Berkshire Hathaway Annual Meeting Crowdsourcing Experiment

The Annual Meeting of Berkshire Hathaway is on May 3.  Although I've been a shareholder for many years I've never attended in person.  However I've usually managed to get a good sense of what happened from the many media sources that cover the meeting, as well as the various transcripts that are graciously typed and sent around by Whitney Tilson and others. 

As I mentioned in a recent post, I'm always struck by the fact that people always seem to ask the same questions at the Q&A session, questions that have been asked and answered several times before.   I'd like to see some fresh ones, especially those that help to answer the $64,000 question:  Given its present size, at what rate can the intrinsic value of Berkshire be expected to grow over time?  So:

Below is a list of the questions I would like Warren Buffett and Berkshire Vice-Chairman Charlie Munger to answer.  Some I think I know the answer to, but I'm angling to have them answer it in their inimitable way.  Some I doubt they would answer but I think are worth a try.  Please feel free to use the comments to critique them, answer them, and, of course, add to them.  Also please feel very free to email a link to this post to fellow investors, especially those who plan to attend the meeting.  The more attendees who see and contribute to this list, the better the likelihood the list proves useful.  If only one of these questions gets asked, I'll be very happy:

Questions about Berkshire's operating subsidiaries:

1. You've said that Berkshire's future record cannot approach its past record.  Given this fact, has the rate you charge your operating managers for capital used gone down over time?
2. When you enter into quota-share reinsurance agreements, like you did with Swiss Re, do you substitute their underwriting judgment for your own?  Why don't you simply try to go after Swiss Re's clients directly via your own reinsurance operations?
3. Clayton Homes benefits from being a Berkshire subsidiary because of Berkshire's low borrowing costs.  Are there other companies out there that would similarly benefit, and are you willing to pay a little more for them than other potential acquirers as a result?
4. What is it about the economics of the jewelry manufacturing industry that lead you to believe that Richline, with Berkshire's capital, can become both a  large and profitable supplier, profitable enough to justify all the capital deployed in getting there?  Do you expect a large supplier to be significantly more profitable than the average supplier--i.e. are there economies of scale?  If so, why does the current largest supplier not enjoy them?
5. [For Munger]  Explain, in terms of human psychology, why it's optimal for a car insurance company to advertise its service via a gecko and cavemen, rather than a more straightforward description of the product?  Is this strategy something you would have used if you were in charge of GEICO's advertising?
6. Because GEICO's advertising spending is deferred for accounting purposes, doesn't that mean that accrual accounting somewhat understates GEICO's profitability during times, like now, when it's increasing advertising spending?  How do you internally evaluate the return on GEICO's increased ad spending on a cash-on-cash basis?
7. Could you say more about how and why you misjudged Gen Re's reputation when you bought it?  Were you "seduced" in some way?  What would you do differently in a similar situation today?
8. Why do you charge Clayton Homes 1% over Berkshire's own borrowing costs?  That is, why charge it anything, and why 1% and not some other number?
9. Why did XTRA borrow $400 million dollars only to distribute the proceeds to Berkshire?  Doesn't Berkshire have lower borrowing costs? 
10. It looks like the original rationale for the McLane purchase--that wholesale customers would be more willing to buy from an entity not associated with a major competitor like WalMart--is proving correct.  Is this true?
11. What should the attitude of the owner of a print newspaper be to "necessary" capital expenditures (i.e. to maintain printing presses, etc.)?  Should print newspapers be operated in a kind of gradual "runoff" mode the way Berkshire's textile operations ultimately were?

Questions about Berkshire's Investing and other capital allocation activities:

1. Technical question about your offer to assume the municipal exposure of the monolines:  How would such an offer have released regulatory capital of the monolines (I've read where some disagreed that it would)?
2. Have there been any ancillary benefits to this offer, which was quickly rejected?  I.e. free advertising for Berkshire's own new muni insurance operations, regulatory goodwill, etc.
3. Have would you evaluate the credit protection contracts that you write from an ROE point of view?  How do you think of the "E"?  Do you internally allocate some amount of capital to each dollar of exposure?
4. I've heard you say you're looking at more fixed income opportunities.  Do these need to offer attractive unleveraged returns on capital in order for you to invest, or would you be willing to use debt finance?
5. At this point, how large is the universe of public companies that Berkshire would and could invest meaningful amounts in?
6. Do you have a wish list of private companies that, if you got the call and the price was right, you'd immediately say yes to?  If so, how big is that list?
7. On the credit default contracts you've already written, why did your counterparties come to you rather than to the many other CDS desks on Wall Street?  Because those CDS desks are in trouble, do you expect to be able to write much more business in what is apparently a $62 trillion market?
8. It's one thing to predict that, because of a persistent current account deficit, the US dollar will decline relative to the rest of the world's currencies.  It's another thing to predict that the dollar will decline relative to the Brazilian real in particular.  What was it about the real in particular that made you bet it would rise relative to the dollar?
9. Is the currency market large and liquid enough for Berkshire to deploy meaningful capital?
10. Regarding your final four candidates for the investment job:  what non-compensation reasons did they give for wanting to work for Berkshire?  In general do you believe these four are among "the best out there," rather than just "the best who are willing to work for Berkshire?"  Do you think there's a big difference between those two categories?
11. What separated the final four candidates from the final 10, or 20 or 50?  What was the order of the filters you used to narrow the list?
12. You seem to be more public these days--CNBC specials, interviews, etc.  Are you seeing a "return" to this increased exposure in terms of an increased profile for Berkshire as a potential acquirer, especially of foreign-domiciled companies?
13. Now that it's well established that you don't overpay for acquisitions, would you consider (or have you already) quietly letting companies know you'd be interested in buying them, rather than just waiting for the phone to ring?

Other questions:

1. Can you say anything about Senators Clinton, Obama, or McCain, or about politicians in general, from having met and spoken to them in private?  Does anything come across that does not come across to the average voter who must rely on the candidates' press coverage, public appearances, and paid advertisements?

Comments

[OPM]

Nice list. I'll send it around too.