Berkshire Hathaway Chairman and CEO Warren Buffett gestures during an interview with Liz Claman on the Fox Business Network in Omaha, Neb., Monday, May 5, 2014. The annual Berkshire Hathaway shareholders meeting concluded over the weekend. (AP Photo/Nati Harnik)

“Didn’t we have the livelihood of our guys threatened over there? “

Back in 2006 Elliot Samuels from New York City asked a question to Warren Buffett and Charlie Munger at Berkshire annual shareholders meeting. He said the following “thanks to high energy prices and other factors Russia has been one of the best performing markets, recently the country’s financial condition has stabilized since 1990s fledging middle class is taking shape as personal income has grown. There also loom risks political and legal to minority investors but there was potentially great values among the second tier companies, I was wondering what needs to happen in Russia for you to invest on behalf of Berkshire or for yourself and what kind of companies that interest you there.” With a chuckle, Warren Buffet recalls a sticky situation that prompted him not to invest in Russia further.

Video Courtesy of The Financial Review

Warren Buffet

Sounds like you own a few Russian stocks yourself… Charlie and I were inherited a business at Solomon that was in the oil business big time out and in Siberia and there came a time when we got to dig the holes, we sent the money in and as long as we were drilling we were welcomed and then when we wanted to start taking the oil out after I our money had been used to drill the holes they were not quite as friendly.

In fact it was really kind of extreme what took place with us so having had a few experiences like that it might take us quite a while before we wanted to sink a lot of money into Russia. It may be different now but I don’t think it’s any certainty

I had breakfast in Sun Valley 3 years ago this July I believe with Mikhail Khodorkovsky and had a translator there and he talked to me about whether he was thinking about listing Yukos on the NYSE but he said they would require registering with the SEC or something and he wasn’t sure whether that would that would be too dangerous, well I don’t think he listed there but he went back to Russian and he’s been in jail now for well just about ever since and Yukos was put into bankruptcy with tax claims… I just think it’s a little hard to develop a lot of confidence that the world has changed permanently there in terms of its attitude toward capital and particularly toward outside capital. 

Charlie Munger

Reminds me a little of Poly-Petroleum which years ago was much traded in Los Angeles the saying always was “if they ever do find any oil at old man will steal it” I’m afraid we have some of that problem in many other countries in which were seeking for oil 

Warren Buffett

Didn’t we have the livelihood of our guys threatened over there? We had sent some people to get out the equipment, they said if we send people to get the equipment not only the equipment would not get out but the people wouldn’t get out so we understood the situation.

Comments & Updates:

In 2019 we’ve seen a continued lack of investment confidence from Berkshire in Russia despite the MOEX Russia Index rising 55% in 5 years vs the 50% experienced by the SPY. YTD the SPY has outperformed the MOEX 17% to 13%.

Upon being pardoned by Putin and released from prison at the end of 2013, Mikhail Khodorkovsky immediately left Russia and was granted residency in Switzerland. At the end of 2013, his personal estate was believed to be worth, as a rough estimate, $100–250 million.

Sources: Stock Quotes provided by Google.

Dialogue Provided by: Berkshire’s Annual Shareholders Meeting 2006

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