2000: What can be done to manage Wesco's discount to intrinsic value?

AUDIENCE MEMBER: James Pan (PH) from New York City. I really have a question on Wesco, which is your 80 percent-held subsidiary, just a couple of questions dealing with that.

First question is, last time I checked, that was trading below intrinsic value. And given that most of Wesco’s assets are tied up in Freddie Mac, and Freddie Mac will arguably grow intrinsic value in the low teens for the next couple of years, how are you guys going to manage the, I guess, how would you manage the gap between intrinsic value, and what — the current price, and what intrinsic value will be two or three years from now? And also, is there a succession plan at Wesco or some kind of roll-up plan at Wesco eventually?

WARREN BUFFETT: Charlie is the boss at Wesco. So —

CHARLIE MUNGER: Yes. We have paid almost no attention to the price of Wesco stock. So the chance to make any meaningful gain for the Wesco shareholders by buying in a few shares of Wesco stock is so tiny that we don’t really bother thinking about it very much.

As to succession, we are gradually making me so useless that I won’t be missed. (Laughter)

WARREN BUFFETT: Yeah, incidentally, you talked about Wesco being significantly undervalued compared to intrinsic value. I’m not sure that’s the case. Charlie, would — you’re more of an expert on that than I am.

CHARLIE MUNGER: Well, there’s certainly no huge gap. And, we don’t spend a lot of time thinking about things that will make, practically, no money. (Laughter)