Money Stuff: The Podcast

Episode Title: A Broad Church: BRK/A, OpenAI, Medicaid
Release Date: May 9, 2025
Hosts: Matt Levine & Katie Greifeld

1. Warren Buffett's Retirement and Berkshire Hathaway's Future

The episode kicks off with a significant update from the recent Berkshire Hathaway shareholder meeting where Warren Buffett announced his retirement at [02:43], stating, "I'm out at the end of the year." This revelation sparked immediate discussions about the future leadership and strategic direction of the conglomerate.

Katie Greifeld reflects on the surprise element despite knowing the successor was likely to be Greg Abel, highlighting the uniqueness of Berkshire Hathaway as a company primarily driven by Buffett's exceptional stock-picking prowess rather than a traditional operating CEO. Matt Levine elaborates on this by noting, "It's so unique to have a big company that is sort of best known as a vehicle for a guy's stock picks." He emphasizes the challenge Berkshire faces in maintaining its investment strategy under new leadership without Buffett's direct influence.

The conversation delves into the "Warren Buffett premium", where investors are attracted not just to the company's diverse holdings but also to Buffett's legendary reputation for capital allocation. Levine speculates on how this premium might diminish post-Buffett, questioning, "I don't have a great empirical sense of how big the Warren Buffett premium is."

2. Bill Ackman's Strategic Moves with Howard Hughes

Transitioning from Berkshire Hathaway, the hosts discuss Bill Ackman's recent acquisition of nearly 47% of Howard Hughes at [09:29]. Ackman's intention to model Howard Hughes after Berkshire Hathaway is a focal point, with Greifeld observing, "he's trying to basically model himself after Berkshire Hathaway become a modern day Berkshire."

Levine compares this maneuver to Buffett's strategy, noting differences in industry focus—Ackman is steering towards real estate rather than insurance. He remarks, "It sort of makes sense to be like railroads and insurance companies. We should make the CEO a guy who knows how to run railroads..." This analogy underscores the strategic alignment Ackman seeks in transforming Howard Hughes.

3. OpenAI's Corporate Structure Transformation

A substantial portion of the podcast examines OpenAI's shift from a nonprofit to a public benefit corporation (PBC), discussed around [14:57]. Levine characterizes OpenAI as a "normal tech company with a lot of weird clothing on it," pointing out the company's intricate balance between visionary leadership and traditional corporate structures.

Key points include:

• Governance: The nonprofit board maintains control over the for-profit entity, ensuring decisions align with a broader mission beyond shareholder profits. Levine explains, "the nonprofit board controls the for profit board...and gets to appoint the board of the for profit company."

• Sam Altman's Role: Despite being the CEO, Altman owns no shares in OpenAI, raising questions about his compensation and incentive structures. He states, "He's not Mark Zuckerberg or Elon Musk...his wealth is a 12 digit stake in OpenAI." This highlights the unique dynamics of leadership in OpenAI compared to other tech giants.

• Regulatory Oversight: The involvement of the California Attorney General introduces another layer of oversight, potentially influencing OpenAI's strategic decisions. Levine notes, "There's some oversight of nonprofits that exists here that wouldn't exist if it was just a regular public company."

Greifeld adds perspective on the PBC model's viability, suggesting it offers CEOs greater flexibility and protection from shareholder pressures, though Levine counters by discussing how it might actually reduce binding obligations to shareholders.

4. Medicaid Provider Tax Loophole and Political Challenges

Shifting gears, the hosts tackle the complex issue of Medicaid provider taxes, introducing it as a "great racket" used by state governments to optimize funding for medical care providers. Levine describes the mechanism, "States have figured out that if the state just paid more, then the federal government would match more..." Essentially, states impose special taxes on healthcare providers to leverage higher federal funding.

Katie Greifeld underscores the political sensitivity of reforming this system, mentioning that House Speaker Mike Johnson has retreated from efforts to eliminate the loophole due to its unpopularity in swing states. Levine explains the dilemma states face: removing the loophole would either necessitate cutting Medicaid services or increasing taxes, both politically untenable options.

The discussion includes:

• Economic Impact: A case study of Lincoln Health in Colorado illustrates the financial implications, where a $500,000 provider tax leads to over $3.6 million in additional Medicaid funds.

• Regulatory Challenges: Levine points out that while the intent behind provider taxes is to redistribute funds to Medicaid-serving hospitals, states have often manipulated regulations to maximize their financial advantage, thereby undermining the system's integrity.

Greifeld appreciates the complexity of Medicaid funding strategies, highlighting how states use such mechanisms to sustain Medicaid programs without overtly increasing their budgets.

Conclusion

Throughout the episode, Matt Levine and Katie Greifeld provide insightful analyses into complex financial and corporate structures, blending wit with technical explanations. From the succession plans of a conglomerate giant and strategic moves by hedge fund leaders to the intricate governance of a leading AI company and the political-economic strategies underpinning Medicaid funding, the hosts deliver a comprehensive exploration of each topic.

Notable takeaways include the fragility and significance of leadership transitions in large companies, the evolving nature of corporate governance in tech industries, and the persistent challenges in aligning political incentives with effective public service programs.

Notable Quotes:

• Matt Levine [02:43]: "I'm out at the end of the year."
• Katie Greifeld [03:24]: "Having an orderly transition is useful."
• Matt Levine [06:37]: "We have candy. We own a big chunk of Apple for some reason."
• Katie Greifeld [08:29]: "The cash pile is currently at like $350 billion."
• Matt Levine [14:57]: "OpenAI is a normal tech company with a lot of weird clothing on it."

This summary encapsulates the key discussions and insights from the "A Broad Church: BRK/A, OpenAI, Medicaid" episode, offering listeners a detailed overview of the critical topics covered by Matt Levine and Katie Greifeld.