Bill Ackman & Updates from Omaha 5/5/25
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Bring in show music, please. This is SquawkPod, and I'm CNBC producer Cameron Costa. On today's episode... Greg should become the chief executive officer of the company at year end. Warren Buffett's big news at the Berkshire Hathaway annual meeting over the weekend. A surprise to all of the directors, save Buffett's two children. Billy Idol, I think, would defer to Warren Buffett as the...

ultimate rock star. - Becky Quick is still in Omaha after covering that big weekend for CNBC. - I've been going to this meeting for about 20, 21 years at this point. The crowd was bigger than I'd ever seen, and the applause that broke out, a standing ovation,

And on the West Coast, Pershing Square's Bill Ackman joins Andrew Ross Sorkin in L.A. I think it's more likely that we will build an insurance company. In fact, we have a person that is a phenomenal executive in the industry that we're just beginning a conversation with that's intrigued by what we're doing.

His $900 million deal for a bigger stake in Howard Hughes, plus what Fed Chair Jay Powell might say this week, and much more from the outspoken Harvard alumnus and investor. It's time for a change in leadership in the board at Harvard. It's Monday, May 5th, Cinco de Mayo. Squawk Pod begins right now. Stand back, you buy in three, two, one. Cue, please.

Good morning, everybody, and welcome to Squawk Box right here on CNBC. I'm Becky Quick, along with Joe Kernan. Andrew is going to be joining us just a little later in the show. Joe's at the Nasdaq market site in Times Square, and I'm here in Omaha, Nebraska, following the Berkshire Hathaway annual shareholder meeting this weekend. We've got plenty to talk about from this weekend. Joe, that big news here, Warren Buffett surprising everyone, just as that meeting was set to adjourn. Greg should become president.

the chief executive officer of the company at year end, and I want to spring that on the directors effectively and give that as my recommendation. Let them have the time to think about what questions or what structures or anything they want, and then there's a meeting following that, which will come in a few months. We'll take action on...

Whatever the view is of the 11 directors, I think they'll be unanimously in favor of it. And that would mean that at year end, Greg would be the chief executive officer of Berkshire.

And that was a surprise, really, not only to all of the shareholders that had gathered, 40,000 plus. There were more than 4,000 people that had gone into overflow rooms on top of the 40,000 capacity within the stadium itself, but a surprise to all

All of the directors save Buffett's two children, Susie Buffett and Howie Buffett, who he had spoken with before that. It was a surprise to Greg Abel, who afterwards, even as late as Saturday night and yesterday, was still, I think, in a little bit of shock at how this had all rolled out, to hear it live on the stage along with everyone else.

It was kind of a classic Warren Buffett move, Joe, the idea that he has always treated all of these shareholders as his partners, just as when it was a very small partnership more than 60 years ago. And this was all of them -- all of his partners finding out that news at the same time. I have been going to this meeting for about 20, 21 years at this point.

The crowd was bigger than I had ever seen. And the applause that broke out, a standing ovation through the entire stadium -- one person said to me later, you know, he had been to lots of rock concerts and had never seen -- had seen a lot of them that didn't get standing ovations like that, that didn't get applause like that even for their encores. There were some tears that were shed. This is 60 years now that he's been holding these annual meetings as the CEO of Berkshire Hathaway.

We can tell you a little bit of breaking news on this, too. We can report that the Berkshire Hathaway board did indeed meet yesterday, and they voted unanimously to name Greg Abel as president and CEO come January 1 of 2026.

And the board also voted that Warren Buffett will remain chairman as of January 1, too. So some of these rumors of his retirement have been greatly exaggerated. He said at the time when he was talking that he'd be sticking around. He didn't say in what capacity. And I asked him after the meeting, along with Greg, I ran backstage and asked them about that. They said they still had to talk about that. Greg was still kind of processing what had just happened. But at that board meeting yesterday, they did vote.

on that arrangement. And Warren Buffett will remain as chairman. He's 94 years old right now. He is by far the oldest CEO among the S&P 500. I don't think there's anybody else even in their 90s. And this is something that will happen gradually again, this transition to a

keep Warren Buffett around. He talked a lot this weekend, Joe, about how they have almost $350 billion in cash, and they would love to do some deals, particularly if things get interesting in the markets. So I think that's kind of what they're hoping to get out there at this point, this idea that this is the next step in the transition, but

Buffett's not exactly exiting the stage. He wants Greg to be making all those decisions. He'll have the final say on all these operating costs. I think the board is kind of hoping that he'll be there to help with capital allocation and any big potential deals that come through. But it does give Greg Abel some protection from anybody who looks and says he's not Warren Buffett. Yeah. You knew this day was coming, obviously. Yeah, everybody did. When you call it a surprise, it was a surprise the way he did it, but it wasn't a surprise to me that he decided to...

to do that. As far as, you know, rock star reception, they have that commercial. Maybe your average CEO is not shouldn't really be saying that to Billy Idol. But Billy Idol, I think, would defer to Warren Buffett as the ultimate rock star. I don't think they're trying to think maybe Jagger. I don't know. There's not Warren definitely could counter that. Those those crazy commercial. He is obviously certainly a rock star. And you think about

You know, these days, age of retirement and, you know, it used to be 65. And then people said, well, you know, 70 is a totally different age now. I don't know how it happened, but it did. I mean, we're talking someone that was it's going to be 25 years past the age of 70. And he's special and he's still totally with it and everything else. But, you know, when someone said that, you know,

He could live to 130. I'm not saying he's not going to, but even 130, what's that expression? None of us are leaving here alive. So we are getting out of here alive. So we know that it's just the way it is. It's the way life is. And I mean, he really has given Greg Abel a lot of...

Obviously, he's learned at the feet of the master for how long now? I mean, it's been a long grooming. There's a lot of people. It's been 26 years. I think they first met in 1999 when Buffett made that investment in MidAmerican Energy. So 26 years to be working with him. And look, this is something that...

We knew back in 2021 that Greg Abel was the chosen one, that he was going to be the next CEO because Charlie Munger slipped at the annual meeting that year. So what was that, four years ago? Slipped and said, you know, well, Greg will take care of the culture. And so then, you know, Buffett told us the next day, yeah, that is the plan. We talked to

Ron Olson over the weekend, a Berkshire board member until this most recent, he just stepped down from the board yesterday. But Ron Olson said that Greg had been the chosen one for years before that. So this has been a very long-term transition. Greg Abel has stepped up and taken more and more responsibility. He was vice chairman, or he is vice chairman right now, in charge of all the non-insurance transactions.

companies at Berkshire Hathaway but he's been playing a bigger and bigger role in terms of some of the capital allocation too. He went to Japan and was the one responsible for putting this big investment in those five Japanese trading houses. He's got big plans with the energy company after running that and knows about capital allocation and laying things out for big plans for big projects and one of the things Buffett talked about over the weekend was the idea that in this country we don't have enough

energy production for the needs that are required and that that could take some help from government, the federal government, to do things that we would normally only do in wartime where you have 50 different states and lots of local jurisdictions that all have their own rules and it's pretty tough to get any new electric grids kind of passed

through all of those various regulatory overhangs. I think he was calling for potential of the government to work with a private partnership with industry too, and they could put some of that cash to work doing that. They've got $350 billion, a lot they'd like to spend it on. But Greg Abel is 62 years old. Your point to 65 used to be the point of retirement. They're looking at Greg Abel as having decades still, hopefully, to run Berkshire. That's kind of the way they look at things around here. Yeah.

That's what I was, you know, yeah, you're going to be CEO. You just got 26 years to wait. You'll be 62 years old when you finally ascend to the position. It's all different. So that was my take when I heard it. I,

I don't know. I said, oh, he's passing the baton finally. And it wasn't as earth shattering. But the way he did it was, obviously, you were there and it must have been classic Warren Buffett, the way that it was done. He did it on his terms. Yeah, without his board even, you know, he did it on his terms. And I think it was.

The more I thought about it afterwards, the more brilliant I thought it was. He did it after just holding court in front of tens of thousands of shareholders. That was just live. Yeah.

Yeah, at the end of the whole thing, after doing question and answer for hours, for more than four hours, taking this Q&A totally unscripted and running with it and proving to the world that he's still got it, he's still all there mentally, and being able to answer all of those questions and talk kind of forever about all of these issues, I think he would have gone for longer. I do want to tell you about a couple of things.

that happened at the annual meeting before that. Buffett did go on to explain that he doesn't intend to leave the company entirely. I could be helpful, I believe, in that in certain respects if we ran into periods of great opportunity or anything. I think that Berkshire has a special reputation that when there's times of trouble for the government,

that we are an asset and not a liability, which is a position that's very hard to have because usually the public and government get very negative on business if there's a time like that. So I think I could, there might be a time when I'd be hopeful, but Greg would have the tickets and he would make, like I said, whether it's acquisitions

I think the board would be more welcome to giving him more authority on large acquisitions, probably if they knew I was around. But he would be the chief executive, period. Buffett also made sure to tell shareholders that he will not be selling his shares. I have no intention, zero, of selling one share of Berkshire Hathaway. It'll get given away.

I would add this. The decision to keep every share is an economic decision because I think the prospects of Berkshire will be better.

under a greater advantage than mine. And Joe, a lot of reaction to Warren Buffett's announcements coming in from all over the business world. I got something from Apple CEO Tim Cook last night. He was here for the meeting and Buffett heaped a lot of praise on Tim Cook, saying that Tim Cook had made more money for Berkshire shareholders than Warren himself ever did.

This is what Tim Cook had to say. He said, "Warren's a singular figure, and it has been one of the great honors of my life to know him and to learn from him. He has the rarest of combinations, towering leadership and genuine humility, and he does it all with great humor and even greater generosity. His commitment to others and to making the world a better place are an example for us all.

truly one of the wisest men to have ever walked the earth. And I always look forward to the next time I get to talk to him. You can roll over some of the other comments that came in from people like Jamie Dimon and Brian Moynihan, obviously all of them kind of reaching out. And there's been a lot of reflection in just how far they've come and what he's been able to do over 60 years. I saw a statistic, I think it was from The Motley Fool, that talked about how

How much of his wealth was it? I think 96 percent of his net worth was accumulated after his 65th birthday. And that goes to speak to the power of compound interest. And some of his best comments, Joe, I think over the weekend, just in terms of calming

and the markets talking about, you know, if you thought April was a big volatile month and a drop of 15% in your stock prices, then you probably don't have the right idea

mental attitude for being an investor, that 15% was nothing to him. You're down by, you know, at this point, those stocks are up from where they were on Liberation Day. And he pointed out that he's seen Berkshire Hathaway shares decline by more than 50% in their value over three points over the last 60 years since he took over. And at no time was the company's fortune

really substantially changed. So, you know, you ain't seen nothing yet. This is not, this is all just been average garden variety type stuff we've seen to this point. Well, you obviously have spent a lot more time with him than I have, but I know him pretty well. And I would hear from him, and every time I've ever heard from him,

There's always it's always like it's this impish, humorous, sardonic, whatever he's ever done with me has always been needling back and forth. You know, he'll send me a I'll say, send me some. He sends me a brick with my name on it or a NetJets card that's useless because there's nothing on it or whatever.

And you've seen pictures with him. When my wife, we were sitting next to him and the pictures of him where he's like holding his wallet, you know, trying not to let someone... You know what he's like. He's always been like that. He had a...

Do you speak French? Whatever, however you say it. He had a love for life and he's just he still does. I mean, I'm sounding like he's I mean, all he's doing is retiring. He's not going anywhere, but he's not retiring. He's not retiring, but he's just passing the man passing the man. But I'm saying like they like he's but he's just really I mean, I don't think I've ever had a conversation that wasn't like sort of.

laced with humor or needling or something like that. It's really funny. - That's why you get along with him so well. - Yes, and basketball, you know when we talk about the final, you know, and he's like, "Why don't you try it?" And I tell him, you know, "A million dollars?

How about a billion? It's not going to happen. I mean, no one's going to get it. And a billion, you wouldn't even notice if you did do a billion. Can I just say on that point, he does think they're far more likely to get a winner. And again, his actuarial brain always works on this. But because of the changes that we've seen with NIL and with the players sticking around for the best teams, he thinks it's far more likely that you will see a winner. Someone could get it.

The Final Four this year was all first-place teams. No, I know. They literally are changing the odds on how you can win. What do you need? You have to get every single thing all the way through the entire tournament, don't you? No. Somebody won it this year by getting...

I think he relaxed that a little bit. Well, that's good. OK. 32 out of 34. Yeah. 32 out of 34. And I had a conversation with him earlier this year. And he does think that you are far. The odds have changed. You are far more likely to be able to get this than you were 10 years ago.

He's classical. I think even on what he has to pay, he's got insurance. Of course, he's got plenty of insurance companies, too, right? I think he's self-insured at Berkshire, right? No, he's a character. He's always been... He's just a pleasure, obviously, in so many ways. But...

What are you going to do? It's 94. God bless him. Let's all hope. Yeah, I hope I make it past him in terms of retirement. That's my plan. Coming up. Somebody asked him, Joe, what he wanted to be known for, because in the past he's always said he wanted to be known as a teacher. Somebody asked him about that. One of the shareholders this weekend and his reply was, you know, I want to be known for being for for being very old, for old age.

He said that on his tombstone or something, too. That's what I, or someone said that. He lived to be really, really, really, really old or something. And obviously, he's doing it. Cheese will be next. Now's a good time to flag some very exciting episodes on your SquawkPod feed. The full two sessions of Q&A with Warren Buffett at this year's shareholder meeting, plus CNBC's pregame, postgame, and halftime shows all await you.

We have hours of Warren Buffett content, including that big moment that surprised us all. And it's in podcast format, so you can listen wherever you go. Next up on this episode of Squawk Pod, Andrew joins us. He's catching up with a special guest who was also at the Berkshire meeting this weekend. Buffett's been my, you know, one of my most important heroes, certainly in business. And I would say in life, I wouldn't bet against Berkshire.

Pershing Squares, Bill Ackman, the Fed, tariffs and much more right after this.

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To claim the double roses offer, go to 1-800-Flowers.com-slash-SXM. That's 1-800-Flowers.com-slash-SXM. The official florist of Mother's Day. You're listening to SquawkPod. Welcome back to SquawkBox. I'm here at the NASDAQ market site in Times Square. Becky Quick is in Omaha following the Berkshire Hathaway annual shareholder meeting.

Getting ahead of myself. And Andrew Ross Orcas now joining us from Los Angeles. Welcome. Joe, we've got some breaking news to tell you about right now. Pershing Square announcing it has agreed to invest $900 million to acquire 9 million newly issued shares of Howard Hughes Holdings. We've talked about the potential for this transaction before. It is now halved.

happening on new terms. The purchase price is $100 per share. That's a 48% premium of the stock price as of Friday's close. And this brings Pershing Square's ownership stake from about 37% to about 47%. Bill Ackman, who has served as chairman of Howard Hughes' board up until last April, is named executive chairman of the board. And Ryan Israel, CIO of Pershing Square, will become CIO of Howard Hughes. The rest of the company's leadership team

will remain the same. And importantly, this transaction is an effort for Bill Ackman to effectively get what might be described as permanent capital to try to create an operating business that then he can leverage off of. He's even described it at some points as the beginnings of a mini Berkshire, if you will.

Joining us live from Los Angeles is Pershing Square's CEO, Bill Ackman. You're in town for the Milken Institute Global Forum. Yeah, I'd say for Mike, he puts on an incredible conference. And you just came back from Omaha from the Berkshire Hathaway annual meeting. So I want to talk about that as well. But this is big news because this is something that has been in the offering now for several months. You have raised your offer and your stake now. Tell us what's happened and how did this how did we actually get here?

So I think it's been in the offing for maybe 30 years, actually.

What I mean to say is, you know, I came into this business, first book I read was Ben Graham's Intelligent Investor. The next thing I read was basically the Berkshire Hathaway-Sherolder letters. And it tells, you know, the story of Buffett buying control of a textile company and transforming it into a very valuable business over a long period of time. And, you know, Buffett's been my, you know, one of my most important heroes, certainly in business, and I would say in life.

And I always sort of aspired to build a diversified holding company and turn it into a valuable enterprise and have big shareholder meetings and all that kind of thing. So I've been working on this for a really long time. Now, this specific transaction started actually, again, a long time ago. We bought 25% of a shopping mall company called General Growth before it filed for Chapter 11. I joined the board. And part of the way to make that company valuable was spinning off all the ancillary assets into a company called Howard Hughes.

And then that's now 14 years later. And that business has started with a jumble of assets. And over time, the then management team and most recently David O'Reilly and team have transformed it into a great business, but a business that has really gone unrecognized, I would say, by Wall Street.

And so it struck us that it would be a pretty, it was actually, there was a cover story in Forbes saying that it was going to turn into the next Berkshire Hathaway. That was a decade ago. So the question though is, so you're now going to have almost a controlling stake. Correct. Almost. Correct. It's a little bit actually like Warren Buffett, almost a controlling stake. Correct.

the question is when is it going to produce enough cash like a berkshire effectively that you can then take that cash and go invest it so first of all uh the mpc business let's just back up howard hughes owns these sort of small cities they're called master plan communities but they're not small like so for example we own the woodlands which is about the size of manhattan right uh we own uh summerlin which is a major you know

20 whatever 28 000 acre small city in las vegas, you know populations of like 130 150 000 People and what we do is we own all the land We sell lots to home builders from home builders build homes people move in And then the company over time builds the amenities builds the community I call it a bit like sim city But in real life and eventually we build high-rise office buildings and you know apartment buildings, uh, and it's a great business But it consumes a lot of capital because you have to keep right

building the cities. Now the cities at a certain point in time get to a level of maturity where they start actually throwing off cash. And that's really where we are with Howard Hughes today. But there's still lots of opportunities to reinvest the cash in the city. So Howard Hughes as a real estate company today is not going to throw off a lot of cash to your point. But five years from now, 10 years from now, it's going to put

Produce more cash that it can generate. Explain how Pershing Square is going to be attached to this. Sure. What your role will be, your CIO's role is now going to be effectively involved in this, how you're going to get compensated. Sure. So first of all, the $900 million is not coming from the Pershing Square funds. It's coming from the Pershing Square management company that's owned, I own about 45% of it. The rest of the team owns about 45% and 10% is owned by a group of investors. We sold a piece of the business.

almost a year ago. That's the 900 million of capital that's kind of going into the business. So it's really the new additions to the executive leadership team that is investing the capital. So it's great alignment. You know, you hire a new executive chair, you hire a CIO. It's nice to hear that they're investing, you know, $900 million when they take the seat. We're not getting any option or stock or actually personally any compensation from the company.

The company is getting the benefit not just of Ryan and myself, but I operate with a team. Unlike Mr. Buffett, who seems like a bit of a one-man band, and certainly he was when he started at Berkshire Hathaway. I've built a team over time, and we work as a real partnership.

Howard Hughes today couldn't afford to hire the 40 Pershing Square team members, the eight investment team members. So we're gonna bring all the resources of Pershing Square to Howard Hughes and we're gonna charge a 15, we're gonna get paid a $15 million fee

and we're going to get paid an incremental fee to the extent that the market cap of Howard Hughes grows at a rate in excess of inflation. We're going to get a 1.5% fee on the increase in market cap, basically above today's market cap. Let me finish for a second.

And only if the market cap on a per share basis. So if we issue a bunch of stock to make an acquisition, that doesn't increase our fees. It actually reduces the fees as a percentage. What kind of, you're talking about issuing stock to buy stuff. Yes. Is that how you plan to buy stuff? With the stock? Is there going to be enough cash? And would you ever try to buy, for example, an insurance company, which is something obviously Berkshire's done? So we're going to start with 900 million of capital at the holding company that is available to make investments.

It is definitely on our, you know, if you look at Berkshire over time, a big part, Buffett's known as a great investor in stocks and companies. A huge enhancement to his returns over time is that he built a profitable insurance company that generated as a result, free money, so-called, you know, float. And he built that, the insurance company was embedded in a diversified holding company.

And the benefit of putting an insurance company or building one inside a diversified holding company is that it gives you a lot more flexibility in what you can invest the insurance company's assets in. If you're a pure play insurer, you can't take that much risk. You basically buy fixed income security. So that model has not gone unnoticed by us. I think it's highly likely that we will build or buy an insurance company.

One of the things that's happened is it's become a crowded market, meaning there's a lot of private equity players that are trying to buy up, I imagine, a lot of the stuff that you may want to buy. By the way, they're buying up a lot of the stuff that Warren Buffett used to buy. Sure. So what's going to give you an edge in this case? Sure. So one, we like great businesses, and so do private equity firms. But the big competitor-- maybe I'll by example. So I met with Glenn Youngkin, formerly co-CEO of Carlyle, now governor of Virginia.

And he was saying, "Oh, I really love what you're doing with this Howard Hughes thing." This is when, again, it was publicly announced, but obviously we had not gotten to the deal done. He says, "You know, the biggest problem I had in private equity is I'd have to sit down with Mr. Smith and tell him, 'You realize, of course, that after we buy your business, you're going to kind of be on the merry-go-round, and every five or seven years, your company that you built is going to get sold to someone else.'"

And I had to be candid with them about this, but that's the nature of private equity. And what Buffett was able to achieve over time is he could sit down with Mr. Smith, who was maybe 70 years old. He built this incredible business, an important business in the community. And he can say to him, look, I'm going to buy your business. I'm going to take very good care of it. I'm going to own it for decades. Your employees will be proud. And Mr. Smith found that a very appealing notion after he spent his entire life.

Life building a business now the issue for Berkshire today is that a trillion dollar scale, you know buying even a billion five billion even ten billion dollar business doesn't move the needle Whereas for us, of course, we're starting out, you know market cap today, you know is three and a half billion or something So we have the benefit of starting small but we have the similar benefits of being able to be a permanent owner of a company which is something that

And, you know, depending on where our, we have to get our stock price to closer to intrinsic value. We can also offer a tax-free execution. We can give someone the ability to kind of sell some of their business for cash, sell them for stock, and go along for the ride with us. Beck,

Becky's back in Omaha where you just came from. She has a question for you, Bex. Please. Hey, Bill. Great to see you. Thanks for coming on with us this morning. I'm so intrigued by what you just said about how you guys would either build or buy an insurance company that the benefit of the float hasn't gone unnoticed by you. First of all, do you think you'd

easier to buy one or to build one. I don't know where you think prices are and valuations are on these things right now. And second of all, over the weekend, something Jane kind of focused in on and talked about on stage was the idea that all these private equity companies have now gotten into the insurance business and he thinks are riding premiums

that aren't at great prices and that don't make it very profitable long term to do some of that business. He basically said, almost in these exact words, that Berkshire's waving the white flag when it comes to some of that, particularly when it comes to life insurance, I believe, that they can't write that insurance at competitive levels because he doesn't think the pricing is right from private equity.

Sure. So what Ajit was referring to is that, you know, the Apollos of the world, Brookfield and others have issued annuities, which are more financial products than they are insurance products. But they occur in the context of a regulated insurance company. And they take that capital, you know, multiple that capital, and they lend it with their sort of proprietary access to private debt type deals. And they make a spread.

And that business is, I would say, getting more crowded over time. But to answer your question directly, I think it's more likely that we will build an insurance company. In fact, we have a person that is a phenomenal executive in the industry that we're just beginning a conversation with that's intrigued by what we're doing. And I like the idea of building from scratch because you don't assume a bunch of other people's kind of liabilities. And I think...

you know, he's a super talented executive and hopefully we can make a deal with him. But that would be

I'm kind of more intrigued with the idea of building something from a blank sheet of paper. - I'm curious as you were sitting in Omaha this weekend, what you think the future of Berkshire looks like and whether you think it ultimately changes in a Greg Abel world? - Sure, so I think, you know, Buffett has been very thoughtful about everything in his life and in particular Berkshire, setting it up so that after he is no longer running it, it continues to succeed.

And I think he's achieved that by buying these really great businesses, but I would say maybe more importantly building a culture, principles, governance, you know, thoughts that he's imprinted in the minds of the shareholders and imprinted obviously in the minds of the executives and the board of directors. So I think you've got a principle-based company that's going to stay a principle-based company going forward. Now he's stepping aside with 350 billion of cash on the balance sheet. I think

You know, I break it. Abel's known to be a superb operator and a very good allocator of capital, certainly in the businesses that he's managed. I think it's yet to be proven that the current management team has has the capability that Buffett has had to obviously buy businesses. And it's more challenging now because of the scale. So I don't I think for sure the businesses will be run.

arguably, potentially even better than they've been run historically because now a great real operator focused on that running the company. The question though is, one, I think they're going to start returning capital. You do? In the form of dividends? I think they'll, yeah, dividends. I think they will be a little bit more aggressive about buying back stock.

I don't see Berkshire waking up in six months and Berkshire announcing a $100 billion acquisition. I think the new CEO will be, and the new board, not the new board, the current new CEO and the current board will be a little bit more careful on the first deals. Because if Berkshire's first deal turns out not to be a good one, I think that the market will kind of frown upon that. But I think the business will do very well. You've got Todd, you've got Ted, you've got some very capable people.

and it's extremely well capitalized. The insurance business, by the way, has a lot of continuity and some great talent. So I wouldn't bet against Berkshire. - Let me ask you a separate question just about the economy and where we are. I was at a dinner at this Milken event last night and the question was put to the group to raise their hands. This is maybe 100 some odd people.

who's optimistic about the economy over the next six months? And when that was the question, when I tell you, I think there was maybe one or two hands that went up, that was it. If you asked the question again for a year, a couple of hands. If you asked again for maybe two years or three years, then more hands. When would you have raised your hand? So let me be optimistic for a moment. What do I expect over the next six months?

I expect that the war in Ukraine, Russia, has a pretty high probability of being resolved. I think there's some kind of resolution in the Middle East with Iran, either a deal or

or Israel and the United States take out their capability of producing nuclear weapons. You do? That would be, by the way, a very big deal. Very big deal. Whether it's in six months, six months, nine months, you know, potentially by the end of the year. I think those are well within the realm of possibility. I don't think we're going to wait around a lot longer to deal with Iran. It's got to be dealt with in one way or another. That's going to bring down geopolitical risk, in my view, in a very significant way. But, by the way, it could also increase risk if it doesn't go right. Correct.

Could. I'm being an optimist. Okay. Okay. And I do think, I think Putin would like to end the war. I think Zelensky would like to end the war. I think Israel would like to deal with the nuclear threat. I think the entire world would like to deal with Iran's nuclear threat. So I think that's obviously a big positive. I think inflation has largely been wrung out of the economy, right? Price of eggs. I think the price of energy is coming down and it's going to stay down. And I think

Obviously very, very good for the economy. What else can I say? - Well, how do you think about tariffs impacting potentially inflation? - So I think tariffs, if they, where they ultimately get resolved, will increase the cost of some, by a percent of some products. But it's not like inflation that will compound. It's more like a one-time reset and then we won't have meaningful inflation from there.

And I think that's a backdrop in which the Federal Reserve toward the end of the year could start, could have a few kind of rate cuts. Do you think they should be cutting already?

I think a small cut relatively soon, I think, makes sense. Because I think what's happened is, you know, Q1 has benefited by some front-loading of purchases and inventive tariffs. The uncertainty associated with, you know, Liberation Day, so to speak, has caused many businesses to pause and wait to see what's going to happen. And that's going to be reflected today.

in Q2. And so I think you could, you know, there's definitely a deceleration economy now. Absolutely. So the question, I think what's important is the tariffs get resolved in the relative short term, because I do believe if we're still dealing, if the tariff thing is still major headlines. Let me ask you a tariff question, then I know Joe's got a question about Harvard that he wants to ask. But on the tariff front,

When you say it gets resolved, what does resolved mean? Meaning, do you believe that the U.S. government is going to be collecting lots of revenue because we're going to have big tariffs? Are we blinking and saying, actually, we're not going to have the kind of tariffs we've been talking about all along, and therefore the market likes that, and that actually is a version of resolved? What are we talking about when people say resolved? Sure. So I

I would say Trump has gotten the world's attention on trade imbalances and unfair trading practices of our partners. That's what happens when you announce 145% tariff against China and tariffs, really very high tariffs against the rest of the world.

After achieving that, he said, okay, we're going to pause for 90 days on basically everyone other than China because China responded, so we're going to punish them in effect. That set up the opportunity for deals with our major trading partners. Scott Pesent says, look, we've got 18 countries, the top 18, European Union, et cetera, and we're working out deals. We need to do the same thing with China. My argument is, made the point with China.

But 145% tariff against China means we're ceasing doing business with China. That has very negative repercussions for China, even more negative for China than us. But it also has meaningfully negative repercussions for U.S., you know, starting with small businesses, stick with me for a second, and others. The right thing to do, in my view, is we pause on China. Let's give it a little more time. Maybe it's 180 days because we're going to be busy here. What that does is it...

It stabilizes the risk to the U.S. economy and small businesses around the country. But China is now highly incentivized to make a deal. Why? Because of the shock of 145 percent of the potential for high tariffs against China. Every company that's producing in China and selling to the U.S. is moving their supply chains elsewhere. The longer the tariffs persist and unfair trading practices exist,

They persist against China. The longer they take to make a deal, the greater the risk to China is they lose all those businesses. And so the dynamic now is not, in my view, ideally favorable for the U.S. because there's economic pressure on the U.S. as a result of China tariffs. You pause for 180 days, the economic pressure comes off us, but it persists on China because of everyone leaving. And I think I'd like for us to get to that dynamic as quickly as possible. Buffett doesn't like that.

the tariffs, but we can talk about that. I want to go to Joe, though, because I know you've got a question. I want to bring up the topic of Harvard, which you've been very outspoken about. Sure. And not in a political...

Bill, I'm just wondering, you know, you're an alumnus. What should Harvard do where you'd say, okay, to get back in your good graces, what does the university need to do at this point? Sure. So the right thing to do, or I should say the wrong thing to do, is receive a letter from the administration and write back saying, we're doing nothing. In fact, we're going to sue you. Okay, that's what Harvard did. What Harvard should have done, it should have said, you know, President Trump,

you make some good points, right? You know, taxpayer money coming to Harvard, that's a privilege. It's not a right. And, you know, taxpayer money, you know, going to an institution, the institution cannot have massive amounts of administrative bloat, waste, bureaucracy, and we're going to eliminate it. We're going to hire Alex Partners, a restructuring firm. We're going to take a 3G zero-based budgeting approach to our, the way we run our, you know, administration. Things that are not

Inefficiency is causing harm and we're wasting taxpayer money. Mr. President, you're right. Harvard has become, you know, there is not

Viewpoint diversity at Harvard. Students are self-censoring their remarks in classrooms. Faculty are doing the same, because people are afraid to have real conversations. You can't learn, you go to college to be exposed to a broad array of ideas. And I guess maybe I should be looking at Joe. Broad array of ideas.

And you're not, that's not happening at Harvard. Free speech is not happening at Harvard. So you acknowledge the areas where the president is absolutely correct, and you say, look, we're gonna fix those areas, okay? We wanna make a deal, Mr. President. What have we seen from Trump?

He asked for the moon, kind of shock and awe. Same thing true for Harvard, that most recent letter. You could argue it's certainly overreaching in some of the elements. But he wants to make a deal. Make a deal with the president. Commit to fix these things, which by the way, your alumni want you to fix. It's in the best interest of Harvard. And treat shareholder and taxpayer money

like as a fiduciary, and they're not doing that. And Harvard is not in a good financial position. This is something I think is not well appreciated. They nominally have a $53 billion down.

I don't believe the carrying values of their endowment. 80% of the assets are invested in real estate, private equity, and venture capital. So it's not liquid. It's not liquid. And they're apparently selling a billion-dollar slice of their private equity. Watch where that gets priced relative to the carrying value of the portfolio. My guess is it could be 30%, 40% below the current carrying value to get a bid. In my business, if I owned...

a slice of something, I sold a piece of it at a 30, 40% discount, I'd have to remark my entire portfolio. So one, the endowment in my view is massively overstated in terms of what it's really worth.

The second thing is no one talks about the fact that Harvard now has $8 billion of debt. I read the prospectus for the recent bond issue. So you have $53 billion of overstated assets that are illiquid, and you have $7.9 billion of debt, which you owe. As a donor, do you want to give money to a nonprofit institution, which is going to go into the institution and going to go out the door to pay interest to bondholders? My experience is nonprofits that borrow money, it doesn't end well.

And then you have, what do they rely on for current funding? Money every year from the U.S. government. Money every year from donations. Donations, I don't know, I have to believe they're down meaningfully. And tax-exempt status. You know, another reason that induces people to give money to their university is they've got a tax deduction. Fair or unfair to try to take the tax-exempt status away? I think it's fair. Again, the...

Harvard became, over time, a political advocacy organization for one party. When a university goes from being a university to becoming a university,

A political advocacy organization doesn't deserve non-profit status. Harvard should be a place where students go to learn and the best research gets done. It shouldn't be a place that is allowing pro-terrorist organizations on campus that only allows certain kinds of thinking and speech on campus. That's a political advocacy organization, it's not a university.

I don't think we're going to end up there where Harvard loses its tax-exempt status. I want Harvard to succeed. It's been very important to me over time. But really, it got itself to a very bad place. And Alan Garber is a good president, but he's not managing. The mismanagement here is Penny Pritzker, if this were any other kind of corporation, the notion that she's still chairman of Harvard, leading the charge here in terms of how Harvard managed everything from

COVID, and I know we have to go, but it's an important topic, to endowment management, to waste, to free speech, to who they hired as president of the university. It's time for a change in leadership in the board at Harvard. It's a longer conversation. I want to thank you, Bill Ackman. Sure. Becky and Joe, I will see you. We will all see each other tomorrow.

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