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2016: Why does Buffett prioritize making money for Berkshire over himself?
WARREN BUFFETT: OK, Becky.
BECKY QUICK: Warren, just a quick request. Would you please stop using C-N-B-C as an acronym for mass destruction? (Laughter.)
WARREN BUFFETT: But if I use N-B-C-C, then I’ve got a problem with [NBCUniversal CEO] Steve [Burke].
BECKY QUICK: This question comes from Matt Bandy in Dallas, Texas.
He’s asking about Seritage Growth Properties. He says, “In December, 2015, you filed a personal 13-G evidencing a roughly 8 percent ownership position in the real estate investment trust Seritage Growth Properties, which to my knowledge is not paralleled as a Berkshire investment.
“Alternatively, in September, 2015, Warren filed a personal 13-G evidencing ownership in Phillips 66, which is paralleled as a Berkshire investment.
“My question is, how do you decide when making a personal investment for your own account versus an investment for Berkshire? I understand market cap and ownership sizing are the likely factors, but does it still not behoove him to invest for the shareholder’s benefit in a company like Seritage that might have significant upside, and where are you putting your personal money to work?”
WARREN BUFFETT: Right. I do not own a share, or never have owned, a share of Phillips 66, so I’m not sure where that person — what he’s referring to.
It may be that there’s some way when the form is filled out that — that because I’m CEO of Berkshire that on some line it imputes ownership to me or something. The answer is I’ve never owned a share of Phillips.
And Seritage is a real estate investment trust that had a total market value of under $2 billion when I bought it. And my situation is that I have about 1 percent of my net worth outside of Berkshire and 99 percent in it, and I can’t be doing things that Berkshire does.
So a Seritage, with a $2 billion market cap, is not really something that is of a Berkshire size. Plus we’ve never owned a real estate investment trust to my knowledge, or my memory, in Berkshire at all. I mean, it’s just not a — so, I could buy that and not have any worry about a conflict with Berkshire.
As a practical matter, you know, my best ideas are — I hope they’re my best ideas —are off-limits for me because they go to Berkshire, if they’re sizable enough to have a significance to Berkshire.
We will not be making investments — unless it’s something very odd — we will not be making investments in companies with a total market cap of a couple billion while we’re our present size.
But — so, every now and then I see something that’s subsize for Berkshire that I’ll put my — that 1 percent of my net worth in, and the rest of the stuff is off-limits, basically, unless Berkshire’s all done buying something or — I mean, I own some wells that I bought a long, long time ago, and Berkshire was not in — was not interested. I mean, we bought enough or something at the time, or maybe we didn’t have money for investment.
But I try to stay away from anything that could conflict with Berkshire.
And if I’d been buying Phillips, when Berkshire was buying Phillips, or immediately — or prior — or subsequently, there could be a case where it’d be OK when — we might have hit some limit.
But the answer is I didn’t buy any, and I’ve never owned any. Charlie?
CHARLIE MUNGER: Well, part of being in a position like that we occupy, is you really don’t want conflict of interest or even the appearance of it. And it’s been 50 or 60 years, when have we embarrassed Berkshire by some of our side-gunning?
Both of us have practically nothing of significance, in the total picture, outside of Berkshire. I’ve got some Costco stock, because I’m director of Costco. Berkshire’s got some Costco stock.
There are two or three little overlaps like that, but basically Berkshire shareholders have more to worry about than some conflict that Warren and I are going to give it. We’re not going to do it.
WARREN BUFFETT: It may sound a little crazy, and it’s only because I can afford to say this, but I would much rather make money for Berkshire than for myself.
I mean, it isn’t going to make any difference to me anyway. I’ve got all the money I could possibly need, and way more, and on balance, my personality — everything’s more wound up in how Berkshire does than I am myself, because I’m going to give it all away.
So, I know my end result is zero, and I don’t want Berkshire’s end result to be zero. So I’m on Berkshire’s side. (Laughs)