Warren Buffett’s Berkshire Hathaway gathered for its first annual meeting Saturday at an Omaha arena, bringing together shareholders for the first time since the death of its longtime vice chairman and right-hand man. Charlie Munger.
Tens of thousands of shareholders filled the arena, eager to suck up tidbits of wisdom from billionaire Buffett, who dubbed the meeting “Woodstock for capitalists,” and to pay tribute to Munger, who died at age 99 in November.
The meeting opened with a video tribute to Munger recounting his life and highlighting some of his best-known quotes from meetings over the years that drew applause, including classic lines like “If people don’t If we didn’t cheat so often, we wouldn’t do it.” rich.” The video also featured old interviews of Buffett and Munger speaking about their epic friendship.
The video also featured several of the classic skits that investors had done to meet party stars over the years, such as a parody of “Desperate Housewives” in which one of the women introduced Munger as her boyfriend and another video in which Jamie Lee Curtis fainted over Munger.
At the end of the video, everyone in the arena gave Munger a long standing ovation thanking him for being what Buffett called “the architect of Berkshire Hathaway.”
Rebecca S. Gratz / AP
For decades, Munger has shared the stage with Buffett every year for the marathon question-and-answer session that serves as the centerpiece of the event. Munger regularly let Buffett take the lead with detailed answers that lasted several minutes. Then Munger himself would get straight to the point. He is remembered for calling cryptocurrencies stupid, telling people to “marry the best person who will get you” and comparing many unproven internet companies in 2000 to ” turds “.
He and Buffett functioned as a classic comedy duo, with Buffett providing lengthy set-ups to Munger’s witty one-liners. Together, they transformed Berkshire from a struggling textile mill into a massive conglomerate made up of a variety of interests, from insurance companies such as Geico to the BNSF railroad to several major utilities and an assortment of other companies.
Munger often summarized the key to Berkshire’s success as “trying not to be systematically stupid, instead of trying to be very smart.” He and Buffett were also known for sticking to businesses they understood well.
“Warren always did at least 80% of the talking. But Charlie was a great foil,” said Whitney Tilson, an analyst at Stansberry Research, who was looking forward to her 27th consecutive meeting with a slightly heavy heart due to the absence of Munger.
This absence, however, could allow shareholders to better know the two executives who directly supervise Berkshire’s companies: Ajit Jain, who manages the insurance units, and Greg Abel, who takes care of everything else. Abel will one day replace 93-year-old Buffett as CEO. Abel and Jain share the main stage with Buffett for the first time this year, replacing Munger.
The first time Buffett asked Abel a question, he mistakenly said “Charlie?” by habit.
Morningstar analyst Greggory Warren said he hopes Abel will speak out more this year and allow shareholders to see some of the brilliance that Berkshire executives talk about. Since Munger blurted out at the annual meeting three years ago that Abel would be his successor, Buffett has repeatedly reassured investors of his confidence in the choice.
Berkshire Hathaway remains strong despite falling profits
Buffett’s company reported a sharp drop in profits due to the fall in the paper value of its investments and the sale of part of its massive stake in Apple, but overall Berkshire’s many businesses Hathaway performed well.
Berkshire reported profit of $12.7 billion, or $8,825 per Class A share, in the quarter. That’s about a third of the $35.5 billion, or $24,377 per A share, Berkshire announced a year ago.
But these figures were strongly influenced by a sharp decline in the paper value of Berkshire’s investments. That’s why Buffett encourages investors to pay more attention to the conglomerate’s operating profits that exclude investment figures. By that measure, Berkshire’s operating profit jumped 39% to $11.222 billion from $8.065 billion a year ago, driven by strong performance at its insurance companies.
The three analysts surveyed by FactSet Research forecast operating income of $6,701.87 per Class A share.
Buffett sold nearly $6 billion in stock during the quarter, including reducing Berkshire’s massive stake in Apple by about 13%. The investment in the iPhone maker remains the largest in the $364 billion portfolio, at $135.4 billion, and Buffett said he expects Apple to remain the largest investment for years, even until his successor took over.
But the estimated value of Berkshire’s stake in Apple suggests that Buffett sold more than 100 million shares. Buffett said he invested in Apple stock because of consumers’ devotion to the iPhone and other Apple products.
Apple CEO Tim Cook, present at the Berkshire meeting, told CNBC that he still considered it a privilege to have Berkshire as a major shareholder, and that he knew about the sales before Berkshire made them. disclosed on Saturday.
Berkshire reported underwriting profit of $2.6 billion among its insurers, up from $911 million a year ago.
BNSF Railroad’s profits disappointed and fell 8% to $1.143 billion, but most of its many other companies generated strong results, including a 72% jump in the unit’s operating profits of utilities, which added $717 million to Berkshire’s total.
Berkshire’s revenue increased 5% to $89.87 billion in the quarter. The two analysts who reported their estimates to FactSet called for revenue of $87.044 billion.
With no major acquisitions in sight, Berkshire’s massive cash pile continued to grow to a record $188.993 billion during the quarter. Berkshire even spent $2.6 billion buying back shares in the first three months of the year, but its companies, including Geico Insurance, BNSF Railroad, several major utilities and an assortment of dozens others, continue to generate mountains of cash.
“We’d love to spend it, but we won’t spend it unless we’re doing something with very little risk that will make us a lot of money,” Buffett said.
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