What it was like at Berkshire’s first in-person shareholder meeting in 3 years
OMAHA, Neb. –A remake of “Empire State of Mind” with lyrics about Berkshire Hathaway greeted shareholders this morning. (I don’t know if it was sung by Jay Z and Alicia Keys, but it sounded like it. We’ll try to get the lyrics for you at some point.) The song is a throwback – worthy of a Berkshire Hathaway annual meeting, which is the very definition of old school.
Picking up on what I wrote in today’s Morning Brief, the 2022 Berkshire Hathaway (BRK-A, BRK-B) reunion was both captivating and, well, dare I say SOP. The distinction is a matter of form and content. The format of the meeting is largely the same (i.e. SOP) as in 2019, the last in-person event. But the content, which Warren Buffett and Charlie Munger were talking about, was quite interesting.
I’ll start with what’s the same, and it’s simple – the whole shebang. Upon entering the convention center and arena, the Berkshire gang is back. Several thousand of them, packing the hall and shopping (for Berkshire company goods) until they fell. Admittedly, there were fewer Berkshire companies in the room. For example, the usual large Coca-Cola display was missing. (I wonder why?)
There are other effects of supply chain pressure, like the lack of a special-edition Brooks running shoe (dang!). But supply chain constraints didn’t seem to impact See’s Candies; it looked like they had tons, in fact exactly 11 tons. Apparently the shareholders had some serious cases of a sweet tooth. Buffett told us See had record sales on Friday.
“Anything that’s not sold goes to Charlie and me,” jokes Buffett.
The (Jimmy) Buffett boat, (“when two titans of industry collide”) caught my eye. The boat, designed by parrot chef Jimmy Buffett and manufactured by Berkshire subsidiary Forest River, costs $200,000 with a 10% shareholder discount. Buffett said he sold 15 of them late Saturday afternoon.
The required intro video aired along with the greatest hits clips featuring stars from “Breaking Bad,” “The Office” and “Desperate Housewives.” Also included was a classic clip of Buffett from 1991 in front of Congress during the Salomon Brothers scandal, where he uttered the now famous (at least on Wall Street) words: “Lose money for the company, and I’ll be understanding; lose an ounce of reputation for the company, and I will be ruthless. I love Myles Udland’s title on this: “This is when America met Warren Buffett.”
The original video piece featuring shareholder (and actor!) Bill Murray focused on the last three years of the pandemic and was a kind of homage to “Groundhog Day”. (Maybe “Caddyshack” next year?) BTW Bill Murray showed up for the meeting, as did Apple CEO Tim Cook and JPMorgan CEO Jamie Dimon.
Soon, Buffett and Munger – why do they sometimes remind me of Randolph and Mortimer Duke from “Trading Places”? — took the stage to loud and sustained applause.
“I don’t think we hear anything from index funds,” Buffett joked.
Buffett and Munger were joined on stage by Berkshire vice presidents Greg Abel and Ajit Jain. The Fab Four seemed in great shape.
“It feels good to be in person,” Buffett said. “Charlie and I are 190 years together and I think we have a right to see the shareholders in person.” More jokes about age and dementia followed.
“A few stocks have become very interesting for us”
CNBC’s Becky Quick asked a shareholder a question about why Buffett started buying stocks again (i.e. HP, Allegheny, and especially Occidental Petroleum), and Buffett launched into a soliloquy of over 15 minutes—with occasional Charlie zingers—about banks and brokers, the market, his marriage, and even the late mobster Bugsy Siegel. And the shareholders swallowed it.
In short: “A few stocks have become very interesting for us,” Buffett said. “It’s important to understand…the market over the past two years…has been extraordinary, sometimes efficient and other times almost totally casino…and it has existed to an extraordinary degree over the past two years. Wall Street makes a lot more money when people gamble than when they invest.
Next, Buffett talked – and marveled – about buying 14% of Oxy Pete, as it’s called, in two weeks. (Berkshire also bought billions of dollars from Chevron recently.) Later, Buffett said he had “some news.” It was about Activision Blizzard and how BRK now owns 9.5% of the gaming giant through an arbitrage strategy, since it’s being taken over by Microsoft.
Charlie Munger had some good lines as usual: “We now have computer algorithms that exchange with other computers. And people buying stocks who don’t know anything about it, getting advice from people who know even less. It’s an incredibly crazy situation.
Continuing on that point, Munger said, “All of this activity makes it easier for us.”
“We’re counting on it actually,” Buffett added.
One thing that Buffett spoke to me at length, almost obsessively even, in a phone call in January was how much he wished he could count and communicate with all those shareholders. “I don’t know how many we have,” he told me. “I tried to find out.”
At this point, Buffett spoke today about Broadridge, a service company that charges him to communicate with its shareholders. They told him they had 3.5 million BRK accounts. (There are probably many more accounts than individual shareholders.)
I thought of that as I looked at the packed CHI health center, with a capacity of 17,560 people. Assuming there are a few thousand people in the side chambers, this is probably still less than 1% of the total number of shareholders. I’m sure it’s not lost on Buffett. He sits in a crowded arena and only reaches a tiny fraction of his audience.
And I could hear it in his voice when I spoke to him earlier this year. The great desire he has to speak with each of them.
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