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Buffett says Berkshire is in good hands, praises Apple despite declining stake

By Jonathan Stempel and Koh Gui Qing

OMAHA, Nebraska (Reuters) – Warren Buffett assured Berkshire Hathaway shareholders on Saturday that his expected successors were ready to take the job, and he praised Apple, even though Berkshire has reduced its position in the iPhone maker.

Speaking at Berkshire’s annual meeting, the legendary investor paid tribute to his late business partner Charlie Munger and said he expected the conglomerate’s cash flow, which now stands at a record 189 billion dollars, continues to grow.

The meeting was the 60th for Buffett, who since 1965 has transformed Berkshire from a bankrupt textile company into an $862 billion colossus owning the BNSF railroad, Geico auto insurance, Dairy Queen and dozens of companies. other companies.

Buffett, 93, told shareholders that vice chairmen Greg Abel and Ajit Jain proved to be the right people to lead Berkshire after he leaves.

Abel, who was named Buffett’s successor as chief executive in 2021, and Jain have directly overseen Berkshire’s operating subsidiaries since 2018.

“When you have someone like Greg and Ajit, why settle for me?” » said Buffett. “It worked extremely well.”

“I don’t really know how (Abel) does it, but we have the right person, I can tell you that,” he added.

Buffett said he would like Abel, 61, once he becomes chief executive, to have final say on capital allocation decisions regarding Berkshire’s public stock portfolio.

Investors have long viewed Todd Combs and Ted Weschler, who manage part of Berkshire’s $335.9 billion stock portfolio, as the best candidates to manage part or all of it.

The meeting, part of a weekend Buffett calls “Woodstock for capitalists,” was the first since Munger died in November at the age of 99. Buffett described Munger, his longtime friend and foil, as “the architect of today’s Berkshire.”

Buffett has given no sign of stepping down, telling shareholders, “I feel good,” while joking that he shouldn’t accept four-year employment contracts.

DECREASE IN CASH, GROWTH IN CASH

Before the meeting, Berkshire reported its first-quarter results, including a 39% jump in operating profit to a record $11.2 billion.

To everyone’s surprise, Berkshire announced that it sold about 13% of its Apple shares, reducing the value of its stake from $174.3 billion to $135.4 billion. Apple’s stock price fell 11% during the quarter.

The sale was the main reason Berkshire’s cash flow exploded. Buffett said liquidity could reach $200 billion this quarter, reflecting the risks he sees from high stock valuations and geopolitical conflicts.

Despite Apple’s reduced stake, Buffett praised the company, saying it was “an even better company” than two of Berkshire’s oldest and largest investments, American Express and Coke. -Cola.

The iPhone was “one of the best products, and it may be the best product of all time,” Buffett said in the presence of Apple Chief Executive Tim Cook.

Berkshire invested in Apple in 2016, and the normally tech-phobic Buffett came to view it as a consumer goods company with strong pricing power and devoted customers.

While some investors have expressed concern that Apple represents too large a portion of Berkshire’s stock portfolio, Buffett has said Apple will remain his company’s largest stock investment barring unforeseen events.

Abel, meanwhile, has vowed to fight lawsuits seeking tens of billions of dollars from Berkshire’s PacifiCorp utility unit following the 2020 Oregon wildfires. He described it as a significant challenge and said many claims were unfounded.

Shareholders re-elected Berkshire’s 14 directors and rejected six shareholder proposals, all of which Buffett opposed.

At the start of the meeting, shareholders watched a video tribute to Munger, including scenes from Omaha from 1924, when he was born, and clips of Buffett and Munger over the years.

Munger was on stage alongside Buffett during the meetings, known for his terse and acerbic comebacks to Buffett’s thoughts on Berkshire, the economy, Wall Street and life.

Berkshire shares are up 23% over the last year. Although that figure is lower than the Standard & Poor’s 500’s 25% gain, Berkshire is up 218% over the past decade, compared to the S&P’s 172%.

LINES FORMED HOURS BEFORE THE MEETING

Before the meeting, thousands of people lined up in wet and rainy weather to enter the arena, sometimes hours in advance. When the doors opened at 7 a.m., many raced to get the best seats.

The weekend also featured a showroom for shareholders to purchase gifts such as Berkshire T-shirts and Squishmallows toys at shows of Berkshire-owned companies.

Serena Lam, 32, an investment manager who traveled with 40 others from Hong Kong, said she arrived at 2:30 a.m.

“I want to see Warren Buffett,” she said. “I want to know his views on Japanese stocks. I flew over 25 hours for this.”

As usual, Buffett interspersed his comments on Berkshire’s portfolio with thoughts on wealth and life, including his own.

“I like managing the money of people who trust me. I like the feeling of confidence,” he said. “If I’m lucky, I can keep going for six or seven years, or it could end tomorrow.”

(Reporting by Gui Qing Koh and Jonathan Stempel in Omaha; additional reporting by Scott Morgan in Omaha and Davide Barbuscia in New York; editing by Ira Iosebashvili, Megan Davies, Cynthia Osterman, Jason Neely and Diane Craft)

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