This column originally appeared on Real Money Pro at 11:26 a.m. EDT on May 7.
NEW YORK ( Real Money) -- This morning's opening missive reviews the six questions that I presented to Charlie Munger and Warren Buffett at Berkshire Hathaway's (BRK.A)/ (BRK.B) annual shareholders meeting. I also have included their responses to my questions as well as six alternate questions that I was prepared to ask in the event that someone asked one of my primary questions ahead of me.
Going into the meeting, there were a number of subjects that I thought warranted discussion. (I have a bunch of additional questions not mentioned today, so I hope Warren invites me back next year!)
It was important for me to balance my hard-hitting and pointed questions with a courteous and respectful delivery, considering the extraordinary accomplishments of the men that I was addressing and the unique invitation to a short seller who was negative on their company. Initially, each of my original six questions was far too lengthy (500-1,000 words). Given the setting and Warren's crafty ways of answering questions, my mission was to condense each into a tightly worded question.That process took a surprisingly long time. Let's start with the six questions I asked on Saturday. (I have marked with an asterisk the six primary questions that I had planned to ask. Three of my top six questions were previously asked so I used three of the alternate questions.) 1. Size matters: Berkshire's growth strategy -- chasing elephants instead of gazelles?* 2. The Buffett factor: What happens when Warren has left us? 3. Does a Berkshire breakup make sense?* 4. Has Warren's investment process become less intense over time? 5. A short-selling challenge* 6. Is Howard Buffett qualified to be nonexecutive chairman? I started by thanking Charlie and Warren for the invitation and told them that I was honored. Then I said that I looked forward to playing the role of " Daniel in the lion's den" in front of over 30,000 of his closest friends and greatest admirers. (That got a cheer!
Question No. 1 -- Size MattersQ: As it is said, Warren, "Size matters!" In the past, Berkshire bought cheap or wholesale -- for instance, Geico, MidAmerican Energy, the initial Coca-Cola (KO) purchase and Benjamin Moore. Arguably, your company has shifted to becoming a buyer of pricier and more mature businesses -- for instance, IBM (IBM), Burlington Northern Santa Fe, Heinz (HNZ) and Lubrizol, which were done at prices to sales, earnings and book value multiples well above the prior acquisitions and after the stock prices rose.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV