AUDIENCE MEMBER 00:00
Good afternoon. I’m Claudia Fenner (PH) from Long Island, New York and I have two questions.
The first is, as a big fan of the Gap, I’d like to know why at this time you feel that the Gap is undervalued.
And the second question, if you could direct your answer to my husband, as a shareholder, would you agree that buying a large present at Borsheims this afternoon is like taking money out of one pocket and putting it back in another? (Laughter and applause)
WARREN BUFFETT 00:32
I’ll let Charlie handle the second one. (Laughter)
He’s our expert on consumption at Berkshire.
The Gap is a good illustration of what I talked about earlier, because I think the world assumes that I made a decision to buy Gap at Berkshire. And actually, that’s totally, 100 percent a Lou Simpson portfolio investment.
I don’t think I’ve read the annual report of the — I know — I haven’t read the annual report of the Gap ever. And I don’t know anything about it. I mean, you probably know a lot more about it than I do, and I hope Lou knows a lot more about it than I do. (Laughter)
It’s not a company I’ve ever looked at.
And Lou operates — and he has people that help him — Lou operates in somewhat — he can look at smaller securities, in terms of aggregate market caps, than I can, because I’m investing $2 billion. He can work with $200 million positions or even $100 million positions sometimes.
And I will do that occasionally, just because I happen to bump into them, in effect. But I’m really looking for things that we can put a billion or 2 billion or more in. And Lou’s universe of possible candidates for purchase is a bigger universe than mine.
And that may be a good thing, I mean, having two of us in there. Because he just is going to see things that I’m not going to see. So you’ll have to ask Lou about the Gap.
But, well, Charlie, give her a little advice on Borsheim’s. (Laughter)
CHARLIE MUNGER 02:18
Well, I think when you’re buying jewelry for the lady you love, it probably shouldn’t get too much financial calculation into it. (Laughter and applause)
WARREN BUFFETT 02:39
I will say this. And this is true. And you’re talking to a guy who does not normally go down this path, but I would say this:
I’ve never bought a piece of jewelry that I’ve regretted, in terms of what has happened subsequently, so it — (Laughter)
Well, if that isn’t a sales pitch, I don’t know what is. (Laughter) Zone 1.
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