During the 1994 Berkshire Hathaway Annual Meeting, Warren Buffett explained that Berkshire may consider acquiring a business without current profits if it has strong future potential. He highlights their past investment in GEICO, which initially lost money but turned profitable later. He prioritizes the present value of future earnings over immediate profits, indicating a long-term investment approach. Buffett and Munger assert they aren’t concerned about early financial reports post-acquisition. Here’s an excerpt from the meeting:

Buffett: We could conceivably buy a business — I don’t think we would be likely to — but we could we could conceivably buy a business that had no current after-tax cash flow. But, we would have to think it had a tremendous future.

But we would not find — obviously the current figures, particularly in the kind of businesses we buy, tend to be representative, we think, of what’s going to happen in the future. But that would not necessarily have to be the case.

You can argue, for example, in buying stocks, we bought GEICO at a time when it was losing significant money. We didn’t expect it to continue to lose significant money.

But if we think the present value of the future earning power is attractive enough compared to the purchase price, we would not be overwhelmed by what the first year’s figure would be. Charlie, you want to add to that?

Munger: Yeah. We don’t care what we report in the first year or two of — after buying anything.

You can watch the entire meeting here: