Warren Buffett used the annual meeting of Berkshire Hathaway on Saturday (Sunday morning AEST) to rail against Wall Street excess and extol the virtues of cash after rapidly spending tens of billions on stocks and companies. He also addressed the risk to his conglomerate from the threat of nuclear war.
The meeting in downtown Omaha, Nebraska, was Berkshire’s first welcoming shareholders since 2019, before COVID-19 derailed America’s largest corporate gathering for two years. It allowed shareholders to ask questions directly to Buffett and Berkshire vice chairmen Charlie Munger, Greg Abel and Ajit Jain.
Buffett’s comments came after Berkshire, long criticised for keeping too much idle cash, revealed it had scooped up more than $US51 billion ($72 billion) of stocks in the first quarter, including a much larger stake in Chevron Corp.
Berkshire also said first-quarter operating profit was little changed, as many of its dozens of businesses withstood supply chain disruptions caused by COVID-19 variants and the Ukraine invasion.
Buffett, 91, said it "really feels good" to address shareholders in person, after holding the past two meetings without them. Attendees included JPMorgan chief executive Jamie Dimon and actor Bill Murray, who is a shareholder, among others.
‘I think we’re sane’
Buffett had in his annual shareholder letter in February bemoaned the lack of investment opportunities.
That prompted a shareholder to ask what changed in March, when Berkshire bought 14.6 per cent of Occidental Petroleum and agreed to pay $US11.6 billion for insurer Alleghany.
Buffett said it was simple: he became interested in Occidental after reading an analyst report, and in Alleghany after its chief executive Joseph Brandon, who once led Berkshire’s General Re business, wrote to him.
"Markets do crazy things, and occasionally Berkshire gets a chance to do something," he said. "It’s not because we’re smart ... I think we’re sane."
Berkshire’s cash stake sank more than $US40 billion to about $US106 billion in the quarter, but Buffett assured shareholders that they should not worry.
"We will always have a lot of cash," he said. "It’s like oxygen, it’s there all the time but if it disappears for a few minutes, it’s all over."
Buffett and Jain stumbled for answers when asked about whether the Ukraine conflict could degenerate into nuclear war.
Jain, who has drawn Buffett’s praise for decades, said he had a "lack of ability" to estimate Berkshire’s insurance exposure.
Buffett also seemed nonplussed, while saying there was a "very, very, very low" risk of a nuclear attack, though the world had "come close" during the 1962 Cuban missile crisis.
"The world is flipping a coin every day," Buffett said. "Berkshire does not have an answer. There are certain things we don’t write policies on because we wouldn’t be able to make good on them anyway."
Buffett also picked on a favoured target, Wall Street, saying the sharemarket sometimes resembled a casino or gambling partner.
"That existed to an extraordinary degree in the last couple of years, encouraged by Wall Street," he said.
For his part, Munger, 98, echoed Nancy Reagan in criticising bitcoin, saying that if an advisor suggested you put your retirement account there, "just say no."
Abel, who would succeed Buffett as chief executive if Buffett could not serve, defended Berkshire’s BNSF railroad. He said there was "more to be done" to improve operations and customer service, and compete against rival Union Pacific.
Shareholders will vote later on whether Berkshire should replace Buffett with an independent chairman – he would remain chief executive – and disclose how its dozens of businesses promote diversity and address climate risks and mitigation.
Hours before the doors opened at 7am, thousands of people began massing outside the downtown arena housing the meeting.
Berkshire had projected lower attendance than in 2019, and about 10% to 15% of seats in the normally-full arena were empty.
As at other Berkshire-sponsored events this weekend, nearly all in attendance did not wear masks, though all needed proof of COVID-19 vaccination. CNBC.com also webcast the meeting.
"I bought a chair from Walmart so I could sit down," said Tom Spain, founder of Henry Spain Investment Services in Market Harborough, England, who arrived at 3.15am to attend his third meeting. "Everyone has been using it. Next year I might bring a massive container of coffee and give it out."
Lauritz Fenselau, a 23-year-old owner of a software start-up from Frankfurt, Germany, showed up at 4am for his first meeting.
"Warren and Charlie are the priests," he said. "It’s like a pilgrimage."
Andres Avila from Boston, a huge fan of Buffett's, arrived in Omaha just five hours before getting in line at 4.45am, carrying an umbrella to fend off the rain.
"I have a bunch of my idols here," he said.
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