Following Massive Philanthropic Allotment, Buffett Has More Money to Give
OMAHA, Neb. – Investor Warren Buffett wowed the world last week with his plan to give away stock in his company worth nearly $37 billion.
Bill and Melinda Gates are already contemplating the diseases their foundation might cure with the more than $30 billion Buffett promised them. The other roughly $6 billion of stock in Berkshire Hathaway Inc. (BRK-A) will be split between Buffett's own foundation and the three foundations his children run.
But little has been said about the other 73,332 Class A shares of Berkshire stock Buffett will hold after he completes his gifts.
The Oracle of Omaha hasn't said publicly where that stock, worth nearly $7 billion at current prices, will go.
Those Berkshire shares could certainly enrich Buffett's three children, Susie, Howard and Peter. But Buffett has long said that he doesn't want to use his nearly $44 billion fortune to create a family dynasty.
"What I've always said is that my family won't receive huge amounts of my net worth," Buffett told Fortune magazine. "That doesn't mean they'll get nothing. My children have already received some money from me and (late wife) Susie, and will receive more."
Buffett's standard, he says, is that he doesn't want to give his kids so much money that they can do nothing.
Buffett declined a request by The Associated Press for an interview, but when he explained his major gift last week, Buffett said his remaining Berkshire stock will also go to philanthropy. It might happen during Buffett's lifetime, he said, but if not, it will be donated at his death.
Andy Kilpatrick, the stockbroker who wrote "Of Permanent Value: The Story of Warren Buffett," says he hasn't heard anything about where that stock will go. In the past, Buffett has said his fortune would go to the Susan T. Buffett Foundation, which he and his late wife started.
That foundation is receiving 1 million Class B shares of Berkshire Hathaway as part of the gift Buffett announced last week. George Morgan, who is vice president of Smith Hayes Financial Services in Omaha and a longtime Berkshire shareholder, says he thinks Buffett's foundation is likely to receive more.
So all of Buffett's 474,998 Class A shares of Berkshire stock will one day be gone.
But don't worry about Buffett or his kids, because Berkshire isn't Buffett's only asset.
Buffett told Fortune that when he gained control of Berkshire Hathaway in the early 1970s, he had considerably less than $1 million, and he made a $50,000 annual salary.
"Well, I've made a few decent investments with that money in the years since," he said to Fortune. And since 1980, Buffett's salary has been $100,000 a year, and he's earned money by serving as a director for other companies.
"So I'm glad to say I've got quite a bit of cash now," Buffett said to Fortune. "Overall I can — and will — use all my Berkshire shares for philanthropic purposes and will have plenty left over to provide well for all those close to me."
Mostly, Buffett has said he invests his own money in things that are too small for Berkshire, which owns more than 60 companies and has more than 192,000 employees.
Berkshire owns furniture, carpet, jewelry and candy companies, restaurants, natural gas and corporate jet firms and has major investments in such companies as Coca-Cola (KO), Anheuser-Busch (BUD) and Wells Fargo & Co.
Kilpatrick estimates that Buffett's personal portfolio is worth several hundred million dollars based on the few hints the investment wizard has dropped about his holdings over the years. Kilpatrick said he thinks Buffett's children will likely receive millions, but nothing close to the roughly $1 billion gift of stock Buffett is making to each of his kids' foundations.
"The children are going to be financially all right, for sure," Kilpatrick said.