2022: What made Buffett suddenly decide to deploy capital after his letter came out?

BECKY QUICK: Thanks, Warren. The first question comes from Jack Suselesky (PH). And he says, “In the annual letter that you wrote on February 26th, you mentioned that Charlie and you saw ‘little that excites us in the market.’ Yet around March 10th, the deal for Alleghany was announced, and then later the Occidental announcement, then the disclosure of the HP investment.”

His question is, “What changed from the time you dated the letter to the time the investments were announced that the names suddenly become interesting in the space of a month and a half, or half a month?”

WARREN BUFFETT: Well, Charlie, you want to give your version? I’ll give my version.

CHARLIE MUNGER: Well, my version would be we found some things we preferred owning to Treasury bills. (Laughter)

WARREN BUFFETT: And as usual, Charlie’s given the total answer, but I’ll talk longer and say less. (Laughter)

Actually, the letter’s dated February 26th, when we were confessing our inability to find anything, which was a Saturday. But the day before that, February 25th, I got an email.

Actually, my assistant, Debbie Bosanek, gets it because I can’t figure out quite how to handle the machinery.

So, she brought it in. Actually, she puts a bunch on the edge of her desk, and I collect them occasionally.

And there was a note, just a few lines long, from a fellow that is a friend of mine and that worked for Berkshire many years ago. And this was on February 25th, the day before the thing.

And he said he’d now become CEO of Alleghany Corp. I’ve been following Alleghany Corp for 60 years. Now, I’d read their annual reports. I had four big file drawers full of them because it was an interesting company. And all companies interested me.

WARREN BUFFETT: So, I knew a lot about Alleghany Corp. (Laughs)

And Joe [Brandon] said, you know, “This is my first annual report as CEO, and I just wanted to send it along to you. Just like you write for your sisters,” he says, “I write this report as if I’m writing to you.”

And I sent a note back to Joe. And I said, you know, “I’m going to read it over the weekend,” or whatever I said to him on it, which was true. I mean, I looked forward to reading it.

And I said, “By the way, I’m going to be in New York on March 7th. And can we get together? I’d like to see you.”

And, I think I may have said, “I’ve got an idea.” Well, I didn’t have that idea the day before. (Laughs)

This thing happened to come in on Friday the 26th. And I knew I’d buy Alleghany at a price. And if he hadn’t sent me the note, it never would’ve occurred to me to write him and say, “Why don’t we get together on March 7th?” or anything of the sort.

It just wouldn’t have happened, except for the fact that Joe wanted to send me along this annual report that he’d just written.

So that’s the orderly decision-making process. I didn’t call up investment bankers and say, you know, “Will you prepare me a report on this? And, you know, what’s your advice?” and all that stuff.

I knew we’d buy Alleghany at the price we offered. And if it was of interest to Alleghany, fine. If it wasn’t —

But otherwise, if that email hadn’t been sent, we would not have made an offer for Alleghany. So, give credit to the fact that Joe had written the annual report, and if he’d sent it a week earlier, well — you know, I wasn’t going to make a special trip to New York, but I wanted to sit down with him and tell him what Berkshire would do.

But that explains the 11 billion. (Laughs)