'An amazing company run by amazing people'
A rare interview with the Oracle of Omaha, Warren Buffett
Note: The interview was naturally conducted in English but reported in Hebrew. All the following is paraphrased.
OMAHA, Nebraska - If you didn't know him, you'd think Warren Buffet was a kindly uncle who had purchased shares in Berkshire Hathaway, the investment company he actually controls.
Buffet was at the giant Quest stadium in Omaha, Nebraska, where tens of thousands of investors who believe in him had come to hear him speak. The enormous hall was full of kindly uncles and aunts there for their annual entertainment - listening to Buffet, the biggest investment guru of all time, talking about investments, shares, deals and economics and cracking jokes.
The meeting, which has been nicknamed the Woodstock of Capitalism, attracts tremendous attention not only among Berkshire's tens of thousands of shareholders, but also on Wall Street, where the investor and his partner Charlie Munger are highly respected.
Last Saturday at 9:30 A.M. Buffet opened the assembly at the jam-packed stadium by stating that he had two announcements to make - one important and the second less important.
The less important announcement was that Berkshire's first quarter financial reports were published the previous afternoon. Buffet gave a brief synopsis of the report and went on to the more important announcement - Berkshire's acquisition of Iscar at the close of trade on Wall Street the previous evening.
Immediately after Eitan Wertheimer, chairman of the Iscar Group, introduced me to Buffet, and less than 35 minutes before he would address 20,000 investors, Buffet said to me, "No problem, let's step aside for a moment for the interview."
This is the most sought-after interview for any economic newspaper. It is hard to believe that the man who declines almost every request for an interview from hundreds of American and international newspapers annually had agreed to talk.
Warren Buffet, how did you suddenly decide to invest in Iscar?
"I met with Eitan Wertheimer, Iscar CEO Jacob Harpaz and CFO Danny Goldman - and then they met with Charlie (Munger). He's the type of guy who doesn't get excited about anyone, but he was excited about them. He sat with them until midnight. He doesn't even sit with me until midnight."
What prompted you to invest in Iscar?
"It is an amazing company run by amazing people. I don't get many opportunities to invest in companies like that."
This is your first investment outside the United States.
"True, and it is also the third largest investment ever made by Berkshire."
Weren't you hesitant about investing in a company whose management and production are mainly in Israel?
"When you invest in a company that is doing something necessary, and doing it all over the world, it is not risky."
What does that say about Israel?
"That you have amazing people. We are investing $4 billion in an amazing group of people from Israel - and we are investing it at an astounding speed. This indicates what we think about the company."
You are investing $4 billion in Israel without visiting the manufacturing plant?
"What matters is the people, the management. Buying a company is like a marriage - it's for life. We are very dependent on these people and I am very happy to be depending on them."
Do you believe in Israel, or only in Iscar?
"A great many of my friend identify strongly with Israel. My wife has been to Israel several times. I don't know how many. If it has problems (with terror), the U.S. probably also has problems. I will most likely go to Israel in the fall."
Are you not afraid of the rise of Hamas, of the increase in terrorism?
"There are hazards everywhere in the world. We saw that on September 11. It's a dangerous world. It will always be a dangerous world. Weapons of mass destruction are a genie that cannot be returned to the bottle. The world has to learn to cope with it. Israel knows how to cope with it better because it has always been so close."
You usually steer clear of high-tech companies. Iscar is essentially a high-tech company - at least that is how Stef and Eitan Wertheimer view it.
"They are wiser than I am - they understand these things. If I could get Eitan to think for me, I'd be in good shape."
How do you think your shareholders will respond to your investment in Iscar?
"We'll see about that in a few minutes, when the assembly begins, but I think that they will be very pleased. It is a very important investment in an important company, which will be even bigger within five years and will have much better financial results. This investment gives us exposure to the global economy, which we have not had until now."
How did you set the price for the company?
"That's a question you can ask Eitan."
You acquired control of the company. What are you planning to do with the management?
"Just let it be. That is why we bought the company. We are only 16 people at Berkshire, but the companies in our portfolio employ about 200,000 people. Our job is only to choose the best players - and usually, like in Iscar's case, the players are right there when we buy the company. I wouldn't dream of altering the makeup of Iscar's management. I would be stupid if I told Eitan or Jacob something about running the company - I'd be better at telling Tiger Woods how to swing a golf club."
How will you make sure that the best management stays at Iscar?
"Why am I managing Berkshire? I'm already 75. The answer is that I enjoy it. I love it. There is nothing I would rather do than come to the office at Berkshire each morning. I feel like Michelangelo painting the ceiling of the Sistine Chapel. The people at Iscar are like that, too. The feel that same excitement toward their company, and I have to make sure not to tamper with that."
Do you think that Berkshire's ownership of Iscar will help it continue to develop in the world?
"Look what the company has done so far - it doesn't need me."
How long will you hold onto Iscar?
"Forever. I'm not selling. Ever."
Are you considering at any other companies in Israel?
"I want you to tell your readers that if they know a company similar to Iscar, even slightly, they should let me know immediately - I want to buy it. They can call me collect."
Can you tell us something about Iscar's profitability? Stef and Eitan are very secretive. They never revealed any details about the company's profits.
"We will continue to manage the company that way. You won't get anything out of me that Eitan has not told you."
What do you expect from Iscar? How significant is that company to a huge enterprise like Berkshire?
"In five or ten years, when we look back, we will understand that what we announced here this morning is one of the most significant things that Berkshire Hathaway has ever done. Iscar will be a very big and important company."
Like us on Facebook and get articles directly in your news feed