Berkshire Hathaway Annual Meeting 2018: Trade ‘Is a Win-Win Situation’

Berkshire Hathaway Annual Meeting 2018: Trade ‘Is a Win-Win Situation’

Given the new accounting rule, Mr. Buffett suggested Saturday that shareholders should look at Berkshire’s operating income, which excludes gains and losses for Berkshire’s investments, for a more accurate picture of the company’s performance.

Berkshire reported its operating income rose 49 percent to $5.29 billion from a year ago.

— Stephen Grocer

Shareholders walking through the exhibit hall at Berkshire Hathaway’s 2018 annual meeting. Credit Rick Wilking/Reuters

Questions for Mr. Buffett

The main event every year at Berkshire Hathaway’s annual meeting is the question and answer session. Elisa Mala, a reporter working for The New York Times asked those attending Berkshire events on Friday what they would ask Mr. Buffett. Here is a sampling:

• What is the single greatest important investment in your lifetime? Is it a company? Is it a relationship? — Conner Van Fossen, Hanscom Air Force Base in Bedford, Mass.

• What are your thoughts about the future/sustainability of health care and Medicare, and how is Berkshire Hathaway’s joint venture with JPMorgan Chase and Amazon going to address this? —Timothy Liu, San Francisco Bay Area.

• What does he see in the cryptocurrency market? Is it going to be the future? Is it going to replace the way we exchange value? Is it worth the hype? — Jason Lu, Shanghai

• Where do you see the job market going, given the rise of Artificial Intelligence? — Ralph Humphrey, Hillside, N.J.

• He’s been technology averse in the past. What makes him so bullish on Apple? — Brian Hanks, Salt Lake City, Utah

• How long he plans on doing this. —Bill Skidmore, Omaha, Neb.

— Elisa Mala

Jessica Staben taking a selfie with 1-year-old Cecilia Johnson in front of a caricature of Warren Buffett, right, and Berkshire Hathaway’s vice chairman Charlie Munger. Credit Nati Harnik/Associated Press

Scenes from Omaha: shopping day

(As Berkshire’s annual meeting has grown over the years, it has become a three-day event. Friday is Berkshire Hathaway’s shopping day, where shareholders can buy products from many Berkshire-owned companies.)

Shareholders moseyed around CenturyLink Center, where the annual meeting takes place, perusing dozens of booths displaying goods — many created specifically for the event — from brands like Geico, NetJets and Coca-Cola.

What was really on sale? All things Warren Buffett.

Investors could snack on a Dilly Bar, the long-favored popsicle of the Oracle of Omaha, for $1 or snag “Warren and Charlie” rubber ducks ($5 for the pair at the Oriental Trading Company booth). There were Justin cowboy boots embroidered with the words “Berkshire Hathaway Inc. Shareholders Meeting” and guests had the option to “Put yourself in Warren Buffett’s boots,” as the marketing materials suggest, and purchase a style that had been owned by the man himself.

Jim Van Fossen, a retired financial planner, bought matching Berkshire Hathaway boxers for himself and his son, Conner Van Fossen. In town from Missoula, Mont., he said he wanted a memento of their first trip to the shareholders’ meeting.

Of course, shoppers and vendors were hoping for a sighting and interaction with the man himself. Failing that, they settled for selfies with his many likenesses. See’s Candies displayed Scotch Kiss confections “made by Warren,” and one staff member’s uniform bore Mr. Buffett’s autograph.

The most photographed autograph was at the Benjamin Moore paint booth, where Mr. Buffett had signed his name in permanent marker next to a wall-size mural of his face. All day long, revelers followed suit, decorating the wall with their own signatures in dry-erase ink, and snapping selfies to preserve the memory.

— Elisa Mala

Berkshire Hathaway Annual Meeting 2018: Trade ‘Is a Win-Win Situation’
Berkshire Hathaway Annual Meeting 2018: Trade ‘Is a Win-Win Situation’

What to watch from the meeting

By some measures, Berkshire had a quiet year. The company failed to announce any major acquisitions since Mr. Buffett and Mr. Munger took the stage a year ago.

Still, in January, Berkshire did team up with Amazon and JPMorgan to form an independent health care company, and two longtime executives were promoted, positioning them as possible successors.

Also, shares of Berkshire surpassed $300,000 in December for the first time. To put that in perspective, Mr. Buffett paid $7.50 a share for his initial stake.

Succession: Mr. Buffett has faced persistent questions over the years about who will succeed him as chief executive of Berkshire. Mr. Buffett has largely sidestepped the questions. This year, though, the issue should draw greater attention. In January, Mr. Buffett named the longtime Berkshire executives Gregory E. Abel and Ajit Jain, as vice chairmen. “It’s part of a movement toward succession over time,” Mr. Buffett said in an interview on CNBC at the time.

Berkshire’s health care joint venture: Mr. Buffett has warned regularly for years about the risk of rising health care costs to American businesses, calling it “the tapeworm of American economic competitiveness.” There is a lot still unknown about Berkshire’s decision to set up a joint venture with JPMorgan and Amazon to lower their health care costs. The first priority, as Mr. Buffett said in February, is to hire a chief executive.

Apple: Mr. Buffett famously avoided investing in tech companies because he didn’t understand them. There now seems to be one exception to that rule. Berkshire continues to snap up shares of Apple. Since Berkshire first took a stake in the iPhone maker about two years ago, the investment has grown into Berkshire’s largest holding. At the end of the first quarter, Berkshire owned $40.7 billion of Apple’s shares.

Deal making: Mr. Buffett admits that Berkshire is in the midst of a deal-making dry spell. The company made no big acquisitions in 2017, and that streak has continued into this year. In his annual letter, Mr. Buffett said acquisitions have gotten too pricey. That “proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high. Indeed, price seemed almost irrelevant to an army of optimistic purchasers,” Mr. Buffett wrote. The problem is Berkshire has become so big that spending on large acquisitions has become key to its growth. Some investors in Berkshire may become impatient with the lack of acquisitions, especially as the company’s cash pile had increased to $116 billion by year end.

Wells Fargo: The Federal Reserve in February imposed unusually harsh penalties on Wells Fargo, and last month the bank agreed to pay two federal regulators $1 billion to settle an array of investigations into its mortgage and auto-lending practices.

Berkshire first invested in Wells Fargo nearly three decades ago, and is currently the bank’s biggest holder. Though Mr. Buffett has criticized the bank over the scandals around its sales tactics, he has also stood by the company’s management. Berkshire investors may ask why.

— Stephen Grocer

How Saturday will unfold

The meeting kicked off at 9:30 a.m. E.D.T. with a movie. Mr. Buffett and Mr. Munger will then take the stage around 10:15 a.m.

Over the roughly next six hours, including an hour lunch break, the pair will answer questions. Once the question came only from shareholders on the floor of the CenturyLink Center.

But in 2011, Mr. Buffett added a panel of journalists. Shareholders email questions to those journalists — DealBook’s Andrew Ross Sorkin, Becky Quick of CNBC, and former Fortune writer, Carol Loomis — who choose six to ask.

Mr. Buffett added financial analysts to the panel a few years later. This year Jonathan Brandt of Ruane, Cunniff & Goldfarb and Gregg Warren of Morningstar, as well as Gary Ransom of Dowling & Partners, an insurance specialist, will ask questions.

— Stephen Grocer

Welcome to ‘the Woodstock for Capitalists’

Omaha, Neb., is not typically the center of the financial world. But once a year, that is what it becomes, attracting hedge-fund managers, business executives and mom-and-pop investors to the annual meeting of Warren Buffett’s Berkshire Hathaway.

Over the past five decades, the meeting has transformed from a small gathering of shareholders in the cafeteria of National Indemnity into “Woodstock for Capitalists.”

Tens of thousands of shareholders fill the CenturyLink Center in Omaha each year to ask Mr. Buffett and Charles T. Munger, Berkshire’s vice chairman, questions about the conglomerate, investing, the economy and politics. And between bites of See’s toffees and sips of Cherry Coke, the pair dole out their brand of folksy wisdom and corny jokes.

DealBook will be here through it all providing analysis.

Continue reading the main story


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Publish date : 2018-05-05 15:25:00
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