1. Kurt Eichenwald, The Informant. New York: Broadway, 2000. Unbeknownst to Howie, Andreas reportedly made an illegal donation in response to at least one request for a political contribution that Howie had passed along as part of his job, shrugging off the fine as the cost of doing business.
2. Interview with Howie Buffett.
3. Ibid.; Scott Kilman, Thomas M. Burton, and Richard Gibson, “Seeds of Doubt: An Executive Becomes Informant for the FBI, Stunning Giant ADM—Price Fixing in Agribusiness Is Focus of Major Probe; Other Firms Subpoenaed—A Microphone in the Briefcase,” Wall Street Journal, July 11, 1995; Sharon Walsh, “Tapes Aid U.S. in Archer Daniels Midland Probe; Recordings Made by Executive Acting as FBI Informant Lead to Seizure of Company Files,” Washington Post, July 11, 1995; Ronald Henkoff and Richard Behar, “Andreas’s Mole Problem Is Becoming a Mountain,” Fortune, August 21, 1995; Mark Whitacre, “My Life as a Corporate Mole for the FBI,” Fortune, September 4, 1995.
4. Interview with Kathleen Cole.
5. Astrid was going to be well taken care of by Warren, too, although, as he says about the apparent willingness of his fans to buy any article belonging to him—his wallet, his car; “She’s got one of my wisdom teeth. It’s the ugliest thing you’ve ever seen. That’s her ace in the hole.”
7. Every board member interviewed reached some variation of this conclusion, no matter where they stood on later events.
8. Speaking at the 1998 Berkshire Hathaway shareholder meeting.
9. At the time, NetJets marketed itself both as NetJets and by its legal name, Executive Jet, Inc. It was renamed NetJets in 2002.
10. Interviews with sources; Anthony Bianco, “The Warren Buffett You Don’t Know,” BusinessWeek, July 5, 1999.
11. The business requires a “core fleet” of redundant aircraft, so expensive that running a fractional jet company is by definition unprofitable unless done on a huge scale (or used as a loss-leader by an aircraft manufacturer or other company with a tie-in product).
12. It cost Berkshire over nine times what it paid for the remaining half of GEICO almost three years earlier. The GEICO purchase doubled Berkshire’s existing float (to $7.6 billion), while Gen Re tripled that (to $22.7 billion).
13. Interview with Tad Montross.
14. BRK paid approximately three times book value, a premium to prevailing prices at the time. The reinsurance business became more competitive after this acquisition, and multiples have since declined.
15. Berkshire Hathaway 1997 annual shareholders’ meeting, May 5, 1997.
16. Shawn Tully, “Stock May Be Surging Toward an Earnings Chasm,” Fortune, February 1, 1999.
17. At the companies’ June 19, 1998, press conference, as quoted in “Is There a Bear on Mr. Buffett’s Farm?” New York Times, August 9, 1998.
18. Buffett’s comments in Anthony Bianco’s July 5, 1999, BusinessWeek cover story, “The Warren Buffett You Don’t Know”: “ ‘Charlie and I don’t talk a lot anymore,’ acknowledges Buffett, who says he did not even bother to consult his vice-chairman before making the epochal Gen Re acquisition.”
19. BRK dropped 4.2% on news of the deal. Over a month later, it was down 15% versus a flat market. Setting an exchange ratio implicitly required a view on equities and interest rates, as well as the underlying businesses’ prospects. What investors could not know was the relative weighting of these factors.
20. On August 22, 1997, Wells Fargo stock nosedived after Berkshire Hathaway reclassified it from the publicly filed form 13-F to the confidential disclosure to the SEC, creating the appearance that Buffett had sold his position in Wells Fargo. The SEC announced that it would consider tightening the confidentiality rules. In June 1998, the SEC announced it was tightening its “13F” rule that had allowed Buffett to file confidentially for a year while building large stock positions. Although the SEC did not absolutely rule out confidential filings, Buffett heard the footsteps. Berkshire Hathaway fought an aggressive battle with the SEC over this issue as its confidential filings were denied, and lost. In 1999, Berkshire filed confidentiality requests each quarter along with its regular 13-F forms containing positions that were not confidential. The SEC made a single announcement relating to these three filings that certain of the positions they contained must be publicly disclosed. Buffett’s right to make a profit presumably was not part of the SEC’s deliberations. The SEC’s interest is to protect investors. While the SEC staff had long held that it is desirable to prevent extraordinary fluctuations in stock prices unrelated to fundamental factors so that investors do not profit or suffer as a result, investors’ right to know the identity of a company’s largest shareholders outweighed that.
21. Interview with Herbert Allen.
22. Ibid.
23. Ivester did not respond to repeated requests for interviews.
24. Betsy Morris and Patricia Sellers, “What Really Happened at Coke,” Fortune, January 10, 2000.
25. Interview with Sharon Osberg.
26. Betsy Morris, “Doug Is It,” Fortune, May 25, 1998, and Patricia Sellers, “Crunch Time for Coke,” Fortune, July 19, 1999.
27. This is Herbert Allen’s version of the conversation. Buffett doesn’t recall the exact details.
28. “They never sat down, never even removed their overcoats. In tones frostier than the air outside, they told him they had lost confidence in him.” Constance L. Hays, The Real Thing: Truth and Power at the Coca-Cola Company. New York: Random House, 2004. Buffett and Allen dispute this version and say they sat down and removed their coats. But, they say, it was indeed a very short meeting, with no chitchat.
29. Had the board supported him, it would have left Ivester a weakened CEO. He would also have been gambling that Allen and Buffett would not resign from the board, an instantly fatal blow. Allen and Buffett were also gambling that if Ivester threw himself on the board’s mercy and survived, it would not be for long.
30. Interview with James Robinson, former CEO of American Express and Coca-Cola board member.
31. KO stock dropped 14% in two days.
32. Betsy Morris and Patricia Sellers, “What Really Happened at Coke.”
33. Martin Sosnoff, “Buffett: What Went Wrong?” Forbes, December 31, 1999.
34. Andrew Barry, “What’s Wrong, Warren?” Barron’s, December 27, 1999.
35. Andy Serwer, “The Oracle of Everything,” Fortune, November 11, 2002.
36. Interview with Kathleen Cole.
37. Interview with Susie Buffett Jr.
38. Interview with Peter Buffett.
39. Interview with Howie Buffett.
40. Interviews with Howie Buffett, Peter Buffett, Susie Buffett Jr.