Warren Buffett charity lunch fetches record $4.57 million winning bid

An anonymous bidder has agreed to pay a record $4,567,888 at an annual charity auction to have a private lunch with Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc.
The winning bid, which was submitted during a five-day online auction on eBay that ended Friday night, was nearly one-third higher than the previous record $3,456,789 bids in both the 2012 and 2016 auctions.

Proceeds benefit the Glide Foundation, a charity in San Francisco's Tenderloin district that serves the poor, homeless or those battling substance abuse.
Buffett, 88, has raised about $34.2 million for Glide in 20 annual auctions, which began in 2000 and moved to eBay in 2003.
His first wife Susan, who died in 2004, introduced him to Glide after volunteering for the charity.
"Mr. Buffett is thrilled. We just spoke with him," Glide President Karen Hanrahan told Reuters after the auction ended. "Mr. Buffett is committed to continuing the auction as long as he's able. He has been a thought partner in thinking through Glide's future, and how to set it up for the next 50 years."
The winning bidder and up to seven friends can dine at the Smith & Wollensky steakhouse in Manhattan with Buffett, who says he will discuss anything apart from his next investments.
This year's auction drew 18 bids from five bidders.
The top bid would also be enough to buy 15 Class A or 23,137 Class B shares of Omaha, Nebraska-based Berkshire, whose more than 90 businesses include auto insurer Geico and BNSF railroad.
Past auction winners have included hedge fund manager David Einhorn of Greenlight Capital in 2003, and Ted Weschler, now one of Buffett's portfolio managers at Berkshire, in 2010 and 2011.
Glide's budget goes toward providing roughly 2,000 free meals a day, shelter, HIV and Hepatitis C tests, job training, and children's daycare and after-school programs.
"What it means to us as an organization: It's huge," Hanrahan said, referring to the auction. "It's going to help many many thousands of people in this city."
According to Glide, these bidders have won its auctions:
2000: Pete Budlong, $25,000
2001: Jim Halperin and Scott Tilson, $20,000
2002: Jim Halperin and Scott Tilson, $25,000
2003: David Einhorn, Greenlight Capital, $250,100
2004: Jason Choo, Singapore, $202,100
2005: Anonymous, $351,100
2006: Yongping Duan, California, $620,100
2007: Mohnish Pabrai, Guy Spier, Harina Kapoor, $650,100
2008: Zhao Danyang, Pure Heart Asset Management, China, $2,110,100
2009: Courtenay Wolfe, Salida Capital, Canada, $1,680,300
2010: Ted Weschler, $2,626,311
2011: Ted Weschler, $2,626,411
2012: Anonymous, $3,456,789
2013: Anonymous, $1,000,100
2014: Andy Chua, Singapore, $2,166,766
2015: Zhu Ye, Dalian Zeus Entertainment Co, China, $2,345,678
2016: Anonymous, $3,456,789
2017: Anonymous, $2,679,001
2018: Anonymous, $3,300,100
2019: Anonymous, $4,567,888
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Trade war between US and China 'bad for the whole world', says Buffett

Warren Buffett said on Monday that a trade war between the United States and China would be "bad for the whole world."
Buffett spoke after US President Donald Trump tweeted on Sunday that he will raise tariffs on $200 billion of Chinese imports to 25 per cent from 10 per cent beginning on Friday, and "shortly" slap a 25-per cent tariff on $325 billion of Chinese goods that have not been taxed.

Major stock markets fell worldwide on Monday in response to the president's tweet, which came ahead of scheduled trade talks this week, and was a "rational" response, Buffett said on CNBC television.

Buffett's conglomerate Berkshire Hathaway Inc owns or invests in many companies that do business in China, including Apple Inc, in which it has a more than $50-billion stake.
"If we actually have a trade war it will be bad for the whole world," Buffett said.
A full-scale trade war is unlikely but "would be bad for everything Berkshire owns," Buffett added.
He nonetheless said it would be "nonsense" for investors to sell stocks based on headlines, and that the U.S.-China would not affect how Omaha, Nebraska-based Berkshire operates.
"We will buy the same stocks today that we were buying last week," he said.
Trump on Monday tweeted that the United States has for many years lost $600 billion to $800 billion annually on trade, and "with China we lose 500 Billion Dollars. Sorry, we're not going to be doing that anymore!"
Buffett said tough talk ahead of trade negotiations was understandable, saying that for some people "the best technique is to act half-crazy," but it would be ineffective to "shake your fist first and then shake your finger later on." He added that Trump's threat raises the stakes for Chinese leader Xi Jinping.
"You're talking about two personalities who are very much used to getting their way in politics, and talking about how they will be perceived in their own country in terms of their behavior," Buffett said. "It gets very complicated." Buffett said the trade dispute has already had an effect on Berkshire's BNSF railroad.
Last week, Jim Weber, the chief executive officer of Berkshire's Brooks Running unit, said in an interview that his company was ending most shoe production in China and moving it to Vietnam because of tariff concerns.
Buffett also said the United States should bolster its trade relations with Canada and Mexico.
"We've got lots and lots and lots of common interests," he said. "Trade with Mexico and Canada is enormously important. We should treat them as neighbors, and not adversaries." Berkshire ended March with $191.8 billion of equity investments. It also owns more than 90 companies including energy and utility companies, Geico auto insurance and Dairy Queen ice cream.

Berkshire stock price to 'provide best measure of biz performance': Buffett

Warren Buffett has long told investors in his Berkshire Hathaway Inc they should not pay so much attention to what its stock price is doing.
No longer.

Buffett said in his annual letter to Berkshire shareholders on Saturday that the conglomerate's stock price will over time "provide the best measure of business performance."
In conjunction with that, he plans to deemphasize book value, measuring assets minus liabilities, saying changes at Berkshire and the vagaries of accounting rules mean that gauge has "lost the relevance it once had."
The shift is something of a retreat from the 88-year-old Buffett's decades of preaching patience and long-term thinking for investors and Berkshire shareholders, the antithesis of what stock prices often represent.
Buffett's business acumen has helped make him the world's third-richest person, worth $82.9 billion according to Forbes magazine, and transformed Berkshire from a failing textile company into a $496 billion behemoth.
For nearly three decades, Buffett has led his shareholder letters with a discussion of book value.
He has also long included tables comparing annual changes in Berkshire's book value and in the Standard & Poor's 500 index, including dividends.
Berkshire's long-term performance has been excellent.
Through Dec. 31, book value per share has gained an overall 1,091,899 per cent, or 18.7 per cent per year, since Buffett took over the Omaha, Nebraska-based company in 1965.
In comparison, the S&P 500 gained 15,019 per cent, or 9.7 per cent annually. Berkshire outperformed last year too, up 0.4 per cent compared with a 4.4 per cent drop for the index.
An evolution in Buffett's thinking surfaced in 2015 when he added changes in Berkhire's stock price to the table, after Berkshire's book value had lagged the S&P 500 in five of six years.
Buffett said he did this because Berkshire's shift toward operating large businesses such as Berkshire Hathaway Energy, the BNSF railroad and the Geico auto insurer was widening the gap between its intrinsic value and book value.
While stock prices can be volatile, he said they and intrinsic value almost invariably converge over time.
Berkshire's stock has also done well under Buffett, with an overall 2,472,627 per cent gain, or 20.5 per cent annualized.
Buffett cited three reasons for deemphasizing book value.
First, he said Berkshire's "major value" is now in its operating units, and he and Vice Chairman Charlie Munger expect a "reshaping" of its asset mix to continue.
Buffett also said accounting rules require Berkshire to value its businesses at "far below" current value.
Finally, he said Berkshire will likely buy back "significant" amounts of stock in future years, causing book value to fall.
"That combination causes the book-value scorecard to become increasingly out of touch with economic reality," Buffett wrote.
A possible fourth reason is that changes in the prices of Apple Inc and other stocks in Berkshire's $172.8 billion equity portfolio also affect book value.
Buffett said these holdings will likely grow in 2019 because near-term prospects for acquisitions are "not good."
Book value per share fell 7.1 per cent in the fourth quarter as stock prices tumbled.

Why Indian internet market trumps China's for Jeff Bezos, Warren Buffett

India's long-neglected retail market is turning into one of the world's hottest thanks to Warren Buffett, Jeff Bezos and a frenzy of billion-dollar dealmaking.
Walmart Inc just wrapped up a $16 billion agreement for control of the country's leading e-commerce player, Flipkart Online Services Pvt, while Bezos' Amazon.com Inc negotiates deals with a large supermarket chain and an investment in a prominent retail conglomerate, according to local media. This week, Buffett's Berkshire Hathaway Inc agreed to acquire a stake in the company behind digital payments leader Paytm.
ALSO READ: Warren Buffet's Berkshire Hathaway takes Rs 25-billion stake in Paytm
Why the sudden interest in India? The new optimism is fueled by rising standards of living, increases in smartphone usage and cheap data plans that are boosting internet penetration across the nation. Perhaps most important, India is the last big retail market still up for grabs, with an internet economy projected to double to $250 billion by 2020.
"It's a race for leadership," said Anil Kumar, the Bengaluru-based chief executive officer at researcher RedSeer Consulting. "There's far more action in India compared with stable markets like China and the US."
Online sales grew 23 per cent last year and are up 40 per cent so far in 2018, according to RedSeer. The organised retail market is under-penetrated, leading to tie-ups between online and offline players, and driving unprecedented levels of investments, Kumar said.
India's vast retail industry has no parallel other than, perhaps, China. But unlike the Chinese market, dominated by Alibaba Group Holding Ltd, India is relatively open and largely unconquered, offering global players vast opportunity to grow.

ALSO READ: Walmart completes acquisition of majority stake in Flipkart for $16 bn
India is now the world's fastest-growing major economy, and per capita incomes have been climbing steadily. According to a Forrester Research Inc report earlier this month, the South Asian country is the world's fastest growing e-commerce market.
Amazon and Flipkart have cornered about three-quarters of the online Indian retail market, but other big players are getting aggressive. That's meant heavily discounted offerings for consumers, although the substantial investments have crimped profitability.
When Walmart announced the Flipkart deal earlier this year, S&P Global Ratings changed its outlook on the US retailer to negative, saying that Flipkart was poised to generate losses in the next few years.
"The appeal of retail lies in the population of India, the aspirations of India, the consumption power of India," said Kishore Biyani, the billionaire chief executive of Mumbai-based retail conglomerate Future Group, which runs the 2,000-plus store Future Retail Ltd, including the country's largest departmental chain.
Biyani said his group's online revenues are nearing $150 million. He and others predict that India's retail industry will have a unique combination of online and offline tie-ups.
ALSO READ: Amazon plans to invest $700 million in Kishore Biyani's Future Group
Future Group is reported to have had negotiations about a stake sale with Amazon as well as Alibaba executives. Biyani refused to directly comment, simply saying he too is looking to "crack a deal like everybody else". Amazon declined to comment and Alibaba didn't respond to a request for comment.
India's Reliance Industries Ltd is also fine-tuning its own e-commerce thrust by creating a hybrid online-offline retail platform.
ALSO READ: Why Mukesh Ambani's Reliance, not Walmart, is Amazon's real rival in India
So far, retailers have only scratched the surface by roping in high-income customers in India's large metropolitan cities. Rural areas and small cities offer fresh opportunity. The retail battle for Indian consumers will be on display again in early November during the festival of Diwali, India's version of Christmas and Thanksgiving combined.
Vijay Shekhar Sharma, founder and chief executive officer of the Alibaba-backed e-commerce company Paytm Mall, says he ultimately sees wide-ranging impact from the billions pouring into the industry. He predicts that small mom-and-pop shops will soon be armed with retail technology as well as cloud and payments products.
Sharma is also the founder of One97 which runs the Paytm digital payments app. Berkshire Hathaway this week invested in One97, becoming the latest global player to bet that digital payments will surge as India's increasingly affluent consumers shop online.
"Indian retail will get digitised at an unprecedented scale," Sharma said. "Its every nook and cranny will get altered."

Warren Buffett starts to say goodbye to a pile of equity-index options

Warren Buffett is beginning to say farewell to his equity derivatives.
Equity-index put options written by Berkshire Hathaway Inc. started expiring in June, and the last of them will be gone by January 2026. Buffett, Berkshire’s chairman and chief executive officer, initiated the deals between 2004 and 2008 to bet that stock prices would rise in the long run. The options, tied to four major equity indexes, added a total of $2.4 billion to earnings from 2008 to 2017.

“This is a really unique piece of business,” Jim Shanahan, an analyst at Edward Jones, said in a phone interview. “Not a lot of companies besides Berkshire could have written this business. It demonstrates the unique power of this franchise and their size.”
Buffett, 87, already ended some other derivative bets, exiting his last credit-default agreement in 2016. His use of derivatives was sometimes controversial because he’d once lambasted them as “financial weapons of mass destruction,” later arguing that his bets were different and had no counterparty risk.
Berkshire’s contracts are European style, meaning that they can be exercised only at the expiration date. Since year-end 2008, the S&P 500 has nearly tripled and the FTSE 100 has surged more than 70 per cent.
“Things were a little haywire where banks were going belly-up and there was a lack of confidence in the financial markets and Buffett was betting on some degree of rationality coming into things,” said David Sims, president of Sims Capital Management, which oversees $50 million including Berkshire Class B shares.
Buffett has likened the benefits of derivative wagers to the perks of his insurance operations. Berkshire received a total of $4.2 billion in premiums upfront on the options that it has put to work for more than 10 years, just as the “float” generated by insurance premiums can be invested before any claims must be paid.
The derivative bets have created volatility in quarterly earnings, swings that Buffett said “neither cheer nor bother” him and his business partner, Charles Munger. Berkshire’s vice chairman, Munger defended the derivatives after a shareholder at the 2009 annual meeting questioned the deals.
“There’s some limit to the amount of those things we should do, but I think we stayed well short of the limit,” Munger said.
Terms on the equity options have shifted over the years. In a 2010 filing, Berkshire said it received $4.8 billion in premiums for 47 contracts. In late 2010, the company unwound eight of those options at the urging of a counterparty, according to Buffett’s annual letter to shareholders. That left Buffett’s company with 39 contracts and $4.2 billion in premiums. On some of the deals, the parties also have shortened maturities and reduced strike prices, according to Berkshire’s 2009 letter.
The parties on the other end of the deal have remained a bit of a mystery. Buffett said in 2010 that Goldman Sachs Group Inc. was among the counterparties, without naming others. It’s unclear whether Goldman is part of the remaining group. A spokesman declined to comment.
Buffett’s Creativity
“These derivatives are an example of his creativity,” said James Armstrong, who manages about $700 million including Berkshire shares as president of Henry H. Armstrong Associates. “He saw a mispriced opportunity where Berkshire could make money because people were going to pay more for this insurance than it was going to cost Berkshire.”
Buffett’s equity put options were just a slice of his derivative exposure that’s been winding down. He struck a deal to terminate some contracts tied to municipal bonds in 2012 and paid $195 million in July 2016 to exit the last credit-default agreement.
Berkshire’s energy businesses still use derivatives to manage swings in the price of fuel. Buffett didn’t reply to a request for comment.
Buffett is known for his ability to strike attractive deals with companies seeking safe haven, including taking preferred stakes in Goldman Sachs and General Electric Co. In recent years as preferred holdings were converted and derivative bets wound down, Berkshire has been seeking ways to invest a pile of more than $100 billion in cash and U.S. Treasury bills.
“A lot of this really valuable business is running off now,” Edward Jones’s Shanahan said. “I wish there were more opportunities.”

Warren Buffett to retire from Kraft Heinz board in April

Kraft Heinz said billionaire investor Warren Buffett has decided to retire from the company’s board following the end of his term in April to reduce travel commitments.
HJ Heinz, backed by Buffett’s Berkshire Hathaway and Brazil’s private equity firm 3G Capital, acquired Kraft Foods Group in 2015 to create one of the biggest food and beverage companies in the world. Berkshire Hathaway is Kraft Heinz’s biggest shareholder with 26.7 per cent stake as of December 31, according to Thomson Reuters data.
Last week, the maker of Velveeta cheese and Heinz ketchup reported disappointing fourth-quarter results, a sign of continued pressure on processed food makers as more Americans opt for healthier meals.
In the last few years, Buffett, 87, has shed many of his non-Berkshire responsibilities.
Last month, he gave two top executives Ajit Jain and Gregory Abel greater oversight of Berkshire’s operating businesses, cementing their status as the front runners to succeed Buffett atop the conglomerate.
Kraft said it plans to nominate Alexandre Van Damme, a board member of Anheuser-Busch Inbev and Restaurant Brands International, to stand for election to Buffett’s place in its 2018 annual stockholder meeting. Abel and Tracy Cool, chief executive of Berkshire’s unit, Pampered Chef, are the other Berkshire representatives on Kraft’s board.
Kraft's shares were down 1.4 per cent in extended trading on Friday.