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Imagine sitting with billionaire Warren Buffett at a restaurant, listening to him talk business over root beer floats while Jimmy Buffett of "Margaritaville" fame gives an impromptu show at the same table.
That was the setting for 19 University of Wyoming College of Business finance students who attended a nearly five-hour session Friday, April 13, in Omaha, Neb., with Warren Buffett, widely regarded as one of the world's most successful investors.
The UW students, along with other invited students from around the country, met in Buffett's office of Berkshire Hathaway in Omaha, where he is the company's primary shareholder, chairman and CEO.
Buffett hosts hundreds of students each year for lunch and tours of Berkshire's Nebraska Furniture Mart and Borsheims Jewelry. The highlight, the students say, is an extended question-and-answer session with Buffett, whose goal is to inspire future business leaders.
"My personal reaction was being star struck on a level I have never been. It's not just meeting a billionaire, but a specific breed of billionaire -- the philanthropic type," says Michael Merryman, a UW master's degree candidate in finance from Gillette. "His sense of morality in business was highly appealing to the way I think."
Jeremiah Decker, a finance senior from Newcastle, notes Buffet's "incredible knowledge, and his recall is amazing."
"The Q&A session lasted two and half hours, and I don't think I looked at the clock the entire time," Decker adds. "He is very optimistic, but rational about investing. His general outlook and philosophy about investing are probably what I enjoyed hearing him talk about the most."
Besides the UW contingent, other participants were from the Massachusetts Institute of Technology (MIT), the University of Chicago, the University of Tennessee and the University of Pennsylvania's Wharton School, plus students from Peru and members of Smart Women Securities, a group for undergraduate women with chapters at colleges in the Northeast.
Hilla Skiba, UW Department of Economics and Finance assistant professor, arranged the trip for UW students, but because the Buffett program is so popular among colleges, her students were on a four-year waiting list. Skiba attended the same session when she was a graduate student at the University of Kansas.
Each of the UW students submitted at least one question, voted for the ones they liked best and ranked them accordingly. All participating schools were allowed to pose three questions to Buffett.
Merryman had a vested interest in his particular question -- pertaining to coal and the railway system -- that was selected by UW students. Merryman's father works for BNSF Railway -- the same company recently purchased by Buffett. BNSF is a major coal transporter in the Powder River Basin. Merryman asked Buffett what he thought would be the future of America's energy needs.
Buffett's answer was not exactly what Merryman was expecting, but enlightening. His main message was that the purchase of BNSF was "not a bet on coal," Merryman says. Buffett says that he meant to get involved in the railway industry for a long time and for reasons not related necessarily to energy.
"He stressed how remarkably cost effective it is to transport large-weight freight by using locomotives," Merryman says. "He also predicted that the amount of coal per train will decline over time, while exporting of our coal may increase due to the cleanliness associated with coal here versus coal in China, for instance. All in all, it's a very strong argument for purchasing BNSF."
Toni Schumacher, a senior in finance from Buffalo who will graduate this summer, posed the second question to Buffett. She asked, "Looking into the future, what do you see as one of the biggest obstacles America faces, and how does that affect you as an investor?"
Schumacher said she was expecting Buffett to take the question in the direction of debt or the price of crude oil; however, he took a different route.
"He stated that although unfortunate events may happen that cause temporary setbacks, such as the 2008 housing bubble and Europe's current debt crisis, in the future we are going to be better off than we are now," Schumacher says. "He commented how the standard of living has surged in the past decade, and that it will only continue to increase. He is all about the long run and not worrying about temporary ups and downs."
Decker's question was the third selected by his classmates. He asked Buffett: "You've advocated increasing taxes on capital gains. How do you think a higher tax rate might change investors' behavior, if at all?"
"Regardless of the tax rate, he's never come across anyone who didn't come to work because his taxes were too high. He said, if anything, people may work harder to earn more after taxes," Decker says. "He spent about five minutes answering the question and, all in all, I was satisfied with his answer."
Kaitlin Inschauspe, a finance junior from Sheridan, was impressed with Buffett's presentation, but was even more impressed that the "Oracle of Omaha" sat with the UW group at one of his favorite restaurants, Piccolo Pete's.
"I couldn't wipe the smile off my face the entire lunch. He gave such great advice both at the question-and-answer session and at lunch. This experience is something I will cherish forever," Inschauspe says.
Buffett mentioned investors need realistic expectations, Inschauspe adds.
"I think sometimes investors have this idea that they are going to hit the jackpot, so to speak, and make it big overnight," she says. "Yes, you can be very successful from investing, but it takes time. I think it's important that investors have realistic expectations, as Mr. Buffett said."
At the luncheon a "reserved" sign was posted across from Buffett and in between Schumacher and Inschauspe. Buffett excused himself from the UW table to address the entire luncheon crowd, announcing, "This has all been a setup. I am not the real Buffett."
To the surprise of the crowd, in walked Jimmy Buffett, a close personal friend of the other Buffett.
With guitar in hand, Jimmy Buffett went to the end of the UW students' table, put one foot up on a chair and broke into "Smart Woman (In a Real Short Skirt)" followed by "Margaritaville," the song that made him famous.
"During lunch, we heard a few stories from their friendship, and learned that out of curiosity, they've checked through DNA tests to see if they were related -- they're not," Schumacher says.
"It was so awesome to have Jimmy Buffett playing two feet in front of us and, on top of that, to sit right next to him and right across from Warren Buffett at lunch," Inschauspe says. "By far, one of the best experiences in my life."
And, by the way, the billionaire Buffett picked up the students' luncheon tab.