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Lountzis Says Buffett Remains Overwhelmingly Positive (Audio) · Bloomberg Intelligence

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  Speaker 1: Global business news twenty four hours a day at Bloomberg
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  Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters
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  Speaker 1: on Katherine Cowdery. While stocks greeted them up of May
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  Speaker 1: points two thirds of a percent and close at seventeen thousand,
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  Speaker 1: eight hundred ninety one. SMP five hundred up sixteen points
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  Speaker 1: announced to twelve ninety two. Thirty ten year Treasury down
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  Speaker 1: nine thirty seconds with the yield of one point eight
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  Speaker 1: six per set. And that's a Bloomberg business flash. You're
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  Speaker 1: listening to taking Stock with Kathleen's and pim Box on
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  Speaker 1: Bloomberg Radio. Shares of Berkshire Hathaway hire today by about
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  Speaker 1: a half a percent following the weekend con fab in Omaha, Nebraska,
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  Speaker 1: the Convention of Capitalism, and you call it the annual
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  Speaker 1: Meeting of Berkshire Hathaway. Here to tell us more, Paul lawnces.
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  Speaker 1: He is the founder of Lance's Asset Management. Paul, always
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  Speaker 1: a pleasure, Thanks for being with us. Tell us about
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  Speaker 1: the meeting and how many meetings have How many Berkshire
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  Speaker 1: Hathaway annual meetings have you attended? Hive or so pim um,
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  Speaker 1: And it's always it's always a wonderful opportunity to attend
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  Speaker 1: the woodstock for capitalists and you feel rejuvenated every time
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  Speaker 1: you go. All right, So to give us some of
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  Speaker 1: the highlights, I know that Warren Buffett's comments about Valiant
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  Speaker 1: Pharmaceuticals certainly made headlines. What else did you note about
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  Speaker 1: the meeting? Well, he still feels really really strongly about
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  Speaker 1: the future of America. Irregardless of who the president is.
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  Speaker 1: He believes in the long term, you know, again, the
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  Speaker 1: long term future of America, its prospects. Despite the many
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  Speaker 1: challenges that we have, it's still the best system in
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  Speaker 1: the world. People really want to come here as opposed
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  Speaker 1: to going elsewhere. He still feels that Berkshire is reasonably
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  Speaker 1: under value. To talk a little bit about the one
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  Speaker 1: point two times Um stated book that he'll pay uh
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  Speaker 1: for the stock, which kind of puts a floor on it.
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  Speaker 1: He talked about the individual operating businesses. When he gave
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  Speaker 1: the brief first quarter earnings, the after tax earnings, insurance
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  Speaker 1: was down a bit him and the cold business has
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  Speaker 1: really hurt the railroads as well as the low prices
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  Speaker 1: for natural gas. But again, you know, it was always
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  Speaker 1: he's always overwhelmingly positive despite the challenges, both regarding Berkshire
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  Speaker 1: as well as our country. Well. One of the issues
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  Speaker 1: that I believe was raised had to do with Berkshire
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  Speaker 1: Hathaway in a sense changing its investment strategy. It used
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  Speaker 1: to invest in companies with high returns on capital, no
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  Speaker 1: or even low capital requirements. Now we're talking about massive
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  Speaker 1: amounts of capital. As you described railroads Burlington, Northern Santa Fe,
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  Speaker 1: as well as pipeline companies did did Warren Buffett address
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  Speaker 1: that shift? He did, phim and he specifically stated that
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  Speaker 1: it's one of the challenges and problems with prosperity. When
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  Speaker 1: they were buying Sees candy in nineteen seventy two with
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  Speaker 1: enormous returns on capital, very small business, small investment, there
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  Speaker 1: simply aren't Sees candies, or if there are mars, let's
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  Speaker 1: say there aren't that many. And so they've decided to
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  Speaker 1: look for big businesses, many of which are capital intensive,
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  Speaker 1: like Burlington Northern, and I wouldn't be surprised him to
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  Speaker 1: see him do something else in the industrial space. Um,
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  Speaker 1: it uses up some of their capital. It's a good
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  Speaker 1: productive use of capital. But you're never going to get
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  Speaker 1: the returns on equity in these much larger enterprises that
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  Speaker 1: you're going to get in the small enterprises. So it's
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  Speaker 1: a problem with the prosperity and the success that they've had. Now.
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  Speaker 1: He also mentioned something to do with derivatives as a
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  Speaker 1: potential time bomb sitting on the balance sheets of many banks. Uh. Now,
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  Speaker 1: he believes that holding the shares of obviously a bank
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  Speaker 1: such as Bank of America is a good thing, but um,
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  Speaker 1: is there anything in your mind that caused him to
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  Speaker 1: talk about derivatives. Complex derivatives. Well, that comes up a
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  Speaker 1: lot to him because he he spoke about them years
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  Speaker 1: ago as weapons of mass destruction. And I believe when
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  Speaker 1: they had purchased jen Rey, they took I don't recall exactly,
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  Speaker 1: but it might have been him four million plus in
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  Speaker 1: losses as they were running off the derivatives, if you will,
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  Speaker 1: of jen Ry. And so he's he's just concerned. He
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  Speaker 1: talked about the collateral that to put up with the derivatives,
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  Speaker 1: and I just think there's unknown there's things about the
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  Speaker 1: derivatives and the contracts that are just unknown, and that
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  Speaker 1: that's a cause for concern for him. But having said that,
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  Speaker 1: he seemed to be fine with Bank of America UM,
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  Speaker 1: which you know have some as well. Now Berkshire Hathaway.
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  Speaker 1: It's a three day meeting in Omaha, tens of thousands
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  Speaker 1: of shareholders and it was streamed on the internet for
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  Speaker 1: the first for the first time. It also featured a
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  Speaker 1: five kilometer invest in yourself run. What was that about?
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  Speaker 1: But he um he started to run a couple of
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  Speaker 1: years ago, several years ago, and theyon Brooks running shoes
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  Speaker 1: and UM and so I think it's just a it's
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  Speaker 1: just a fun time and a fun event. Unfortunately, pim
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  Speaker 1: it rained and it was pretty cool and damp out there.
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  Speaker 1: Um last year was terrific. That wasn't the case. But
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  Speaker 1: he UM, you know, at the end of the day,
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  Speaker 1: he tries to make it a really enjoyable time. And
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  Speaker 1: part of the reason he dreamed it, um, you know,
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  Speaker 1: he wanted it to be available, um for people that
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  Speaker 1: can't make it, as opposed to those who can. But
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  Speaker 1: most of the people who go, they go for the
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  Speaker 1: annual and they go for his wisdom and Charlie's wisdom,
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  Speaker 1: but they also go because of the friendships and the
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  Speaker 1: relationships they've built over two and three and four decades. Well,
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  Speaker 1: the five year old warm Buffett, he spoke about his
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  Speaker 1: Coca Cola investment. He said he's about one quarter Coca Cola,
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  Speaker 1: meaning his body. Yeah, he said he's twenty or so
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  Speaker 1: exactly p him. I think he drinks five cokes a day.
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  Speaker 1: Charlie prefers diet coke. And I think what I would
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  Speaker 1: say him in my own words, just if you do
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  Speaker 1: things in moderation, UM, I just don't think you really
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  Speaker 1: have to worry about doing things in excess is really
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  Speaker 1: the problem. Is there any thought in your mind that
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  Speaker 1: there will be a dividend declared at Berkshire Hathaway. I
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  Speaker 1: think that's highly, highly unlikely. UM as long as Mr
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  Speaker 1: Buffett and Mr Munger are running Berkshire Hathaway, there's too
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  Speaker 1: many opportunities that they're looking for. There's always the possibility,
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  Speaker 1: tim you could have a decline in the stock market
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  Speaker 1: or with geopit political issues, and they always want to
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  Speaker 1: have a minimum of twenty billion in cash. They did
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  Speaker 1: use up a bunch with Precision Cast Parts thirty two
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  Speaker 1: billion that they spent in cash. Thank you very much.
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  Speaker 1: Paul lawn says he's the founder of Launce's Asset Management.
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  Speaker 1: Talking about Berkshire Hathaway and a note. American International group
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  Speaker 1: The Ensure hosted first quarter net loss of sixteen cents
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  Speaker 1: a share. You're listening to taking stock on Bloomberg Radio. Yeah.
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