Today I plan on attending the Berkshire Hathaway annual meeting in Omaha, the first in-person such gathering since 2019.
Much has changed for Warren Buffett, 91, and Charlie Munger, 98, over the past three years — and much hasn’t.
Before I get to that, just consider that the 6th biggest company in the U.S. (and 11th biggest in the world) — with a quarter of trillion dollars of annual revenue and roughly 370,000 employees — is run by two nonagenarians. "Unlikely" is a word that comes to mind.
How many more years and annual meetings do these two have in them? Not many more, so enjoy the ride.
In fact, both Charlie and Warren have been winding things down a bit. Buffett recently announced his last “Power Auction Lunch with Warren Buffett,” calling it a “Grand Finale Event.” Last time Buffett held this auction, which benefits the Glide Foundation, a San Francisco-based charity that addresses poverty, in 2019, the winning bid went for $4.6 million. I can’t imagine what it will fetch for this, the last, er, lunch.
Still Warren and Charlie plan on talking for some five hours today, fueled per usual by See’s peanut brittle and Cherry coke. To be sure, as long as Warren’s the CEO, he should be available. This is a guy who plunked down $11.6 billion to buy insurer Alleghany last month — BRK’s biggest deal in six years. He better know what he’s doing, which if the stock price is any indication (more on that in a second), it appears he still does. (I have to say, Buffett’s recent sit-down interview with Charlie Rose was a bit of a head scratcher.)
As for what’s changed and what’s different, just the fact that Buffett’s army, or flock, will be back in person today, is compelling enough. I’ll be fascinated to feel the vibe. There will be a timelessness to it I’m sure.
Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc's annual shareholder meeting in Omaha, Nebraska, U.S., May 4, 2019. REUTERS/Scott Morgan ·Scott Morgan / Reuters
The substantive facets of the meeting should be interesting too—and new. As Barron’s notes, there are a number of big investments to talk about this year like HP, Occidental Petroleum and Alleghany.
“It seems odd that there’s been this huge amount of investment activity during this market pullback — when two years ago when there was a market pullback he was selling stocks,” says James Shanahan, who covers Berkshire at Edward Jones and has a hold rating on the stock. “It might be [that there] could’ve been a variety of outcomes from the pandemic, some quite severe; where this looked more like a traditional pullback in the market.”
You also have a number of knotty shareholder resolutions, including one on accounting for workforce diversity and another on sustainability. The proposals will likely be defeated, but could prove embarrassing if they garner enough votes, as The New York Times notes. Big institutional investors like BlackRock are for instance now espousing green goals and voted for similar proposals last year. Then there’s Buffett’s pal, Bill Gates, who’s also been talking up sustainability. How will the big block of BRK shares owned by the Gates Foundation vote? A bit awkward.
Ray Renk holds his 10-year-old son Benjamin as they wear matching custom-made suits printed with a caricature of Berkshire Hathaway Chief Executive Warren Buffett at the annual shareholder meeting in Omaha, Nebraska, U.S., May 4, 2019. REUTERS/Scott Morgan ·Scott Morgan / reuters
(As an aside, why doesn’t management ever say, "This proposal is a great idea. Vote yes!" Boards are supposed to be dispassionate, but somehow they shoot down every resolution ever proposed.)
But back to Buffett, and how to explain the apparent contradiction between his progressive positions on issues like taxation and social issues, and the company’s positions on climate change and workforce composition disclosure?
“I don’t think it’s a function of a personal belief system that runs counter to these goals,” says Cathy Seifert, a Berkshire Hathaway analyst at CFRA Research. “It’s more a function of a mindset of Berkshire Hathaway that almost runs like a private equity firm. I don’t necessarily think it belies anything nefarious but unfortunately in this environment it starts to look a little antiquated.”
Regardless, Buffett’s magic touch as an investor has seemingly returned. After lagging the market during FAANG mania, Berkshire is running circles around the S&P 500 this year — up about 10%, with the market down 10%. BRK is ahead of the index over one year, two years and five years. And Barron's notes Berkshire has returned 15.4% annually over the past 10 years, versus 14% for the S&P. BTW, Buffett didn’t lose his mojo during the tech stock mania — rather it never left. BRK always underperforms during bubbles.
Shareholders in overflow rooms watch on big screens as Berkshire Hathaway Chairman and CEO Warren Buffett, left, and Vice Chairman Charlie Munger preside over the annual Berkshire Hathaway shareholders meeting in Omaha, Neb., Saturday, May 4, 2019. An estimated 40,000 people are thought to be in town for the event, where Buffett and Munger spend hours answering questions. (AP Photo/Nati Harnik) ·ASSOCIATED PRESS
Is it too late to invest in Berkshire? I remember people asking that 20 years ago when Buffett was 71, and the price of an A share of Berkshire was $70,000. Today it’s around $500,000. That’s a price gain of 576% versus 291% for the overall market. Of course, "past performance is no guarantee of future results.'' And who knows how many years Buffett has left running Berkshire.
“He’s going to live to be 100,” a Berkshire insider told me recently. Maybe, but he’s certainly not going to be CEO for another 20 years.
We also don’t know if Buffett with Greg Abel — who, thanks to an apparent gaffe by Charlie Munger at last year’s meeting appears to be Buffett’s successor — will pull off a Steve-Jobs-to-Tim-Cook hand-off, which has benefitted Apple shareholders, (and BRK shareholders by dint of BRK’s investment in Apple), oh-so well. So really the big question for Berkshire shareholders is: How able is Abel?
In January I had a long phone call with Buffett who told me how much he wished to be back in-person this spring in Omaha. "We really want to have the meeting," he told me. "There is pent-up demand."
Looks like he got his wish. At 91 years old, Buffett will address a meeting that's the same as it ever was — but different too.
This article was featured in a Saturday edition of the Morning Brief on April 30, 2022. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
By Andy Serwer, editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer
