Buffett’s “Circle Of Competence” Is A Lot Smaller Than He Thought
Inside today’s Daily Journal…
Essay: What Bill Gates Tells Us About Buffett And Berkshire
30 Russell 1000 stocks have doubled
Getting clarity in trade policy
Renting Nvidia chips
Chart Of The Day… Deere & Co. (DE)
Today’s Mailbag
Editor’s note: Porter’s new book, 2029: The End of America, is quickly moving up the best-seller list on Amazon. To get your own copy now, just click here to order it.
It’s finally dawning on Warren Buffett that Bill Gates isn’t a good man.
Buffett has delayed this year’s multibillion-dollar gift to the Gates Foundation pending the foundation’s own internal review of the fact that Bill Gates was mentioned thousands of times in the Jeffrey Epstein files. The review, which is being conducted by an outside law firm, WilmerHale, follows Gates being called to testify in front of the House Oversight Committee.
Both Gates and Buffett say the last time they spoke was in January, before the release of the Epstein files. And sources told The Wall Street Journal that Gates was not invited to sit among the other CEOs at Berkshire Hathaway’s annual meeting in May. Gates – a Berkshire Hathaway board member until 2020 – did not attend for the first time in many years.
Seems like Buffett is having serious “giver’s remorse.”
On June 26, 2006, Buffett pledged 10 million shares:
I am irrevocably committing to make annual gifts of Berkshire Hathaway B shares throughout my lifetime for the benefit of the Bill and Melinda Gates Foundation… In July of every year, 5% of the balance of the earmarked shares will be contributed.
There were only three conditions:
Either Bill or Melinda had to be personally involved in running the foundation
The foundation had to remain a charitable foundation, such that Buffett’s donations could be given tax-free
The foundation had to spend the money on its charitable activities within a set time period, which Buffett described in detail
Buffett has now given the foundation almost $50 billion. And while Melinda Gates left the foundation in 2024, Bill Gates remains chairman… for now. Gates’ association with Epstein is deeply troubling. First, he established the relations five years after Epstein was sentenced to jail for soliciting minors. Among the disclosures in the Epstein files were emails disclosing that Gates had numerous affairs, including with Russian prostitutes who gave him a venereal disease. Emails from Epstein include allegations that Gates was secretly giving his wife antibiotics to treat the infection he passed to her.
It’s hard to believe Buffett needs a WilmerHale investigation to determine that Gates’ behavior in these matters was so egregious that he should step down from the Gates Foundation, which in turn would trigger a condition allowing Buffett to cease his charitable gifts.
Buffett’s friendship with Gates calls into question his own judgment. And while his bad judgment about Gates has only harmed his reputation (and cost him $50 billion), his bad judgment about other business leaders has cost Berkshire shareholders hundreds of billions.
And this is the part of the story that the mainstream media will not tell you.
Buffett has long been celebrated for his ability to close huge transactions in a matter of hours – without requiring any formal due diligence. How? His own genius.
In October 2015, six weeks before the $37 billion deal to acquire Precision Castparts (“PCC”) closed, Buffett described his process for vetting the deal, Berkshire’s largest ever, in a Fortune magazine interview:
I probably met [PCC CEO Mark Donegan] maybe a total of 80 minutes now or so… we didn’t do one piece of information… we do not do formal due diligence. My due diligence is to look into their eyes basically.
So an 85-year-old man spent 80 minutes talking to the CEO of a major U.S. corporation and decided to write the largest check of his life, using the funds of a public company – because he looked into his eyes. Does this seem like a good idea to you…?
What does the late Charlie Munger say about incentives?
