Thanks for posting the transcript. I was asleep for the first part and it was interesting to hear him describe his shorting DOW common in anticipation of their conversion. He ended up timing it perfectly, with a net zero position the day after they sent him 72 million shares -
"Quick: The reason I ask-- that question just now is because Dow Chemical preferred shares-- they called those the preferred shares on December 30th. And from what I read it said that it should've translated into about 6 percent of the shares outstanding of the company—
Buffett: 70, 72 million shares, yeah.
Quick: But I did not notice Dow Chemical on the 13-F in this most recent filing. Would have--
Buffett: We timed our sales so that once it got above the conversion price-- we timed our sales-- we tried to time 'em—because 72 million shares would be a lot of shares to get and we did not want to own the common stock we don't own any common stocks of any chemical companies so and as the stock when higher we sold it more aggressively because we wanted to get 72 million shares done by the day which was becoming more probable all the time that they would call it and they called it exactly when we thought they would call it. And I think our last shares were sold the day before, the day after, the same day we timed it to be out of 72 million shares when we received those shares.
Quick: So I was going to say you didn't sell 72 million shares on December 30 and 31st
Buffett: No we didn't want to be in that position.
Quick: but you had been timing those shares all along and preparing for it.
Buffett: exactly and it became you were in a very strong market and as Dow kept moving up we would get more aggressive so towards the end we might have been selling a couple million shares a day when it got up to 56 or some price like that. We were hoping to get out of it, out of the common by the time they sold the common and like I said it worked out to the day we were kind of lucky on that we could have ended up with 10 million shares but we were going to quit obviously when we got to the amount that was going to be handed to us.
Quick: Why don't you like Dow or the other chemical shares?
Buffett: We've never owned chemical shares. We own a specialty chemical company Ebersol a chemical common stock we own we bought the preferred stock of Dow because we wanted a preferred position and we held it. It was kind of interesting we bought that stock in July of 2008, the preferred and they were going to acquire, Dow was going to acquire Rohm & Haas and they needed money for it and then the world fell apart in the fall and Dow wanted to get out of the contract, they sued Rohm & Haas to get out of the contract but it was held that they had to stick with it. So we closed the deal to buy the preferred stock in April of 2009 by which time the market had totally disintegrated the time we closed that we bought $3 billion worth it probably wasn't worth tops more than
60 cents on the dollar so we showed up with $3 billion for something that was worth $1.8 billion at the time which is one reason why people offer us deals they know we will be around at the closing. We showed up for the Wrigley closing too that was on October 4 or something but during that whole period we had commitments and that kept me from doing some other things we might have done at that time. The fact that we had this $3 billion going out the door
Quick: What did you ultimately end up making on Dow Chemical shares.
Buffett: we ended up making about a billion dollars and plus we had an 8.5 percent coupon those years.
Quick: You made a billion even before the preferred dividend that was paid?
Buffett: We had a billion dollar of capital gain very roughly, and then we had $255 million a year dividends during the time we owned it."