The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [584]
12. Interview with Sue James Stewart.
13. Buffett, who usually dealt with uncomfortable issues by joking about them, ended the 1999 Berkshire annual report (written winter 2000) by saying that he loved running Berkshire, and “if enjoying life promotes longevity, Methuselah’s record is in jeopardy.”
14. This is sort of an inside joke at Berkshire Hathaway.
15. David Henry, “Buffett Still Wary of Tech Stocks—Berkshire Hathaway Chief Happy to Skip ‘Manias,’” USA Today, May 1, 2000.
16. Buffett owned 14 million barrels of oil at the end of 1997, bought 111 million ounces of silver, and owned $4.6 billion of zero-coupon bonds as well as U.S. Treasuries. The silver represented 20% of the world’s annual mine output and 30% of the above-ground vault inventory (Andrew Kilpatrick, Of Permanent Value: The Story of Warren Buffett: More in ’04, California Edition. Alabama: AKPE, 2004), purchased on terms to avoid disrupting world supply.
17. Interview with Sharon Osberg. The silver was at JP Morgan in London.
18. Buffett measures his performance not by the company’s stock price, which he didn’t control, but by increase in net worth per share, which he did. There is a link between these two measures over long periods of time. In 1999, book value per share had grown only ½ of 1%. But for the acquisition of General Re, book value per share would have shrunk. Meanwhile, the stock market as a whole was up 21%. Buffett called it a fluke that book value had increased at all, pointing out that in some years it will inevitably decrease. Yet only 4 times in 35 years under Buffett, and not once since 1980, had Berkshire done worse than the market by this measure.
19. James P. Miller, “Buffett Scoffs at Tech Sector’s High Valuation,” Wall Street Journal, May 1, 2000.
20. David Henry, “Buffett Still Wary of Tech Stocks.”
21. The Knight-Bagehot Fellows.
22. Interviews with Joseph Brandon, Tad Montross.
23. Interviews with Bill Gates, Sharon Osberg.
24. Amy Kover, “Warren Buffett: Revivalist,” Fortune, May 29, 2000.
25. Interview with Bill Gates.
26. Berkshire Hathaway press release, June 21, 2000.
Chapter 55
1. Philip J. Kaplan, F’d Companies: Spectacular Dot-com Flameouts. New York: Simon & Schuster, 2002.
2. Purchase price not disclosed for these two acquisitions—but both were paid half in cash, half in BRK stock.
3. For $570 million.
4. For $2 billion; it became Berkshire’s largest business outside the insurance operations (2000 BRK annual report).
5. For $1 billion.
6. For $1.8 billion cash and $300 million in assumed debt.
7. For $378 million.
8. At the end of 2000, Berkshire had spent more than $8 billion buying companies and still had $5.2 billion in cash and cash equivalents, along with $33 billion in fixed maturity securities and $38 billion in stocks.
9. Berkshire Hathaway letter to shareholders, 2000.
10. Kilts joined Gillette after successfully turning around Nabisco, as only the second outsider in 100 years to run the company.
11. Interview with Susie Buffett Jr.
12. Interviews with Barry Diller, Don Graham, Susie Buffett Jr.
13. “Disney Scrambling to Play Spoiler Role,” New York Post, July 14, 2001.
14. Marcia Vickers, Geoffrey Smith, Peter Coy, Mara Der Hovanseian, “When Wealth Is Blown Away,” BusinessWeek, March 26, 2001; Allan Sloan, “The Downside of Momentum,” Newsweek, March 19, 2001.
15. As of June 2001. From the Industry Standard’s Layoff Tracker, along with the Dot-Com Flop Tracker and the Ex-Exec Tracker.
16. Buffett was not the only one concerned about the implication of this relationship. John Bogle, retired chairman of Vanguard, wrote of it in April 2001. However, he concluded that “some version of reality” had returned to the stock market. What made Buffett’s speech noteworthy was not use