2019 Berkshire Hathaway Annual Meeting - CNBC Coverage with Buffett, Munger, Gates

Buffett addresses breaking trade war escalation as markets fall 500 points. Compares tough negotiation tactics to 'can't shake your fist first and shake your finger later' - you have to mean it but it's dangerous with uncertain outcomes. Trade wars 'easier to start than stop' with huge global effects. Uses analogy of states with tariff barriers showing absurdity. This is like 'nuclear threat' that brings people to table but 'you don't want too many nuclear threats because somebody may have to fulfill one.' Notes US-China tensions inevitable for 100 years as two superpowers but escalation extremely risky. Won't change Berkshire's stock purchases but rail intermodal already distorted by stockpiling ahead of tariffs.

Breaking SEC filing during interview: Kraft Heinz restating 2016-2017 earnings due to procurement misconduct (not senior management involved). Impact <2% adjusted earnings. PWC hadn't signed off, delaying 10-K and forcing Berkshire to report zero Kraft earnings in Q1 (normally reports equity method earnings, not dividends). Buffett heard from Greg Abel/Tracy Britt Cool night before. Admits overpaying for Kraft portion of merger: 'If we just bought Heinz we'd it'd be a better investment.' Company has his confidence despite restatement. Jack Pope heading audit committee doing 'terrific' job.

Buffett explains $10B Occidental financing for Anadarko bid. Brian Moynihan called Friday, Buffett met with Occidental Sunday 10am, agreed by 11am - 100% certainty, no conditions. 'Lawyers don't write deals like this' - no material adverse change clause, no outs if stock market closes. Deal closes, Berkshire is there under all circumstances. Would have done $20B if needed. This is bet on oil prices long-term and Permian Basin. Occidental revised to 78% cash/22% stock (vs original split) to avoid shareholder vote, increasing deal certainty. Buffett had no control over bid terms, just committed capital.

Buffett 'wildly in favor' of Apple's $75B buyback authorization. When Apple shares down 3%: 'That's good...when they repurchase shares our interest goes up and we don't lay out a dime.' On China risk: 'What's important is the relationship 3, 5, 10, 20 years from now' - miscalculations possible but shouldn't happen. Praises Tim Cook as having both 'operational mind and money mind.' Cook cold-called Buffett in 2012 about buybacks when Apple crossed $100B cash. Buffett's advice: 'If you believe your stock is undervalued you should buy your stock.' Cook found out about Berkshire buying Apple via 13-F filing like everyone else - thought it was 'incredible' and felt like 'recognition' since Buffett avoided tech companies he didn't understand.

Buffett's core philosophy: own businesses, not ticker symbols. 'If you own a farm are you worried about selling your farm because you read the newspaper? If you own a perfectly decent business in your town, why should you worry about selling stocks?' Buy for 10 years, not next day/week/month. Cheaper prices are better for buyers: 'If you could buy the farm right next to you cheaper you'd love that.' Bought first business 1942 when 'we were losing the war...the Philippines were falling' but America moves forward. 'Your kids are going to live better than you did and your grandchildren better than they do.' Perfectly happy with $100B+ equity portfolio despite all-time highs. 'You won't be wrong on America.'

Buffett shares Steve Jobs call years ago about buybacks. Asked two questions: (1) Have all the money you need to develop your business? Jobs: plenty. (2) Is stock selling for less than it's worth? Jobs: lot less. Buffett: 'You've answered your own question.' Jobs hoping for different answer. Repurchases 'can be the dumbest thing in the world or the smartest thing in the world' depending on price. Berkshire only buys back when shareholders will be wealthier next day - shade below intrinsic value. Admits Coca-Cola mistake when he was director: company bought back aggressively at too high prices after earlier smart buybacks below $10B market cap. 'If you belch too often at the dinner table you don't get invited to parties anymore.' Notes irony of CEOs saying they can't evaluate stocks for their own portfolio but making $5B acquisitions.