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Collection: Warren Buffett - #209 'Berkshire Is Not a Fund'



Hi, my name is Joel. I’m an undergraduate student at the University of Virginia. Just — I have two questions.

My first question is, how important do you think the structure of your fund is to its long-term success?

And by that, I mean, in the last couple weeks, some other legendary investors, like Julian Robertson, Stanley Druckenmiller, have been forced to either close or restructure their funds as a result of a kind of vicious cycle of underperformance and subsequent redemptions and then even worse performance.

Do you think that the structure of your fund, as a publically-traded company, as opposed to a private partnership, like Tiger and Quantum, has protected your business from a similar fate?

Or phrased a different way, do you think that, if Tiger or Quantum were structured the way that Berkshire Hathaway is, that they might still be in business in the same way today?


Yeah, we don’t consider ourselves in remotely the same business as Tiger. I mean, they are managing a securities operation. And we aren’t doing anything like what they do. So that — they have —

Thirty years ago, when I had the partnership, it was much more along their lines, although still far from what they do. But it was structured much more like what they did.

And I — and, although we had bought control of businesses and all that, we were functioning much more — or, focusing much more on securities.

We don’t care whether we own a stock or a bond. We will over the next 20 years. But that’s not what we’re about. We’re not a fund. We are an operating business that generates a lot of capital and uses that to buy other businesses in whole or part.

And we prefer in whole. But we sometimes do it in part.

But I would — I don’t consider — which is a reason why I don’t consider book value that important, although it — it’s got the importance I attributed to it earlier.

But, we could easily have 90 percent of the value of Berkshire, ten years from now, be represented by businesses that we own and 10 percent by securities. Or we could very easily have 60 or 70 percent represented by securities, depending on how markets develop.

I hope it develops in the former way. But I’m perfectly willing to go the other way, too. But it just has no relationship to the kind of funds you talk about. They —

We are structured poorly, from a tax standpoint, compared to those fellows, and compared to what I used to have in the ’60s.

But that’s, you know, that’s a decision we made. And we’re stuck with it, more or less.

It’s not a great tax structure, if you’re going to own securities. But we may not own that many securities over time.



Well, I do think that the people in the relative performance game, who are trying to attract so-called hot money, are living in a totally different world from ours.

I mean, Soros, in the end, was not willing to have a lot of people make a lot of money in high-tech stocks and not be part of that game. And they got killed.

We’re perfectly willing to let something we don’t understand very well rage on while a lot of other people make a lot of money we don’t.


Yeah, we — it’s just not a securities operation that we have. We own a lot of securities at present. And we’ll probably own a lot 5 or 10 years from now. But it’s not what Berkshire is necessarily about.

Ideally, you know, I would love it if we could move all the money in securities into businesses that we liked. But that’s — that isn’t going to happen, in all probability.

It’s too tough, because we can’t find multi-billion-dollar businesses to buy right and left. We find a few. But they tend to be small. Number 5?

~ Please visit the site above for full video of Berkshire Hathaway Annual Meeting.


[YAPSS Takeaway]

Berkshire is like Pac-Man 😂.

"We are an operating business that generates a lot of capital and uses that to buy other businesses in whole or part." ~Warren Buffett

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