2015 年 CNBC Precision Castparts 收购访谈

WHENTODAY, MONDAY, AUGUST 10

WHERECNBC'S "SQUAWK BOX" Following is the unofficial transcript of a CNBC interview with Berkshire Hathaway CEO Warren Buffett today on CNBC's "Squawk Box." Video of the interview is available on CNBC.com. All references must be sourced to CNBC.

QUICKAGAIN WE ARE LOOKING THROUGH THE NUMBERS ON THIS DEAL AGAIN IT IS BERKSHIRE HATHAWAY BUYING PRECISION CASTPARTS THIS IS A DEAL THAT THEY ARE VALUING AT 37 BILLION DOLLARS JUST LOOKING AT THE PRESS RELEASE. WARREN BUFFETT IS CALLING INTO THE CONTROL ROOM IS JUST A MINUTE THEY ARE PAYING $235 PER SHARE IN CASH THIS IS A STOCK THAT CLOSED AT $193.88 ON FRIDAY SO WE WILL BE TALKING MUCH MORE ABOUT THIS. I THINK RIGHT NOW WE DO HAVE WARREN BUFFETT ON THE LINE. SIR ARE YOU THERE? SO WE SEE THE NEWS THAT IS OUT TODAY THIS COMES AS A SURPRISE TO A LOT OF PEOPLE BUT THE WALL STREET JOURNAL DID REPORT THIS ON SATURDAY I WONDER WHEN DID YOU FIRST HEAR ABOUT THIS, WHEN DID YOU FIRST TALK TO THIS COMPANY AND HOW DID THIS DEAL HAPPEN?

BUFFETTI WOULD SAY IS WAS ABOUT 5 WEEKS AGO. YOU HAVE TO GIVE CREDIT TO TODD COMBS FOR THE DEAL WE HIRED TODD ABOUT 5 YEARS AGO TO MANAGE MONEY AND HE MANAGES ABOUT 9 BILLION NOW AND MAYBE THREE OR SO YEARS AGO HE ADDED PRECISION TO HIS PORTFOLIO AND I REALLY NEVER HEARD ABOUT THE COMPANY BEFORE THAT AND TODD TOLD ME A LOT ABOUT IT AND OVER THE LAST FEW YEARS I HAVE BECOME FAMILIAR WITH IT AND ABOUT 5 OR SO WEEKS AGO THE CEO MARK DONEGAN ALONG WITH HIS CFO AND IR PERSON CAME BY BERKSHIRE THEY WERE SEEING BERKSHIRE HOLDERS AND THEY MET WITH TODD AND THEN I DROPPED IN ON THE VISIT AND IN THE LAST 15 MINUTES OR SO AND I WAS VERY IMPRESSED BY MARK AND OF COURSE I HAD BEEN IMPRESSED BY THE COMPANY SO SHORTLY THEREAFTER I STOPPED AND GIVE THEM A CALL TO SEE IF THEY WOULD BE OFFENDED IF WE MADE A BID AND THEY DIDN'T INDICATE THEY WERE PARTICULARLY RECEPTIVE BUT THEY ALSO INDICATED THEY WOULD LISTEN SO I SUBSEQUENTLY MADE A BID. I MET MARK OUT AT SUN VALLEY, HE WAS ACTUALLY IN THE AIR MOST OF THE TIME AND SO HE CAME BY BECAUSE I WAS THERE FOR THE ALLEN COMPANY CONFERENCE AND I MADE HIM A BID AND HE TOOK IT TO THE BOARD AND BEFORE LONG WE HAD A DEAL.

SORKINWARREN I HAVE GOT TO TELL YOU I SAW BECKY THE WEEK AFTER SUN VALLEY AND I SAID BUT WARREN IS DOING A DEAL I HAD SEEN YOU AT SUN VALLEY. YOU HAD THAT PHONE WITH YOU SO INTENSE THERE WAS SOMETHING GOING ON AND I THOUGHT I DIDN'T REALIZE THIS IS WHAT YOU WERE DOING.

BUFFETTI WILL HAVE TO BE CAREFUL WHEN I AM AROUND YOU ANDREW IF YOU CAN READ MY FACE LIKE THAT.

SORKINFROM A PRICE PERSPECTIVE ONE OF THE QUESTIONS WE HAD FROM AN EBITA I WAS DOING IT OFF OF THE $30 BILLION AND THINKING THIS WAS ABOUT 20 TIMES EBITA WHICH I WAS SAYING NOT THE CHEAPEST DEAL IN TOWN. IT DOES ALLOW YOU TO SPEND A LOT OF MONEY QUICKLY. IN TERMS OF THE VALUATION THOUGH HOW DO YOU THINK ABOUT IT AND WHEN YOU ARE TALKING ABOUT SPENDING THIS KIND OF MONEY IS IT HARDER AND HARDER AS WE WERE TALKING ABOUT EARLIER TO ACTUALLY GET A REALLY CHEAP DEAL?

BUFFETTIT IS NOT 20 TIMES EBITA THOUGH ANDREW. I AM NOT SURE WHAT FIGURES YOU ARE LOOKING AT THERE BUT ALL DEALS SEEM EXPENSIVE TO ME BUT THIS ONE WE ARE CERTAINLY PAYING A VERY GOOD PRICE FOR AN EXTRAORDINARY COMPANY RUN BY A PERSON THAN AS FAR AS I AM CONCERNED HE IS THE BEST IN THE WORLD AT WHAT HE DOES.

SORKINHE'S MADE A NUMBER OF DEALS OVER THE PAST COUPLE OF YEARS ABOUT 8 BILLION DOLLARS WORTH OF TRANSACTIONS WHEN YOU LOOK AT THIS COMPANY OVER THE NEXT COUPLE OF YEARS DO YOU IMAGINE USING A LOT OF BERKSHIRE CASH TO MAKE ADDITIONAL ACQUISITIONS TO USE IT AS A ROLL UP VEHICLE IF YOU WILL?

BUFFETTWELL ITS ALWAYS ACQUIRED COMPANIES I DON'T KNOW HOW MANY ACQUISITIONS THEY MADE OVER THE YEARS BUT IT IS A LOT. BECAUSE THERE ARE A LOT OF THINGS THAT GO INTO AEROSPACE IN THE WAY OF PARTS AND THEY'VE GONE AFTER ONE ITEM AFTER ANOTHER OVER THE YEARS. IN FACT THEY'VE MADE A COUPLE SMALL DEALS I BELIEVE IN THE FIRST FISCAL QUARTER AND I THINK THEY'VE GOT MAYBE ONE PENDING OR SO. NOW THEY MAKE A GOOD BIT OF MONEY SO THEY WILL PROBABLY BE ABLE TO DO THE ACQUISITIONS OR MANY OF THE ACQUISITIONS INTERNALLY GENERATED FUNDS BUT IF THEY NEED ANY MONEY FROM BERKSHIRE ALL THEY HAVE TO DO IS CALL.

QUICKLYWARREN THIS IS AN EXPENSIVE DEAL IS THIS THE MOST EXPENSIVE DEAL EVER? HOW DOES IT MATCH UP TO BURLINGTON NORTHERN?

BUFFETTWELL THE MOST DEALS ARE THE ONES THAT DON'T WORK OUT. YOU MENTIONED DEXTER SHOE A LITTLE WHILE AGO. BUT IN TERMS OF PRICE EARNINGS MULTIPLES GOING IN THIS IS RIGHT UP THERE AT THE TOP NOW WHEN WE BOUGHT BURLINGTON THAT WAS A HIGH PE BUT IT WAS OFF A VERY DEPRESSED FIGURE BECAUSE WE BOUGHT THAT IN THE FALL OF 2009 WHEN EARNINGS WERE AT A TROUGH. AND PRECISIONS EARNINGS HAVE FALLEN OFF MODERATELY BECAUSE OF DEVELOPMENTS IN THE OIL AND GAS FIELD WHERE THEY DO SOME BUSINESS AS WELL AS IN AEROSPACE SO BUT THIS IS A VERY HIGH MULTIPLE FOR US.

SULLIVANYOU READ MY MIND ON OIL AND GAS HOW MUCH OF THIS IF AT ALL IS A BET THAT THE U.S. OIL AND GAS INDUSTRY MAY BE BOTTOMING OUT AT LEAST FROM A PRICE PERSPECTIVE?

BUFFETTWELL WE ARE GOING TO BE IN THIS BUSINESS FOR A 100 YEARS SO IT DOESN'T REALLY MAKE ANY DIFFERENCE WHAT OIL AND GAS DOES IN THE NEXT YEAR IN TERMS OF US BUYING IT. IF SOMEONE TOLD ME FOR SURE THE OIL AND GAS BUSINESS WAS GOING TO BE IN THE DULDRUMS WE'LL SAY FOR 3 YEARS I STILL WOULD HAVE MADE THE DEAL. THAT'S NOT A PREDICTION I AM JUST SAYING IT IS NOT IMPORTANT TO US HOW LONG THE OIL AND GAS SLUMP LASTS WHEN YOU GET A CHANCE TO BUY A WONDERFUL COMPANY YOU KNOW THERE IS USUALLY SOME REASON WHY YOU ARE GETTING THAT CHANCE AND PERHAPS THE SLUMP IN OIL AND GAS HELPS US IN THIS CASE. BUT THERE WILL BE SOMEDAY THERE WILL BE A SLUMP IN AEROSPACE AND THAT WILL BE MUCH MORE SEVERE FOR A COMPANY LIKE THIS BUT IF YOU LOOK OVER THE DECADES BOTH OIL AND GAS AND AEROSPACE WILL BE GOOD BUSINESS AND THESE FELLOWS ARE THEIR KEY PARTICULARLY IN THE AEROSPACE BUSINESS THE INDUSTRY NEEDS THEM THEY'RE UNIVERSALLY REGARDED AS THE MOST RELIABLE INNOVATIVE DEPENDABLE SUPPLIER OF VERY KEY PARTS THAT GO INTO ALL KINDS OF AIRCRAFTS.

SORKINWARREN SPEAK TO THE DEFENSIVE MODE THAT YOU OFTEN TALK ABOUT WHEN YOU THINK ABOUT PARTICULAR COMPANY IN TERMS OF ITS MARKETSHARE AND ITS ABILITY TO MAINTAIN IF NOT GROW THAT MARKETSHARE

BUFFETTWELL WHAT YOU NEED IS YOU NEED PEOPLE THAT HAVE PHYSICAL FACILITIES BUT THAT IS A SMALL PART OF IT. THEY DO HAVE MARVELOUS PHYSICAL FACILITIES BUT WHAT YOU REALLY NEED IS BRAIN POWER AND YOU NEED PARTICULARLY AT THE TOP YOU NEED SOMEBODY WITH A TOTAL PASSION FOR THE BUSINESS AND I'VE MET MARK FOUR OR FIVE TIMES AND EACH TIME HE'S BEEN IN THE AIR AND HE'S IN THE AIR ALMOST A THOUSAND HOURS A YEAR THIS FELLOW LOVES THIS BUSINESS LIKE I LOVE BERKSHIRE AND HE'S A LOT BETTER AT IT THAN I AM AT BERKSHIRE. YOU CAN'T FIND PEOPLE LIKE THIS. YOU CERTAINLY CAN'T HIRE THEM. THE ONE THING I GUARANTEE MARK IS THAT HE'S RUNNING THE COMPANY. PEOPLE LIKE THIS ARE VERY VERY RARE. YOU CAN SEE IT IN WHAT HE HAS BUILT AND YOU CAN SEE IT IN THE PASSION HE'S GOT FOR WHAT HE IS DOING NOW. HE'S NEVER SATISFIED IN TERMS OF GETTING MORE BUSINESS IN THE AIRFRAME AND THE ENGINES. HE'S NEVER SATISFIED IN TERMS OF GETTING HIS COST TO WHERE THEY SHOULD BE. HE JUST HAS A PASSION FOR THE BUSINESS.

QUICKWARREN WHAT DOES THIS MEAN IN TERMS OF THE CASH THAT YOU ARE USING FOR THIS? I KNOW YOU LIKE TO KEEP ABOUT 20 BILLION DOLLARS IN CASH ON HAND. ARE YOU STILL IN THE MARKET FOR OTHER POTENTIAL DEALS? OR DOES THIS TAKE YOU OUT OF THE MARKET FOR AWHILE?

BUFFETTTHIS TAKES US OUT OF THE MARKET FOR AN ELEPHANT BUT WE WILL PROBABLY BE BUYING A FEW SMALL THINGS IN THE NEXT 6 MONTHS. WE ARE IN NEGOTIATIONS ON A COUPLE BUT IN TERMS OF A DEAL OF SIMILAR SIZE IT PRETTY MUCH TAKES US OUT. WHAT WE WILL PROBABLY DO ON THIS ONE WE WILL PROBABLY BORROW ABOUT 10 BILLION AND USE ABOUT 23 BILLION OF OUR OWN CASH ON THAT ORDER. WE'LL BE LEFT WITH OVER 40 BILLION PROBABLY IN CASH WHEN WE GET ALL THROUGH. BUT I LIKE TO HAVE A LOT OF CASH AT ALL TIMES SO THIS MEANS WE HAVE TO RELOAD OVER THE NEXT 12 MONTHS OR SO BUT IT DOESN'T PRECLUDE DOING SMALLER DEALS BUT WE WILL BE DOING A FEW PROBABLY.

SORKINAND WARREN ONE OF THE OTHER QUESTIONS YOU ALWAYS TALK ABOUT TALENT AND SPECIAL PEOPLE AND SPECIAL BERKSHIRE PEOPLE AND IT IS HARD TO FIND THEM. WHEN YOU THINK ABOUT MARK DARE I ASK THE QUESTION SHOULD WE START TO ADD HIM TO THE LIST OF POTENTIAL PEOPLE THAT MAY ONLY RUN THIS PARTICULAR COMPANY NOW BUT MAYBE PUT INTO THE BERKSHIRE FOLD WHEN IT SOMES TO SUCCESSION?

BUFFETTIF I READ MARK CORRECTLY AND IN THIS RESPECT I AM SURE I DO ALL HE WANTS TO DO IS RUN PRECISION AND TO TAKE IT TO GREATER AND GREATER HEIGHTS HE DOES NOT WANT TO RUN BERKSHIRE AND TRUE OF MOST OF OUR MANAGERS THEY LOVE WHAT THEY ARE DOING THAT'S THE BEAUTY OF IT. I HAVE TO DECIDE REALLY WHEN I BUY A COMPANY THERE IS NO WAY IN THE WORLD THAT I COULD RUN PRECISION OR REALLY ANYBODY IN OUR OPERATION COULD SO THE FIRST I ASK AND MARK'S 58 I ASK IF HE HAS ANY IDEAS AT 65 THAT HE'S GO AND PLAY SHUFFLE BOARD IN FLORIDA OR SOMETHING LIKE THAT. AS LONG AS WE TREAT HIM RIGHT NOW WE'VE GOT TO TREAT PEOPLE RIGHT WE TREAT HIM RIGHT HE WILL BE RUNNING THIS FOR DECADES AND DECADES. AND THAT'S WHAT HE WANTS TO DO JUST LIKE I LIKE RUNNING BERKSHIRE.

QUICKWARREN YOU MENTIONED THAT THIS WILL TAKE YOU OUT OF THE HUNT FOR A BIG ELEPHANT FOR 12 MONTHS OR SO WHILE THE COMPANY RELOADS WITH THE CASH CONTINUALLY COMING IN. JUST LAST WEEK BILL ACKMAN MADE IT PUBLIC THAT HE HAS A LARGE STAKE IN MONDELEZ ONE OF THE THINGS HE THOUGHT ABOUT IS POTENTIALLY MONDELZ GETTING LUMPED IN WITH KRAFT HEINZ. DOES THAT MEAN IT IS NOT AN OPTION AND WHAT DO YOU THINK OF BILL'S PROPOSAL?

BUFFETTWELL I WILL LISTEN TO ANYTHING MY FRIENDS AT 3G WANT TO DO BUT WITH KRAFT HEINZ WE HAVE OUR WORK CUT OUT FOR US FOR A COUPLE OF YEARS. I THINK IT IS QUITE UNLIKELY YOU NEVER WANT TO SAY ANYTHING IS IMPOSSIBLE BUT I THINK IT IS QUITE UNLIKELY THAT KRAFT HEINZ WOULD BE DOING A BIG ACQUISITION IN THE NEXT COUPLE OF YEARS SOMEWHERE DOWN THE ROAD I WOULDN'T BE SURPRISED. BUT IT ALSO WOULD HAVE TO MAKE SENSE FINANCIALLY AND FRANKLY MOST OF THE FOOD COMPANIES SELL AT PRICES THAT IT WOULD BE VERY HARD FOR US TO MAKE A DEAL EVEN IF WE HAD DONE ALL OF THE WORK NEEDED AT KRAFT HEINZ. A LOT OF THE COMPANIES ARE SELLING AT PRICES THAT SORT OF REFLECT IMPROVEMENTS IN THEM THAT PEOPLE SORT OF WHAT HAS BEEN HAPPENING AT KRAFT HEINZ AND BELIEVE ME THIS IS NOT EASY.

QUICKMEANING THAT MONDELEZ AT THESE PRICES YOU WOULDN'T LIKE?

BUFFETTWELL IT WOULD BE HARD FOR US TO MAKE A DEAL THAT MAKES SENSE YEAH. BUT WHO KNOWS WHAT HAPPENS DOWN THE LINE BUT IF YOU LOOK AT KELLOGG OR CAMPBELL'S SOUP OR MONDELEZ THEY'RE PRICES TO SOME EXTENT THE MARKET HAS PUT INTO THOSE COMPANIES PRICES THAT REFLECT AN EXPECTATION KRAFT HEINZ TYPE MARGINS ARE POSSIBLE AND THAT MAY BE THE CASE BUT I HAVE NOT SEEN IT ELSEWHERE.

SULLIVANMR BUFFETT IN 2009 MANY OF THE BANKS CAME TO YOU FOR HELP. HAVE YOU HAD ANY OIL OR GAS COMPANIES COME TO YOU IN THE LAST FEW MONTHS LOOKING FOR YOUR HELP, LOOKING FOR YOUR INVESTMENT?

BUFFETTNOT YET BUT PRICES STAY DOWN HERE. IF PRICES STAY DOWN HERE SO FAR I WOULD SAY THAT MOST OF THE PEOPLE IN THE OIL AND GAS BUSINESS UP MAYBE UNTIL VERY RECENTLY THEY FELT THAT OIL PRICES WOULD BOUNCE BACK. THEY MAY NOT HAVE FELT GAS PRICES WOULD BOUNCE MUCH BUT THEY FELT OIL PRICES WOULD BOUNCE BACK. THE OIL PRODUCTION COMPANIES HAVE BEEN SELLING ON A BASIS NOT OF $45 WTI THEY HAVE ASSUMED HIGHER PRICES AND OF COURSE THE FORWARD CURVE HAVE REFLECTED HIGHER PRICES. I THINK IT WOULD HAVE BEEN HARD TO MAKE REALISTIC DEALS WITH OIL AND GAS UP UNTIL NOW BUT WE WILL SEE WHAT HAPPENS IN THE FUTURE. TO BE SPECIFIC NOBODY HAS COME TO ME.

QUICKDOES THAT MEAN THAT YOU HAVE NOT MADE ANY OTHER PURCHASES IN THE OIL AND GAS BUSINESS?

BUFFETTTHAT'S CORRECT

QUICKSO THERE IS NOTHING THAT YOU'VE SEEN ASIDE FROM THIS DEAL TODAY THAT YOU THINK HAS BEEN AN OPPORTUNITY YOU WOULD BUY INTO?

BUFFETTNO OF COURSE THIS IS KIND OF SECENDARY I WOULDN'T SAY MAYBE 15% OF PRECISION'S BUSINESS HAD BEEN IN THERE AND THEY GOT HURT IN THE LAST COUPLE OF QUARTERS SIGNIFICANTLY BECAUSE WHEN OIL SLOWS DOWN IF THEY'VE GOT VARIOUS BUILDING EQUIPMENT ON HAND ALL OF A SUDDEN THEY DON'T NEED TO ORDER ANY FOR AWHILE EVEN THOUGH CONTINUE TO PRODUCE. SO NO WE HAVE NOT MADE ANY COMMITMENTS IN OIL AND GAS.

SORKINHEY WARREN EVERY TIME I SEE YOU I ALWAYS ASK THE QUESTION IBM, IBM UPDATE THE STOCK IS TRADING I THINK ABOUT 155 DOLLARS RIGHT ABOUT NOW HOW ARE YOU FEELING ABOUT IT

BUFFETTI FEEL FINE.

SORKINWHAT'S YOUR BASIS IN THAT COMPANY AT THIS POINT?

BUFFETTWHAT'S OUR STOCK COST US?

SORKINYEH

BUFFETTI WOULD SAY AROUND 170

SORKINAROUND 17O NOW BY MY MATH YOU HAVE ACTUALLY MADE THE MONEY STILL ON THIS DEAL ON PART I THINK THE FUNCTION OF THE DIVIDENDS BUT YOU ARE NOT CONCERNED AT ALL IN TERMS OF THE STOCK

BUFFETTI LOVE IT WHEN IT GOES DOWN IT MEANS THE COMPANY BUYS STOCK CHEAPER AND MEANS IF I WANT TO BUY MORE STOCK YOU CAN LOOK AT OUR 13F IN A FEW DAYS IT MEANS I GET TO BUY IT CHEAPER

QUICKDOES THAT MEAN YOU'VE BEEN BUYING IT?

BUFFETTI AM NOT A SELLER OF STOCK. PEOPLE ASSUME WHEN WE BUY SOME STOCK WE WANT IT TO GO UP. WE DON'T WANT IT TO GO UP MAYBE OBVIOUSLY EVENTUALLY MAYBE FIVE OR TEN YEARS FROM NOW BUT WE LOVE THE IDEA OF A COMPANY BUYING ITS STOCK CHEAPER. I MEAN THAT'S HAPPENED AT AMERICAN EXPRESS FOR INSTANCE AMERICAN EXPRESS IS A REGULAR REPURCHASER OF SHARES AND WE OWN 15% OF IT AND OWNERSHIP GOES UP FASTER IF THE STOCK IS DOWN THAN IF THE STOCK IS UP.

SULLIVANWE HAD ON FRIDAY A BILLION DOLLAR ACTIVIST INVESTMENT IN AMERICAN EXPRESS MR BUFFETT JEFFREY UBEN OF VALUEACT CAPITAL. WHEN YOU OWN A STOCK LIKE AN AMERICAN EXPRESS ARE YOU HAPPY TO SEE AN ACTIVIST COME IN DO YOU WELCOME IT.

BUFFETTNO NOT PARTICULARLY BUT IT IS UP TO THEM WHAT THEY DO WITH THEIR MONEY. ACTUALLY IT SENDS UP FOUR OR FIVE POINTS SO THE EXTENT THAT AMERICAN EXPRESS IS REPURCHASING SHARES WE CAN'T BUY STOCKS IN AMERICAN EXPRESS BECAUSE IT IS A BANKHOLDING COMPANY AND WE OWN OVER 10% BUT THE CHEAPER THE STOCK IS THE MORE SHARES AMERICAN EXPRESS WILL BE ABLE TO REPURCHASE FOR A GIVEN AMOUNT OF MONEY AND ON BALANCE THAT HELPS US WE'RE BUYING YOU KNOW THERE IS NO MORAL PROBLEM ATTACHED TO IT BECAUSE IT TAKES PLACE IN THE MARKET BUT WE'RE ON OUR PARTNERS CHEAPER.

QUICKLET'S TALK ABOUT SOMETHING ELSE THAT IS ALSO A LOT CHEAPER THAN IT WAS A WEEK AGO YOU LOOKS AT THE MEDIA STOCKS DISNEY KICKED IT OFF WHEN BOB IGER SAID THERE ARE CONCERNS ABOUT ESPN, VERY BRIEF CONCERNS FROM HIS PERSPECTIVE THE MARKET TOOK THAT AS A HUGE SELLING POINT NOT ONLY FOR DISNEY BUT ALL OF THE MEDIA RELATED STOCKS DO YOU SEE ANYTHING IN THE MEDIA INDUSTRY YOU LIKE AT THESE PRICES?

BUFFETTNO I WOULD SAY THAT I CONSIDER BOB IGER AND I KNOW HIM WELL AND HAD EXPERIENCE WITH HIM MORE THAN 20 YEARS AGO I THINK HE IS ONE OF THE GREAT MANAGERS IN AMERICA AND A GOOD GUY BEYOND THAT BUT I'M AN OBSERVER OF THE MEDIA PICTURE TODD AND TEDD OWN SOME SHARES IN CERTAIN MEDIA STOCKS BUT I AM NO VICTIM OF THIS MYSELF AND THE SELL OFF DID NOT ENTICE ME.

SORKINHEY WARREN SPEAKING OF BUYBACKS ONE OF THE QUESTIONS AND I DON'T THINK WE HAVE TALKED ABOUT THIS SINCE YOU SENT YOUR LETTER AND WE HAD YOU ON THE SHOW BUT LARRY FINK FROM BLACKROCK SENT A LETTER A COUPLE OF MONTHS AGO TO CEOS AROUND THE COUNTRY AND SAID LOOK STOP WITH THE BUYBACKS, STOP WITH THE DIVIDENDS WE WANT YOU INVESTING IN THE FUTURE AND IN PART I WOULD ARGUE THAT LETTER SEEMED TO INSPIRE HILLARY CLINTON WITH HER LATEST QUARTERLY CAPITALISM APPROACH AND PROGRAM THAT SHE'S TALK ABOUT IN TERMS OF CHANGING THE TAX STRUCTURE CAPITAL GAINS STRUCTURE AROUND INVESTMENTS. WHAT DO YOU THINK OF WHAT HILLARY CLINTON HAD TO SAY AND WHAT DO YOU THINK OF WHAT LARRY FINK HAD TO SAY?

BUFFETTWELL PEOPLE MAKE BUYBACKS VERY COMPLICATED. BUYBACKS MAKE SENSE WHEN YOU ARE BUYING YOUR STOCK BACK BELOW ITS INTRINSIC VALUE AND WHEN YOU DON'T NEED THAT MONEY FOR THE NEEDS OF THE BUSINESS. IT MAKES NO SENSE WHEN YOU PAY ABOVE INTRINSIC VALUE AND THAT'S A VERY SIMPLE PRINCIPAL BUT IT HAS BEEN IGNORED BY MANY MANAGEMENTS OVER TIME. IF YOU LOOK AT THE HISTORY OF BUYBACKS PEOPLE BUYBACK A LOT IN TERMS OF AGRIGATE BUYBACKS PEOPLE BUY A LOT MORE STOCK BACK WHEN STOCKS ARE UP THAN WHEN THEY ARE DOWN BUT IN THAT WAY THEY ARE SORT OF BEHAVING LIKE JOE PUBLIC YOU KNOW. THERE HAVE BEEN SOME GREAT INVESTMENT STORIES BASED ON PEOPLE WHO BOUGHT BACK STOCK INTELLIGENTLY WHICH MEANS BUYING IT AT A DISCOUNT FROM ITS INTRINSIC VALUE. WE WOULD BUY BACK STOCK BY THE BUSHELL BASKETS IF IT SOLD WELL BELOW INTRINSIC VALUE IT WOULD HAVE TO BE WELL BELOW INTRINSIC VALUE AND WE WON'T BUY A SHARE IF WE THINK WE ARE PAYING INTRINSIC VALUE OR MORE. IT IS NOT A COMPLICATED EQUATION BUT MANAGEMENTS WHEN SOMEBODY SAYS THEY ARE GOING TO HAVEA 5 BILLION DOLLAR BUYBACK THEY OUGHT TO SAY WE ARE HAVING A 5 BILLION DOLLAR BUYBACK IF WE CAN BUY IT AT X OR BELOW BUT THAT'S JUST NOT THE WAY IT OPERATES.

SULLIVANHAS IT BEEN AN EFFICIENT USE OF CAPITAL

BUFFETTIT HAS BEEN A TERRIFICLY EFFICIENT USE OF CAPITAL FOR SOME COMPANIES AND BEEN A VERY STUPID USE OF CAPITAL FOR OTHER COMPANIES. I WOULD ARGUE THAT OUR BUYBACKS HAVE BEEN PEANUTS UNFORTUNATELY BUT OUR COUPLE OF BUYBACKS MADE GREAT SENSE. BUT WE COULDN'T DO IT ON SCALE.

SORKINAND WHAT DID YOU MAKE OF HILLARY CLINTONS PROPOSAL ON CAPITAL GAINS BUT SHE ALSO SAID I BELIEVE THAT SHE WANTS PEOPLE TO LOOK INTO BUYBACKS THEMSELVES IN TERMS OF HOW THEY SHOULD BE REGULATED. ELIZABETH WARREN AND OTHERS HAVE SUGGESTED THEY ARE EFFECTIVELY INSIDER TRADING BECAUSE THE COMPANIES KNOW ABOUT IT.

BUFFETTWELL I WILL BE GLAD TO WRITE A PAPER ON IT SOMETIME. I HAVE WRITTEN ON IT ABOUT 20 TIMES OVER THE YEARS AND IN GENERAL VERY MUCH APPROVE OF WHERE HILLARY IS GOING IN TERMS OF FINE TUNING ALL THE POINTS WE'LL TALK ABOUT THAT AS THE CAMPAIGN PROGRESSES. BUT BUYBACKS ARE NOT NIRVANA AND THEY ARE NOT EVIL IT IS JUST A QUESTION OR WHETHER THEY MAKE SENSE AND IF OUR STOCK SELLS WELL BELOW INTRINSIC VALUE AND WE HAVE MONEY WE DON'T NEED FOR THE BUSINESS WE WILL BUY IT BACK JUST AS FAST AS WE CAN NOW UNFORTUNATELY WHENEVER I SAY THAT IT KEEPS IT FROM HAPPENING.

QUICKWARREN WE KNOW THAT YOU ARE A SUPPORTER OF HILLARY CLINTON BUT DID YOU WATCH THE REPUBLICAN NATIONAL DEBATES THAT TOOK PLACE LAST WEEK?

BUFFETTI WOULDN'T HAVE MISSED IT

QUICKAND WHAT DID YOU THINK?

BUFFETTI THOUGHT THAT IT WAS TERRIFIC TELEVISION AND I THINK THERE'S A SMALL CHANCE WITH PROPORTIONAL AWARDING DELEGATES IN A GREAT MANY OF THE PRIMARIES AND WITH SUPER PACKS ENABLING PEOPLE TO KEEP GETTING FINANCE WHERE AS OTHERWISE THEY WOULD DROP OUT FOR LACK OF MONEY IF THEY WEREN'T DOING THAT WELL. I THINK THERE IS ACTUALLY SOME CHANCE THAT WHEN THEY GO TO THE REPUBLICAN CONVENTION NO ONE WILL HAVE A MAJORITY GOING IN BUT I THINK IT WILL BE VERY VERY INTERESTING. DONALD TRUMP IS GOING TO HAVE A CERTAIN PERCENTAGE OF DELEGATES AND SO WILL A WHOLE BUNCH OF OTHERS AND IN THE PAST UNLESS YOU WERE IN THE TOP 2 OR 3 YOUR FUNDING DRIES UP AND YOU GET TO A COUPLE OF STATES AND THAT WAS WITH BUT WITH SUPER PACKS AROUND YOU CAN HAVE QUITE A FEW CANDIDATES IN IT FOR QUITE A BIT OF TIME AND THE PIE COULD GET DIVIDED IN SUCH A WAY THAT NOBODY HAS A MAJORITY. IT IS GOING TO BE VERY INTERESTING. IT IS A GREAT SPECTATOR SPORT.

QUICKWE DID HAVE AN OVERNIGHT POLL AN NBC NEWS POLL THAT WAS CONDUCTED FROM FRIDAY INTO SATURDAY IT SHOWED THAT DONALD TRUMP IS STILL LEADING THE PACK WHICH MIGHT COME AS A SURPRISE TO SOME PUNDITS WHO HAD KIND OF WRITTEN HIM OFF AFTER THAT PERFORMANCE.

BUFFETTYEH NO HE IF YOU CAN GET BY THE JOHN MCCAIN IS NOT A HERO AND A FEW THINGS AND NOT HAVE YOUR NUMBERS GO DOWN YOU HAVE A VERY SOLID BASE AND YOU KNOW I WOULDN'T BE SURPRISED IF HE MAINTAINS QUITE A SOLID BASE FOR A LONG TIME. AND THAT MEANS HE IS GOING TO GET A FAIR NUMBER OF DELEGATES IF YOU GET IT IN PROPORTIONAL STATES. AND HE IS NOT GOING TO RUN OUT OF MONEY SO IT IS GOING TO BE A LOT OF FUN TO WATCH PARTICULARLY IF YOU ARE A DEMOCRAT.

QUICKI WAS GOING TO SAY AS A DEMOCRAT YOU MUST ENJOY HOW THIS PLAYS OUT. WHO WOULD YOU MOST LIKE TO SEE YOUR CANDIDATE RUN AGAINST?

BUFFETTWELL I THINK IF I GAVE THAT PREDICTION IT WOULD BE SORT OF THE KISS OF DEATH ON THAT CANDIDATE. I WANT TO SEE HER RUN AGAINST THE WHOLE FIELD.

QUICKYOU KNOW WARREN WE HAVE A WHOLE BUNCH OF OTHER THINGS WE WOULD LOVE TO TALK TO YOU ABOUT WE SAW THE JOBS NUMBER THAT CAME IN. THE JOBS REPORT WAS JUST AS EXPECTED ON FRIDAY 215,000 A LOT OF PEOPLE SPECULATING THAT THE FED WILL RAISE INTEREST RATES COME SEPTEMBER. YOU HAVE A VERY GOOD IDEA OF WHAT'S HAPPENING IN THE ECONOMY JUST BASED ON THE NUMBERS THAT YOU SEE AND THE BUSINESSES THAT YOU HAVE YOUR FINGER ON THE PULSE. WHAT DO YOU THINK IS HAPPENING IN THE ECONOMY. WHAT DO YOU THINK THE FED SHOULD DO IN SPETEMBER?

BUFFETTI THINK WHAT'S HAPPENING WITH THE ECONOMY IS EXACTLY WHAT'S BEEN HAPPENING NOW FOR FIVE YEARS IS THAT IT IS MOVING AHEAD ROUGHLY AT 2% RATE AND IN CERTAIN INDUSTRIES A SPURT OCCASSIONALLY AUTOS ARE STRONG RIGHT NOW BUT IT HAS BEEN A VERY STEADY INCREASE AND PEOPLE HAVE TALKED ABOUT DOUBLE DIPS AND THEY'VE TALKED ABOUT ACCELERATION AND EVERY TIME THEY TALK ABOUT IT MOVING SHARPLY IN ONE DIRECTION IT DOESN'T DO IT. THE ECONOMY HAS COME BACK AND IT HAS COME BACK VERY WELL CONSIDERING THE KIND OF SHOCK THAT WE HAD 5 OR 6 YEARS AGO BUT I DON'T SEE IT PARTICULARLY ACCELERATING AND I DON'T SEE IT DECELERATING EITHER. I HAVE SAID BEFORE I THINK IT IS VERY TOUGH TO PUSH RATES HIGHER IN THE U.S. WHEN EUROPE NEEDS TO KEEP THEM ALL AND YOU'VE GOT THE SITUATION EXISTING AROUND THE WORLD BUT I KEEP HEARING THE VARIOUS GOVERNORS SAY IT IS GOING TO HAPPEN SOON SO BUT I DON'T THINK IT IS AN EASY DECISION WHEN RATES ARE CONSIDERABLY LOWER IN EUROPE AND YOU MAY BE AFFECTING EXPORTS AND IMPORTS VERY SIGNIFICANTLY IF YOU PUSH RATES HERE TO BE CONSIDERABLY HIGHER THAN THEY EXIST IN EUROPE.

QUICKTHERE HAVE BEEN A LOT OF PEOPLE WHO HAVE BEEN CONCERNED ABOUT THE MARKET LATELY IF YOU HAVE WATCHED WHAT HAS BEEN HAPPENING DURING EARNINGS SEASON SOME OF THE MOVES HAVE BEEN EXTRAORDINARY TO SEE PEOPLE MISSING BY SMALL AMOUNTS ON EARNINGS OR REVENUE LINES AND THEN COMING IN WITH DOUBLE DIGIT STOCK DECLINES YOU ALSO SAW WHAT HAPPENED WITH MEDIA STOCKS OVERALL MOVE THE ENTIRE SECTOR LOWER THAT HAS SOME PEOPLE THINKING THAT THERE IS A LOT OF WEAKNESS IN THE MARKET AND THAT THERE IS SOMETHING OF A CORRECTION THAT'S DUE. I AM GUESSING THAT I WOULDN'T PUT YOU IN THAT CAMP IF YOU ARE WILLING TO DO DEALS LIKE THIS OR DO YOU EVEN THINK ABOUT WHAT IS HAPPENING ON A DAY TO DAY BASIS?

BUFFETTSTOCKS ARE GOING TO BE HIGHER AND PERHAPS A LOT HIGHER 10 YEARS FROM NOW, 20 YEARS FROM NOW I AM NOT SMART ENOUGH TO PICK TIMES TO GET IN AND GET OUT IF YOU ARE IN SOMETHING THAT IS GOING TO BE A LOT HIGHER OVER TIME. IF YOU THOUGHT YOUR HOUSE WAS GOING TO GO DOWN 5% IN PRICE YOU WOULDN'T SELL YOUR HOUSE AND HOPE TO BUY IT BACK 5% CHEAPER. THAT'S NOT MY GAME. MY GAME IS TO OWN DECENT BUSINESSES AND OWN THEM AT DECENT PRICES AND YOU ARE GOING TO MAKE A LOT OF MONEY OVER TIME IF YOU DO IT BUT I THINK THE ABILITY OF PEOPLE TO DANCE IN AND OUT OF MARKETS IS QUITE LIMITED AND IN MY CASE IT IS ZERO.

QUICKWARREN THERE IS A STORY ON THE FRONT PAGE OF THE NEW YORK TIMES TODAY ABOUT COCA COLA WHICH IS A COMPANY THAT YOU ALSO THE LARGEST SHAREHOLDER IN IT POINTS OUT THAT COCA COLA HAS TEAMED UP WITH SOME INFLUENTIAL SCIENTISTS TO TRY AND ADVANCE A MESSAGE IN MEDICAL JOURNALS THAT IT IS REALLY MORE ABOUT HOW MUCH YOU EXERCISE NOT WHAT YOU EAT THAT MATTERS. THE TIMES ACTUALLY KIND OF PUTS THIS AS SOMETHING WHERE THEY LOOK ASKANCE THE IDEA THAT BIG COPORATION IS FUNDING A MESSAGE LIKE THIS WHAT DO YOU SAY AS THE LARGEST SHAREHOLDER?

BUFFETTWHAT HAPPENS TO YOUR WEIGHT DEPENDS ON HOW MUCH YOU TAKE IN AND HOW MUCH YOU BURN UP. AND IF YOU TAKE IN 2700 CALORIES AND YOU BURN UP 2700 YOUR WEIGHT ISN'T GOING TO CHANGE AND IF YOU TAKE IN 3500 AND BURN 2500 YOU ARE GOING TO GAIN WEIGHT. IT'S A MATHEMATICAL TYPE EQUATION AND IF YOU ARE LIKE ME AND DON'T LIKE TO EXERCISE MUCH THAN YOU BETTER NOT TAKE IN TOO MUCH. THERE IS NO MYSTERY TO WEIGHT. CALORIES ARE DEFINED THERE'S 4 PER GRAM IF YOU ARE DEALING WITH PROTEIN AND CARBOHYDRATES THERE'S 9 PER GRAM WITH FAT AND YOU'VE GOT TO FIGURE IT OUT IF YOU WANT TO LOSE WEIGHT SO YOUR BODY BURNS OFF AS MANY AS YOU ARE CONSUMING.

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