Business Musings From Woodstock for Capitalists

• MAY 4, 2009

Buffett and Munger Play the Main Stage: Views on Newspapers, Triple-A Ratings, Complex Math and More

SCOTT PATTERSON and ALISTAIR BARR

Here are some highlights of Warren Buffett's and Charles Munger's remarks at the Berkshire Hathaway Inc. shareholder meeting this past weekend.

Mr. Buffett on Newspapers

Mr. Buffett has long held himself out as a newspaper man. As a child, one of his first jobs was delivering newspapers. An Omaha newspaper Berkshire owned, Sun Newspapers, won a Pulitzer Prize in 1973 based in part on a tip Mr. Buffett provided. One of Berkshire's biggest investments in the 1970s was the Buffalo News, which it still owns.

But his view on the future of the newspaper industry is dismal. "For most newspapers in the United States, we would not buy them at any price," he said. "They have the possibility of going to just unending losses."

Reuters

Warren Buffett, left photo, noshes on an ice-cream bar at Berkshire's annual meeting in Omaha, Neb., on Saturday.

As long as newspapers were essential to readers, they were essential to advertisers, he said. But news is now available in many other venues, he said.

Berkshire has a substantial investment in Washington Post Co. He said the company has a solid cable business, a good reason to hold on to it, but its newspaper business is in trouble.

Mr. Munger called newspapers' woes "a national tragedy....These monopoly daily newspapers have been an important sinew to our civilization, they kept government more honest than they would otherwise be."

A Washington Post Co. representative couldn't be reached for comment.

Mr. Buffett on Insurance

In response to a question about the worst possible development for Berkshire Hathaway's vast insurance operations, Mr. Buffett responded: nationalization.

If inflation jumped and insurance policies became extremely expensive, pressure could rise on the government to nationalize the insurance industry, he said. "When people get outraged, politicians respond," Mr. Buffett said. It's highly unlikely that such a development would happen, he added. But he did note the example of Social Security, which is a form of a nationalized annuity.

Mr. Buffett on Housing

"In the last few months you've seen a real pickup in activity although at much lower prices," Mr. Buffett said, citing data from Berkshire's real-estate brokerage business, HomeServices of America Inc., which is one of the largest in the U.S.

Reuters

Attendees wait in a food queue on Friday at the meeting's kickoff celebration.

In California, medium and lower-price homes -- under $750,000 -- have been selling more, though there hasn't been a bounce back in sale prices, Mr. Buffett said. "We see something close to stability at these much-reduced prices in the medium to lower part of the market."

Mr. Buffett on Moody's

Mr. Buffett was asked about Moody's Investors Service, which gave a triple-A rating to billions of dollars of mortgage securities that subsequently lost value. Berkshire has a 20.4% stake in the company.

"Basically, four or five years ago, virtually everybody in the country had this model in their heads, formal or otherwise, that house prices could not fall significantly," Mr. Buffett said. He later added that "it was stupidity and the fact that everyone else was doing it."

He said that if Moody's had started to take a negative view on residential real estate, the ratings provider would have been hauled before Congress to testify about why it was hurting the U.S. economy with its bearish ratings. "They made a huge mistake, and the American people made a huge mistake," he said.

Bloomberg News

One Fruit of the Loom mascot adjusts the hat of another at the Berkshire meeting on Saturday. The apparel maker is one of Berkshire's holdings.

A Moody's representative couldn't be reached for comment.

Mr. Buffett on Treasurys

Berkshire Hathaway had only one slide at this year's annual meeting. It displayed a Dec. 19 trade ticket showing a Berkshire sale of $5 million of Treasury bills. They were coming due on April 29 this year, roughly four months after Berkshire sold them. Berkshire sold the bills for $5,000,090.70. If that buyer had instead put their money in a mattress, by April 29 they would have been $90.70 better off, he said. Negative yields on Treasury bills show how tumultuous last year was, Mr. Buffett added. "We may never see that again in our lifetimes," he noted.

Messrs. Buffett and Munger On Math and Theories

Messrs. Buffett and Munger made clear their complete disdain for the use of higher-order mathematics in finance.

"There is so much that's false and nutty in modern investing practice and modern investment banking, that if you just reduced the nonsense, that's a goal you should reasonably hope for," Mr. Buffett said. Regarding complex calculations used to value purchases, he said: "If you need to use a computer or a calculator to make the calculation, you shouldn't buy it."

Said Mr. Munger: "Some of the worst business decisions I've ever seen are those with future projections and discounts back. It seems like the higher mathematics with more false precision should help you, but it doesn't. They teach that in business schools because, well, they've got to do something."

Mr. Buffett said: "If you stand up in front of a business class and say a bird in the hand is worth two in the bush, you won't get tenure....Higher mathematics my be dangerous and lead you down pathways that are better left untrod."

Mr. Munger on the Future

"As I move close to the edge of death, I find myself getting more cheerful about the economic future," Mr. Munger said.

Mr. Munger sees "a final breakthrough that solves the main technical problem of man," he continued.

By harnessing the power of the sun, electrical power will become more available around the world. That will help humans turn sea water into fresh water and eliminate environmental problems, Mr. Munger explained. "If you have enough energy you can solve a lot of other problems."

Write to Scott Patterson at scott.patterson@wsj.com and Alistair Barr at alistair.barr@marketwatch.com

PREVIEW-Bad debt charges may haunt Singapore banks 04 May 2009 11:55

    * What: Singapore banks' Q1 earnings, Malaysia's Maybank's Q3 
    * When: UOB & OCBC May 6, DBS May 8, Malaysia mid-to-late May 
    * Bad debt charges, slowing loans to hit profits 
    * Singapore banks increased market share in Q1 
     
    By Saeed Azhar 
    SINGAPORE, May 4 (Reuters) - Singapore's three banks could 
post sharp declines in quarterly profits this week as bad debt 
charges soar, and investors will be keen to see how much market 
share they are gaining from battered foreign players in Asia. 
    Malaysian banks are also likely to be hurt by a squeeze in 
interest rate margins following hefty rate cuts by the country's 
central bank and as loan growth stutters. 
    Southeast Asian banks survived the initial phase of a global 
financial crisis relatively unscathed due to minimal toxic debts 
on their books, but began to feel the effects of an Asian 
economic downturn from the second half of 2008. 
    DBS Group Holdings <DBSM.SI>, Southeast Asia's biggest bank, 
could see its profit slide 47 percent in the Jan-March period 
from a year earlier, according to an average estimate by five 
analysts in a Thomson Reuters poll. 
    "NPLs have only just started to rise in the fourth quarter of 
2008 and are likely to continue on an uptrend as the recession 
feeds through into the banking system," Kar Weng Loo, an analyst 
at Banc of America Securities-Merrill Lynch, wrote in a note to 
clients, referring to non-performing loans. 
    Despite the gloomy year-on-year forecasts, analysts expect 
some bright spots in the first quarter, such as higher trading 
gains quarter-on-quarter as banks bet on volatile foreign 
exchange and stock markets. 
    Singapore banks, which are capturing market share from 
foreign lenders, are also gaining pricing power, which may boost 
interest rate margins compared with the October-December period. 
   "A steeper yield curve and better loan pricing should provide 
upside support for net interest margins despite negative loan 
growth," said CLSA banking analyst Thilan Wickramasinghe. 
    These expectations and a renewed global appetite for 
risk-taking have boosted shares of Singapore banks since they hit 
multi-year lows in early March. Singapore's index for financial 
stocks <.FTFSTAS8000> has gained almost 46 percent since hitting 
a year-low of 323.51 points on March 10. 
    But CLSA's Wickramasinghe warned the "overarching concern" 
for Singapore banks is asset quality, which may translate into 
higher bad debt charges. 
     Moody's Investors Service last month cut its ratings outlook 
on Singapore's three banking groups to "negative" from "stable", 
saying the global recession would hurt earnings and asset 
quality. 
    Thai banks kicked off the earnings season for Southeast Asian 
lenders earlier this month, with Bangkok Bank <BBL.BK>, the 
country's biggest, reporting a 13.5 percent drop in quarterly 
profit  [ID:nBKK496559]. 
    Analysts in Malaysia do not provide quarterly forecasts, but 
Malaysian bank earnings are likely to take a hit from a slowing 
economy and lower interest rate margins due to the central bank's 
150 basis points interest-rate cut since the fourth quarter. 
    But a significant deterioration in overall asset quality is 
unlikely because of the absence of any large corporate defaults, 
said Loong Chee Wei, analyst at CLSA in Kuala Lumpur. 
 
    SINGAPORE - ESTIMATED Q1 NET PROFIT AVG (S$ mln) 
         Q1 2009    CHANGE (PCT) VS   Q1 2008   ANALYSTS 
    DBS   321           -47             603       5 
    UOB   387           -27             529       4 
    OCBC  293           -53             622*      5 
     
    *OCBC's core earnings in Q1 2008 excluding a tax refund and 
gains from asset sale were S$460 million. 
    (Data based on a Reuters poll) 
    MALAYSIA FULL YEAR FORECAST (bln ringgit) 
                         2009    CHANGE (PCT) VS 2008   ANALYSTS 
    Maybank              2.44    -16.7           2.93       16* 
    Bumiputra-Commerce   1.89     -3.0           1.95       16 
     
    * Maybank's financial year runs from July to June.

Blogged with the Flock Browser

Wilmar Int'l

WILMAR INTERNATIONAL <WLIL.SI>  
    -- Palm oil producer Wilmar International said on Monday it 
has acquired a 25 percent interest in the equity of Chinese 
mineral water firm Water Enterprises for US$25.6 million. 

Blogged with the Flock Browser

China hopes draw billions in foereign funds back to Asia

* Asia markets likely to extend rally on foreign inflows

* Foreign net inflows to Asia at 48-week high

* China, Taiwan, S. Korea biggest winners

(Repeating item first carried on Thursday with no change to text)

By Faith Hung and Kevin Plumberg

TAIPEI/HONG KONG, April 30 (Reuters) - After a six-month drought, foreign investors have been sending billions of dollars back to Asia, a trend some expect to continue on hopes China will lead the region out of the global economic recession.

Foreigners have poured a net $6 billion into six major Asian markets since early March, according to BNP Paribas, helping to boost China, Taiwan and South Korean stocks by up to 35 percent this year and making them the world's best performers.

Regional government efforts to drive their economies out of recession by aggressively cutting interest rates and spending billions of dollars on stimulus packages, especially the $600 billion one implemented by China, are fuelling international investor appetite for risk after months of caution.

"I think it's time to be in risky assets. The rally we've seen since March is the start of a new bull market," said Anthony Bolton, president for investments of Fidelity International, an affiliate of the world's top mutual fund firm Fidelity Investments, on a trip this week to Taiwan.

"I started to put in money in September, November, and then January and March. We are buying China-focused funds," said Bolton, whose contrarian bets made him a top U.K. fund manager for more than two decades.

China's official Purchasing Managers' Index (PMI) for March, rose to 52.4 from 49.0 in February, marking its first time in expansionary territory since September, a rebound that Beijing said the economy may have bottomed. [ID:nPEK25397]

The index is a key survey of the manufacturing sector, showing managers felt cautiously optimistic about the next few months.

To view two graphs on foreign fund inflows and stock market gains in Asia since March, please click on: https://customers.reuters.com/d/graphics/AS_FLWS0409.jpg https://customers.reuters.com/d/graphics/AS_FLWS20409.jpg

CHINA LEADS

The massive inflows to China plays and other emerging markets contrast with outflows from developed markets, a sign foreign investors bet China will lead Asia out of the global recession.

Emerging market equity funds have received inflows of $7.3 billion so far this year, compared with outflows of $56.1 billion for developed market equity funds, fund flow tracker EPFR Global said in a recent report.

In the past week alone, foreigners purchased $1.6 billion worth of Asian equities, their second-highest buying level in 48 weeks. Meantime, mutual fund buying was at a 50-week high of $946 million, Nomura International said in a report.

China equity funds absorbed another $243 million and Taiwan equity funds posted their highest weekly inflows in nearly a year, said EPFR.

Fund managers said they favoured shares of infrastructure, raw materials, personal computer makers and China plays on expectations they will continue to benefit from China's massive economic stimulus.

"China's determination to sustain 8 percent-plus GDP growth remains the cornerstone of the latest surge in risk appetite," EPFR Global senior analyst Cameron Brandt wrote in the report. Bratin Sanyal, head of Asian equity investment for ING Investment Management in Hong Kong, shared a similar view.

"We believe the bigger economies in Asia are going to come out of the downturn more quickly. China, India and Indonesia remain our favourite markets along with Singapore and Hong Kong because they add some stability to our portfolios with companies that are liquid.

STABILISING FORCE

Fund managers said recent interest in Asia by foreign funds is likely to stabilise those markets, as many fund managers buy in on dips after missing initial rallies.

"Many institutional investors are worried stocks have risen too much, too fast. They are waiting for any pull-back as an opportunity to build up their positions," said Wendy Kuo, chief investment officer of Yuanta Funds.

Yuanta's funds, with $3.3 billion of client assets, recently bought shares of Ping An Insurance <2318.HK>, Nine Dragon Paper <2689.HK> and carmaker Dongfeng Group <0489.HK>, all Chinese firms listed in Hong Kong, Kuo said.

China-listed shares in its two exchanges in Shanghai and Shenzhen are closed to all but a handful of foreign buyers.

Jamie Cumming, a senior investment manager on the global equity team of Aberdeen Asset Managers in Edinburgh, said he gradually added cyclical names, materials and industrials, including Chinese oil refiner PetroChina <0857.HK> and Taiwanese chip maker TSMC <TSM.N> at the start of the year.

Still, some fund managers advised caution.

"Globally, policymakers have added $2 trillion in stimulus but global equity markets have lost $15 trillion in market cap since the peak of the last bull market," said Mark Matthews, Asia Pacific strategist with Fox Pitt Kelton in Hong Kong.

"People are misconstruing some of the sequential improvements in numbers for an economic recovery. It's not an economic recovery and I don't think we are anywhere near an economic recovery."

Blogged with the Flock Browser

Buffett Withholds Hoopla, Hope

• MAY 4, 2009

At Annual Meeting, Investor Sees More Pain After Berkshire's Worst Year

By SCOTT PATTERSON and ALISTAIR BARR

At an event that is typically filled with hoopla, Warren Buffett spent much of his company's shareholder gathering this weekend defending a rough year. And he didn't hold out much hope in the near term for better results in many of Berkshire Hathaway Inc.'s businesses.

"We will continue to do quite well in our insurance and utility operations. We won't do well in other operations," Mr. Buffett said.

But Mr. Buffett was upbeat about opportunities for Berkshire, saying he believes the company is well positioned to capitalize on current market turmoil.

Berkshire last year suffered its worst year ever. Among its hard hit holdings were Wells Fargo & Co., and Moody's Investors Service. Berkshire's shares have fallen more than 30% since the end of September.

Mr. Buffett this weekend fretted that bank stocks could suffer further, thanks to the government's current stress tests of financial firms. His worry: Regulators might paint with too broad a brush and fail to recognize strengths that differentiate companies.

View Full Image

Associated Press

Warren Buffett toured the exhibit floor prior to the annual Berkshire Hathaway shareholders meeting.

"Maybe the whole idea is not such a hot idea," said Berkshire Vice Chairman Charles Munger.

A representative of the Federal Reserve declined comment.

Mr. Buffett said he is especially interested in U.S. deals. "We're always open to things internationally," he said, "probably a little less so now because there are things going on in the United States that are interesting to us."

Still, Berkshire's ability to do many deals may be hampered by a decline in its cash position. The company has roughly $20 billion, down from about $25 billion in cash at the end of 2008. Mr. Buffett has frequently said he would never let his cash go below $10 billion, leaving Berkshire about $10 billion to put to work.

Mr. Buffett predicted more doldrums for retail, manufacturing and services businesses, and offered little hope for newspapers.

Live From Omaha

• Business Musings From Woodstock for Capitalists
• Berkshire Meeting Ends With Somber Note, Marriage Proposal
• Munger Unusually Optimistic
• Insurance Nationalization as Worst Possible Scenario
• Berkshire Operating Profit, Book Value Fall
• Buffett Has Dismal Outlook for Newspapers
• Disdain for Complex Math, Portfolio Theory
• Berkshire Set for Marathon Session
• Movie: Buffett Demoted to Mattress Salesman
• More reports from Omaha from WSJ's MarketBeat blog.

Housing, at least in medium- and lower-end markets, is seeing a pickup in activity, albeit at lower prices, the famed investor said.

He surprised his audience Saturday by sharing some results for the company's first-quarter performance. Operating profits declined to $1.7 billion from $1.9 billion a year earlier, he said. Full results are expected Friday.

Regarding succession, Mr. Buffett has said he plans to split the chief executive and chief investment officer roles. He said Saturday the four money managers who may oversee Berkshire's investment portfolios in the future did no better last year than match the S&P 500's 37% decline. "You would not say that they covered themselves with glory," he said. "I didn't either."

"I have not changed the list" of possible people for the job, Mr. Buffett said, but "we're always looking to add more people to it."

Write to Scott Patterson at scott.patterson@wsj.com and Alistair Barr at alistair.barr@marketwatch.com

Blogged with the Flock Browser

The Sun Shines on Solar Stocks

May 1,2009

By Robert Curran

By Rob Curran and Geoffrey Rogow

The Obama administration wants to recreate President Kennedy’s “space race” in pursuit of alternative energy, and some solar-power and electric-car battery stocks are already rocketing higher.

Shares of lithium-battery makers GS Yuasa of Japan; BYD of Hong Kong; and U.S.-listed lithium producer Sociedad Quimica y Minera de Chile have all more than doubled since their lows around the time of Obama’s election victory. To technicians, that kind of momentum means the stocks are in “strong uptrends.” Caveat emptor: corrections are likely to be extreme, too.

BYD, which is Warren Buffett’s alternative-energy play, has started producing and selling its own hybrid electric vehicle in China for about $22,000 a pop. GS Yuasa supplies Honda Motor with batteries for its electric car.

The beauty of investing in battery companies is the investor doesn’t have to bet on which — if any — electric car will eventually catch on, however.

Obama’s goal to put 1 million plug-in vehicles on the road in the U.S. by 2015 is gravy for companies that are already selling their batteries for more prosaic uses such as mobile phones. There will likely be many false starts in the race toward a “green” car, but a lot of battery power will be expended in the race.

Meanwhile, solar-power companies, one of the hot plays of early 2008, are having another hour in the sun. Both the Market Vectors-Solar Energy ETF and Claymore/MAC Global Solar Energy Index ETF have both halved, then nearly doubled
so far this year. And those are broad ETFs, not single stocks.

Long term, however, technicians note both ETFs and much of the sector is still in the midst of a strong uptrend.

“It’s one of the few areas in the market people can dream about real and big growth,” said Phil Roth, chief technical strategist with Miller Tabak. “There is almost nothing with that kind of growth and the hot money will gravitate to it.”

Pacing the sector is industry leader First Solar Inc. The maker of solar-power harnessing panels and cells is up 23% for the week after the company reported its first-quarter net income more than tripled on surging revenue
Wednesday.

“The stock has almost doubled off the lows and its all-time high was $300. There’s no reason it shouldn’t pass that in the next couple years,” said Roth.

“With the first quarter quite possibly marking the bottom of the industry’s first-ever down cycle, there was no sign of those troubles in First Solar’s stellar results,” said Raymond James analyst Pavel Molchanov. “To summarize our thesis on First Solar: The addition of solid utility-scale project development capabilities to the world’s lowest-cost (solar cell maker) … for a potent combination.”

As investors in the “commodities theme” and indeed the solar sector discovered to their detriment in 2008, “hot-money” sectors can cool off fast. Investors eager to participate in the latest space race should remember that not all U.S. or Russian rockets made it to the moon.

Here's the Story on Berkshire's Munger

MAY 1, 2009

By SCOTT PATTERSON

Warren Buffett is synonymous with Berkshire Hathaway Inc., getting credit for billions of dollars in big deals that have made him an icon to investors around the world. But on the one day a year when he faces his shareholders, at his side will be his longtime partner, Vice Chairman Charles Munger.

On Saturday, the partners will take their decades-old act back to the stage in Omaha, Neb., telling thousands of loyal shareholders that they see huge opportunities amid the financial crisis that drove Berkshire to its worst performance since Mr. Buffett took it over 44 years ago.

Charlie Powell

BOOK VALUE: Berkshire Hathaway's Charles Munger reads businesses well -- and, as a bibliophile, he goes through several books a week.

The two men, Mr. Munger, 85 years old, and Mr. Buffett, 78, speak frequently and confer about most deals, but there are differences. Mr. Munger is laconic; Mr. Buffett loquacious. Mr. Munger leans Republican; Mr. Buffett tilts Democratic. Mr. Munger will pay hefty price tags for businesses; Mr. Buffett likes safe, dirt-cheap stocks.

Mr. Munger's views have pushed Berkshire into some surprising directions. Several years ago, Mr. Munger learned of an obscure Chinese maker of batteries and automobiles called BYD Inc., which hopes to create a cheap, functional electric car.

A Chinese tech company is nothing like the shoe and underwear makers Berkshire had been buying. But Mr. Munger was enthusiastic, less about the technology than about Wang Chuanfu, who runs BYD. Mr. Wang, Mr. Munger says, is "likely to be one of the most important business people who ever lived."

Mr. Buffett was skeptical at first. But Mr. Munger persisted. David Sokol, chairman of Berkshire utility MidAmerican Energy Holdings Co., paid a visit to BYD's factory in China and agreed with Mr. Munger's assessment. Last year, MidAmerican paid $230 million for a 10% stake in BYD.

"BYD was Charlie's idea," Mr. Buffett said. "When he encounters genius and sees it operating in a practical way, he gets blown away."

Mr. Munger also was an advocate of Berkshire's $4 billion investment in Iscar Metalworking Cos., an Israeli maker of metal-cutting tools, in 2006. The investment was relatively pricey, especially given Mr. Buffett's preference for cheap companies. But Mr. Munger convinced his longtime partner that Iscar was worth the cost.

The deal helped pave the way for other large investments by Berkshire in companies outside the U.S. Results on the two investments haven't been reported.

The men share a view that the U.S. financial system will change, and criticize past excesses. "People were horribly overpaid for just pouring on leverage," Mr. Munger said. The two investors have repeatedly warned about the systemic risks posed by the abuse of leverage and derivatives.

More

• Check in with the MarketBeat Blog throughout the weekend for updates from the Berkshire Hathaway shareholder meeting.

Mr. Munger thinks regulators may significantly curb the amount of leverage, or borrowed money, that banks can use. That will drive down pay at Wall Street firms, since traders won't be able to make as many big, leveraged bets. This could benefit Berkshire, with its cash hoard of $24.3 billion at the end of 2008. "There's going to be new rules in the game," he said. "For someone like us, that's going to be very interesting."

Saturday's meeting comes after the worst year in Berkshire's history, when it lost 9.6% in book value per share, a common metric it uses to track its performance. It marked the biggest decline since Mr. Buffett took over the company in 1965, when it was an East Coast textile maker, and turned it into an investing powerhouse. Berkshire's shares have fallen 36% since September.

The two investors say they expect Berkshire to return to form in the near future, and they continue to collaborate. They speak on the phone at least once or twice a week from their respective offices -- Mr. Buffett in Omaha, Mr. Munger in Pasadena, Calif.

"Charlie understands the essence of a lot of businesses probably better than people in those industries do," Mr. Buffett said. "He gets right to the point of it quicker than anyone I've seen.

Mr. Munger grew up in Omaha and joined the U.S. Army during World War II, serving as a meteorologist in Alaska. After the war, he earned a degree from Harvard Law School and became an attorney at a California firm.

He also became a serious investor. He met Mr. Buffett in an Omaha restaurant in 1959. After working together on a number of investments for many years, the two joined forces full time at Berkshire in 1978, when Mr. Munger became vice chairman.

One of their early deals is one of Berkshire's best-known brands. In 1972, Mr. Munger helped persuade Mr. Buffett to participate in a joint purchase of See's Candies, a California boxed-chocolate maker, for $25 million. While the price seemed steep by some measures, the deal was wildly successful, producing more than $1 billion in pretax earnings.

Without such investments, it isn't likely that Berkshire could have grown as large as it has, says Whitney Tilson, manager of T2 Partners LLC, a New York money manager that owns Berkshire stock. He says: "Munger helped Buffett appreciate some of the higher-quality investments that lead to multibillion-dollar outcomes several decades later."

Financially, Mr. Buffett has done better. He boasts a net worth of $37 billion in 2008, according to Forbes magazine's list of the world's wealthiest people, putting him at No. 2 in the world behind Microsoft Corp. founder Bill Gates. Mr. Munger placed 522 on the list, with a net worth of $1.4 billion.

Mr. Munger has won the respect of Mr. Gates, who sits on the company's board. When the Justice Department accused Microsoft of abusing monopoly power with its Windows operating system in the late 1990s, Mr. Gates says he sought out Mr. Munger for legal advice. He also consulted Mr. Munger when considering how to set up his charity, the Bill & Melinda Gates Foundation.

"Warren wouldn't have done nearly as well without his help," Mr. Gates said in an interview.

Write to Scott Patterson at scott.patterson@wsj.com