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Dozens of University of Akron students wanted to pay their way to Omaha last week for a visit with Warren Buffett, but Todd Finkle could bring only 27, the standard number allowed by Berkshire Hathaway Inc.
That didn’t count Finkle’s friends, acquaintances and other people who learned the university would be among six schools sending students for a tour of Berkshire Hathaway Inc., its furniture and jewelry stores (Nebraska Furniture Mart, Borsheims) and a lunch and Q&A session with Buffett at Piccolo Pete’s restaurant.
“Everybody wanted to go,” said Finkle, an associate professor and director of the school’s entrepreneurial program.
Finkle, a graduate of Omaha Central High School, arrived early and sampled the Buffett-style lunch fare at Gorat’s steakhouse, namely a hot beef sandwich, and stayed for Saturday’s Nebraska-Oklahoma football game.
After Finkle announced the upcoming trip at the start of the fall semester, 67 students officially applied for the 27 slots, following his requirements: submit a résumé with your GPA, write a one-page summary of why you want to attend and attach a recommendation from another professor.
The students selected were overjoyed, he said. One student’s mother cried when she heard the news. Another had been laid off from her job and returned to school to find a new career.
“I was looking for people who would really benefit from the whole experience of meeting Buffett,” Finkle said.
Twelve of the 27 were women, surpassing Buffett’s requirement that at least one-third of each student group be women.
Besides Akron, the schools visiting Friday were Texas Christian University, the University of Illinois, Boston College, the University of South Dakota and the Rotman School of Management at the University of Toronto, 162 students in all. It was the second group this year, Berkshire said, with five more group visits to go this school year.
At Berkshire’s headquarters, some students got stuck temporarily in an elevator, but to make up for the mishap Buffett invited some of them to ride with him to lunch.
The Akron students, whose athletic teams are the Zips, gave Buffett a plaque with a picture of them and the school mascot, a giant kangaroo named Zippy.
Financial strength
While investors apparently love Berkshire’s plan to acquire BNSF Railway Co., driving up prices for stock in Berkshire and U.S. railroads, the agencies that rate corporations’ financial strength warned the deal might weaken Berkshire’s finances.
To come up with the $26 billion needed to buy the rest of BNSF stock that Berkshire doesn’t already own, Buffett said he will use $8 billion of cash on hand, borrow $8 billion and pay it back in three annual installments and then use Berkshire stock for the remaining $10 billion. Berkshire also would assume the $10 billion in debts of the Fort Worth, Texas, railroad company.
Fitch Ratings, Moody’s and Standard & Poor’s all said they might reduce Berkshire’s financial rating because of the cash outlay, the Associated Press reported. Fitch said the purchase would shift Berkshire’s holdings toward businesses that use more debt, making it more sensitive to the economy than its main insurance business.
Earlier this year, the agencies marked down some of Berkshire’s AAA ratings, citing financial uncertainties and declines in the values of some of its holdings, but only by one notch so that Berkshire remains one of the highest-rated financial companies in the world. The agencies plan to assess Berkshirse’s capital position when the deal goes through early next year.
A downgrade might carry immediate costs, according to Berkshire’s latest earnings report. Some financial contracts might require the company to put up as much as $1.1 billion in added collateral, depending on the degree of downgrade, meaning Buffett wouldn’t have that money to invest.
Buffett said last week that the BNSF purchase would leave Berkshire with about $20 billion in cash, which means he will hold off on major purchases for a while.
BNSF, meanwhile, earned $2.1 billion last year, returning more than 10 percent on its capital investment.
Contact the writer:
444-1080, steve.jordon@owh.com
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