Berkshire Hathaway Inc. chairman Warren Buffett believes in scale, whether in making money or giving it away.
But while he wants his investing to be a successful activity, he wants his philanthropic activity to focus on “the tough problems of society that defy both money and intellect”.
“Big-time charity should tackle things that may fail. If you are succeeding with everything you have taken on, you may have chosen what is too easy,” he told reporters in Bangalore on Tuesday, a few hours into his first visit to India.
Investment plans: Warren Buffett at a press conference in Bangalore. Aniruddha Chowdhury/Mint
Philanthropy was more difficult than investing, he said, as there was no feedback from the “market system” to tell you how you are doing. But if it can be done with “scale and intelligence,” it will be worth it.
Should he have started giving money away earlier? “My wife would agree. But I can compound money at a good rate, and I thought it is better to give away billions later on than just millions earlier,” he said.
The idea of his visit to India, along with Bill Gates, was to just talk about what they had done in the US in terms of pledging to give away wealth, rather than make any prescriptions. “If something like that, or a variant of it, can work here, great,” he said.
Emphasizing his well-known investment philosophy in the Indian context, he said he liked industries where the rate of change is slow.
While Indian information technology (IT) companies are good prospects for investment, he said that he had no idea which companies are going to do well in the future. “I bought 100 shares of Microsoft (Corp).”
Sectors can be identified, but the key was to identify the right companies, which is why it is important to stay within “your circle of competence.”
“I understand chewing gum and cola better,” he quipped, holding up a soft drink can. Buffett has a large stake in Coca-Cola.
Berkshire Hathaway would have to make large investments for it to be meaningful, and he was therefore looking for one good idea. “Opportunities are hard enough to find,” he said.
Besides the US, where he has nearly 80% to 90% of his investments, Buffett is looking at India and China. “I need to make large investments. I hope to spend some money here. I don’t consider India an emerging market, it’s a large market. We invest billions of dollars and it’s tough to do that in emerging markets.”
He, however, refused to say how much capital could come India’s way. “If I get one good idea here, I will invest in it.”
His advice for investors in India? “It is the same as anywhere. Invest in what you understand, go for companies with good management and a sustainable economic advantage over time, and don’t buy and sell actively.”
On his insurance business in India, an agency for Bajaj Allianz General Insurance Co. Ltd, he said that a cap higher than 26% would make things more attractive. “The effort is the same, whether we have a 26% stake, or 50 or 75. So for some time, we’ll be at the agency level rather than the underwriting level,” he said.
He was non-committal on reports of India-born Berkshire insurance chief Ajit Jain being seen as a candidate to succeed him as chairman of Berkshire Hathaway. Buffett said Jain is like a brother or a son. “He is better than me,” he said. “He has made more money for Berkshire than I have.”