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TitleThe Buffett essays symposium : a 20th anniversary annotated transcript
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Table of Contents
Production Note
Greetings from Dean David Rudenstine
Corporate Governance
Finance and Investing
Mergers and Acquisitions
Accounting and Taxation
Subsequent Steps
Notes from Omaha
Document Text Contents
Page 2

The Buffett Essays Symposium
A 20th Anniversary Annotated Transcript

Warren Buffett & Charlie Munger

Lawrence A. Cunningham

Page 88

Current Commentary
“It is remarkable how rarely Warren and Charlie have expressed differences
of opinion on business policy, particularly given their political differences,
with Warren slightly left of center and Charlie slightly right. But Warren
hints often about the great value of their more frequent differences of opinion
over Berkshire acquisition decisions, as Charlie vetoed so many ideas
Warren believed in that Warren dubbed him the ‘abominable no man.’ ”

QUESTION: Do you think most stockholders have the ability to make an
assessment about a sale? For example, if you look at the balance sheet of a
corporation and you see large amounts of fixed assets that are carried at cost less
accumulated depreciation that might differ significantly from current market
value, or you look at the income statement and there are other factors where
there could be some difficulty on the part of most people in trying to make an
assessment. And it would appear to me that of the millions of shareholders who
are just buying hoping that the stock will go up, that most of them lack the
ability to make an adequate determination.

GORDON: For myself—and I think I find support in this in some of the
Buffett essays—a legal rule that relies on the incompetence or gullibility of
shareholders seems to me improbable. We let people buy stock without a license
and in the ordinary course they can sell it too. So the starting point that
shareholders are unable to assess a bid coming over the transom against their
hopes and expectations for the company in which they buy stock and the stock
price, it just seems to me a slightly strange view given that we let shareholders
buy stock and sell it in the ordinary course.

BUFFETT: Let me postulate this. Company A, a very large company, is
selling at $100 a share. Company B is some rather smaller company selling at
$80 a share. Company A decides that there are benefits of joining up with
Company B so they offer a share-for-share exchange. Company B shareholders
are happy they’re going to get $100 a share for this deal and they vote it and the
investment bankers bless it, et cetera.

And say that extra value presumably comes from the synergy that would be
achieved from putting these two entities together. The market is efficient, we’ll
say, about evaluating each one on their own, but putting them together creates

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