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Arthur Clarke's avatar

Thank you Kevin for doing a fine job of helping to flesh out the Berkshire archive. I attended that meeting; I think it was my second meeting held at the Joslyn.

At the first, Warren announced at the beginning that the latest member of the Buffett clan to attend an annual meeting was his six-month-old grandson. He said, he is somewhere in the hall in the arms of his mother and added, “If he starts crying during the meeting, you can assume his mother has just explained to him my feelings about inheritance.” The hall was exploded with a spontaneous thunder of laughter. It was a memorable example of Warren’s skill at using humor to teach a lesson. (When I took an accounting course at Chicago, our text, in draft, had restated Net Worth in the balance sheet as “Residual Responsibility”. As Berkshire owners, Warren was saying, we had residual responsibility!

A year before this meeting, Warren said to me in his office that he measures his success as a manager by how few shares trade. To this he added, in passing, that that is not a view shared by his fellow CEOs, or on Wall Street. Not splitting the shares was one significant means of nurturing long-term ownership. Indeed, years later the specialist for Berkshire trading confirmed that the lack of trading meant shares could trade with a hundred dollar spread on a 10,000+ price, which amounted to 10 cents on a 10 dollar trade, less than the then 12.5 cent minimum spread. The reason? He didn’t need a higher spread to cover the risk of a sudden large trade.

Related to this is one of my favorite memories—not from a meeting. In the early ‘80s one day I walked through Grand Central in NY. Merrill Lynch had a booth there with two Quotrons, with two lines of people, which I ignored. I approached the desk and easily got the attention of a nice woman who was eager to help: “May I help you?” Yes, could you give me a quote for Berkshire Hathaway? Sure, she replied, “I’ve never heard of it”; and proceeded to leaf through a 2” volume of listings. I said, the ticker is BKHT, which she punched in while asking me what kind of a company it is. Oh, I replied, it is an old New England textile company—headquartered in Omaha. And it doesn’t pay a dividend! Now she was really puzzled: something is wrong, the quote is 20 bid,30 asked, that can’t be right. No, I replied, that’s 1020 bid, 1030 asked, the price hasn’t changed! (It had just risen over 1000 and the system handled only 3 digits, so the first two were dropped.) I added that she could have bought it for around 37 in the mid-‘70s. Her last question had me smiling all the way to my next appointment: “do you think it will split?”

I’m still smiling after seeing two more zeros added—and no split!

Keep writing fine posts!

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