- "I make no apologies whatsoever for Clayton's lending practices," says Warren Buffett, responding to a Berkshire Hathaway (BRK.A, BRK.B) shareholder who says he's disgusted Berkshire would support Clayton Homes' allegedly predatory lending practices. "Clayton," says Buffett, "has behaved very well."
- Previously: Berkshire mobile homes unit accused of predatory tactics (April 6)
- Only about 3% of Clayton's $12B in mortgages on 300K homes fail, says Buffett, noting Clayton does not securitize the paper, but instead holds the notes on its books.
- The Oracle also defended his partnership with 3G - an outfit which has won a well-deserved reputation for ruthless cost-cutting, seemingly at odds with Buffett's distaste for layoffs and other expense reductions.
- See: Zero-Based Budgeting, 3G's secret sauce
- Buffett: “I don’t know of any company that says, as a policy, ‘we will have more people than we need,’ but a lot of companies ended up that way." Layoffs at 3G-run companies have spurred those companies to perform "exceedingly well."
- On American Express (NYSE:AXP): While the payments industry is subject to innovation, AmEx has an incredible history of adapting.
- On IBM: Asked if this is a "cigar butt" company - a great old company on the slide, but still a couple of puffs left (like Berkshire Hathaway when Buffett bought) - Charlie Munger says it isn't. He reminds that IBM was the dominant player in punch cards and has adapted over the years. It helps, says Munger, that Berkshire bought its stake at a reasonable price. "If people weren't often so wrong, we wouldn't be so rich."
- Live blog of the meeting at the WSJ