Members of the WBG pose with their namesake at Piccolo Pete's.
Front row (left to right): Stantanu Samant, Pedro Saboia, Tatsu Nishimura, Jie Tang, Vivienne Ko, Warren Buffett, Lisa Rosenthal, Simran Reen, Ieva Vysniauskaite, Liz Oates, Camillla Liou
Back row (left to right): Andrew Bruce, Dima Mostovoy, Hugh Cameron, Matt Scovotti, Harlan Piper, Brendon Eisner, Chris Abraham, Joe Rumph, Russell Kohn
On April 12, a group of 19 Booth students traveled to Omaha, Nebraska, to meet with the greatest living rebuke to the efficient markets theory: Warren Buffett, CEO of Berkshire Hathaway. The highpoint for many was a two-hour Q&A session with Mr. Buffett, followed by lunch at his favorite steakhouse, Piccolo Pete's. Four students even had the good fortune to sit at Warren's table during lunch. Students also had the chance to tour three Berkshire-owned businesses, led by their respective CEOs, including Nebraska Furniture Mart, Borsheims, and Oriental Trading Company.
The trip was led by co-chairs of Booth's Warren Buffett Group (WBG), Chris Abraham '13, Hugh Cameron '13, Russell Kohn '13, Dima Mostovoy '13, and Joe Rumph '13. The other fourteen participants earned their places by passing a rigorous quiz on Warren Buffett and value investing. The WBG is now organizing an additional trip to Omaha for the Berkshire Hathaway Annual Shareholders Meeting on May 4.
At age 82, Mr. Buffett was his usual energetic and modest self. The world's fourth-wealthiest person chauffeured himself to the meeting in a nondescript champagne-colored Cadillac. He explained his monetary success in life as being born at the right time with the right skillset; at another time, as Bill Gates once commented, he would have been "some animal's lunch." Throughout the session, Warren answered questions with enthusiasm, clarity and wit to rival far younger elocutionists.
There were eight business schools in attendance, and questions spanned diverse topics from investing to philanthropy to career advice. Several questions were directed at understanding Berkshire's recipe for finding and operating wholly-owned businesses. Mr. Buffett explained that he first tries to make Berkshire attractive for business sellers who love their businesses, which has enabled Berkshire to avoid ever buying a business at auction. Second, when deciding whether to retain management, he tries to answer the key question of whether they love their business or love the money. For the right kind of manager, Berkshire is the ideal home because Mr. Buffett allows managers "to paint their own painting."
Mr. Buffett offered plenty of thoughts for investors, too. When asked how to decide whether to invest in a company whose stock is down materially on a negative hiccup, he said that an investor must decide whether the company still has a fundamentally sound business. He cited examples from the histories of GEICO and American Express, but cautioned that the second key question for an investor is whether he or she knows enough to make that decision. Moreover, Mr. Buffett refuses to invest in "unknowables," where the earnings power of a business is hardly knowable five to ten years out. For Mr. Buffett, "unknowables" include television, media and healthcare companies, but he does love his Heinz ketchup, Wrigley gum and Cherry Coke.
When asked about career advice for MBA students, Mr. Buffett advised students to take a job that they will love. He said that he is surprised by the number of MBAs who take jobs that they do not enjoy for the purpose of building a résumé, which, he quipped, "is a lot like saving sex for old age."
Mr. Buffett managed to leave most participants at least a little inspired. While the world is facing numerous problems, his faith in capitalism, business and America are reasons for optimism.
Berkshire Hathaway's Annual Shareholders Meeting will take place on May 4, 2013. The WBG is organizing travel and accommodations and obtaining credentials to the events. If you are interested, please contact the WBG.