The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [582]
18. At the companies’ June 19, 1998, press conference, as quoted in “Is There a Bear on Mr. Buffett’s Farm?” New York Times, August 9, 1998.
19. Buffett’s comments in Anthony Bianco’s July 5, 1999, BusinessWeek cover story, “The Warren Buffett You Don’t Know”: “‘Charlie and I don’t talk a lot anymore,’ acknowledges Buffett, who says he did not even bother to consult his vice-chairman before making the epochal Gen Re acquisition.”
20. BRK dropped 4.2% on news of the deal. Over a month later, it was down 15% versus a flat market. Setting an exchange ratio implicitly required a view on equities and interest rates, as well as the underlying businesses’ prospects. What investors could not know was the relative weighting of these factors.
21. James P. Miller, in “Buffett Again Declines to Flinch at Market’s High-Wire Act,” Wall Street Journal, May 5, 1998, got it. He attended the shareholder meeting at which Buffett reiterated his views and commented that maintaining return on equity was a particularly vexing issue. On the other hand, Justin Martin and Amy Kover, in “How Scary is this Market, Really?”(Fortune, April 27, 1998), wrote that “no less an authority than Warren Buffett” had endorsed the market bulls through his “not overvalued” statement.
22. On August 22, 1997, Wells Fargo stock nosedived after Berkshire Hathaway reclassified it from the publicly filed form 13-F to the confidential disclosure to the SEC, creating the appearance that Buffett had sold his position in Wells Fargo. The SEC announced that it would consider tightening the confidentiality rules. In June 1998, the SEC announced it was tightening its “13F” rule that had allowed Buffett to file confidentially for a year while building large stock positions. Although the SEC did not absolutely rule out confidential filings, Buffett heard the footsteps. Berkshire Hathaway fought an aggressive battle with the SEC over this issue as its confidential filings were denied, and lost. In 1999, Berkshire filed confidentiality requests each quarter along with its regular 13-F forms containing positions that were not confidential. The SEC made a single announcement relating to these three filings that certain of the positions they contained must be publicly disclosed. Buffett’s right to make a profit presumably was not part of the SEC’s deliberations. The SEC’s interest is to protect investors. While the SEC staff had long held that it is desirable to prevent extraordinary fluctuations in stock prices unrelated to fundamental factors so that investors do not profit or suffer as a result, investors’ right to know the identity of a company’s largest shareholders outweighed that.
23. Interview with Herbert Allen.
24. Nikhil Deogun, James R. Hagerty, Steve Secklow, and Laura Johannes, “Coke Stains, Anatomy of a Recall: How Coke’s Controls Fizzled Out in Europe,” Wall Street Journal, June 29, 1999.
25. Interview with Herbert Allen.
26. Ibid.
27. Through Project Infinity, partly cloaked in Y2K spending, Coca-Cola turned the soft-drink business into a technology-fed numbers game. In 1999, the company hired 150 experts for worldwide implementation of SAP’s programs. SAP, an acronym for Systems, Applications, and Products in Data Processing, provided business software solutions for process redesign in supply-chain management, customer-relationship management, and resource planning.
28. Ivester did not respond to repeated requests for interviews.
29. Betsy Morris and Patricia Sellers, “What Really Happened at Coke,” Fortune, January 10, 2000.
30. Interview with Sharon Osberg.
31. Betsy Morris, “Doug Is It,” Fortune, May 25, 1998, and Patricia Sellers, “Crunch Time for Coke,” Fortune, July 19, 1999.
32. This is Herbert Allen’s version of the conversation. Buffett doesn’t recall the exact details.
33. “They never sat down, never even removed their overcoats. In tones frostier than the air outside, they told him they had lost confidence in him.” Constance L. Hays, The Real Thing: Truth and Power at the Coca-Cola Company. New York: Random