETT: We sold a substantial number of Kirby units outside of the United States last year. And that business has grown very significantly in recent years. And I think it promises to grow.

We’re always looking for opportunities. Some things travel very well. And some things don’t.

I mean, Gillette travels. Disney travels. McDonalds travels. Coke travels.

You know, See’s Candy doesn’t travel as well. It might if you spent 50 years working on it. But it’s not an easy thing to travel. Actually, candy bars, themselves, don’t travel very well.

If you look at the top-selling candy bars in France or in England and Japan, you don’t find the similarity that you find in terms of the bestselling soft drinks or movies or fast food hamburgers or razor blades, and —

CHARLIE MUNGER: Except Snickers. For some reason, Snickers. (Laughter)

WARREN BUFFETT: Well.

CHARLIE MUNGER: It travels very well. Don’t ask me why. (Laughter)

WARREN BUFFETT: Yeah. Well, Charlie’s had a lot of experience as he goes around the world. (Laughter) You don’t want to eat where we eat. You may want to invest where we invest, but — (Laughter)