Reporting From Omaha

Berkshire Hathaway's 55th Annual Shareholder Weekend Recap

Continuing an Obermeyer Wood tradition, five team members traveled to Omaha in early May for Berkshire Hathaway’s 55th annual shareholder weekend. The OWIC team, comprised of Wally, Ali, Maia, Tod, and Brian, woke around 4:30 am on Saturday, May 4, and made its way to the CHI Health Center Stadium to stand in line to secure prime seats for the meeting, which began at 8:30 am. Despite the fact that this event is now available for anyone to watch via live stream, attendance for this year’s “Woodstock of Capitalism” was as strong as ever, with 42,000 people packing the arena. Warren Buffett, 88, and Charlie Munger, 95, held court for more than five hours, answering questions from journalists, analysts, and investors with their usual wit, wisdom, and down-to-earth style. The two business partners covered an impressive range of topics, including succession plans, share buybacks, value investing, and U.S.-China relations, to name a few. Their ability to provide detail-filled answers about Berkshire’s vast businesses continues to be an awe-inspiring spectacle.

A few highlights:

The duo was asked about whether Berkshire Hathaway’s longstanding value investing philosophy was changing after the company disclosed that it recently bought a stake in Amazon – a company with a high price-to-earnings ratio. In response, Buffett stated that all investing is value investing and the price of a stock shouldn’t be the only consideration. He noted that his portfolio managers who bought Amazon shares looked at a slew of financial metrics, including the company’s sales, margins, tangible assets, excess cash, and excess debt. “All those things go into making a calculation as to whether they should buy A versus B versus C, and they are absolutely following the principle,” said Buffett.
Looming large over this year’s meeting was the topic of share buybacks, and whether Berkshire planned to do more of them given that the company has about $100 billion of cash on hand after the first quarter of 2019. Buffett said buying back shares benefits Berkshire shareholders, but a pile of cash won’t influence the timing. “We want to be sure when we repurchase shares that people who haven’t sold their shares are better off than before,” he said.
An interesting question focused on the increased criticism of capitalism in the U.S. When asked to respond with his view, and whether this posed any threat to Berkshire, Buffett replied, “I’m a card-carrying capitalist.” He added: “You don’t have to worry about me changing in that matter. I also think capitalism does involve regulation. It involves taking care of people who are left behind … I don’t think the country will go into socialism in 2020 or 2040 or 2060.”
Succession at Berkshire has become an increasingly hot topic in recent years, as Warren and Charlie near the end of their careers after running the business for nearly 55 years. In a nod to this issue, Warren asked Greg Abel, Berkshire’s vice chairman for non-insurance businesses, and Ajit Jain, Berkshire’s vice chairman for insurance operations, to respond to two separate questions during the meeting. Both men answered a question from their seats in the crowd, but Buffett did allude to the possibility that one or both of them would join him and Charlie on stage at future annual shareholder meetings. Buffett didn’t tip his hand too much, as he had already promoted both men to leadership positions earlier this year. However, it was interesting to see the rare sight of someone not named Buffett or Munger answering questions at the annual meeting.