At 91, Warren Buffett is still sprinting around Wall Street
After a two-year pandemic-induced haitus, the only such shareholder meeting on the planet is back and could break his own stunning record.
What started in a small cafeteria decades ago today has grown so big it’s selling out the very arena where Taylor Swift and Paul McCartney perform. This weekend, tens of thousands of people from around the world will travel to Omaha, Nebraska, birthplace of “The Oracle of Omaha”, aka Warren Buffett.
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The entrance fee? A single share of Berkshire Hathaway, the conglomerate he has run for 57 years.
Not only is Buffett alive and active at 91, but the chairman and CEO of the $307 billion conglomerate – a giant with more than 80 companies under his umbrella – will burst onto the scene on Saturday with the power to declare that Berkshire’s stock performance beat the market…again.
Buffett himself predicted a record crowd of over 40,000, although Berkshire later released a statement downplaying that number. But for a man who regularly deals in odds thanks to his huge insurance business, he’s never been one to casually throw around predictions involving numbers.
He could believe that with so many Americans eager to travel after the COVID-19 shutdowns, why not come to the capitalist circus whose No. 1 attraction is an oddity more fascinating than any three-headed serpent: two elderly self-made billionaires – Buffett and his 98-year-old best friend and Berkshire Vice Chairman Charlie Munger, who decade after decade has crushed stock indexes and the performance of the world’s top fund managers. They have done so simply by adhering to disciplined and simple investment rules that they willingly share, and yet few, if any, manage to imitate.
The two sit alone on stage and for hours answer questions from the crowd. This year, Buffett and Munger will co-star with Buffett’s eventual successor, Vice Chairman Greg Abel, as well as Vice Chairman Ajit Jain, who heads Berkshire’s vast insurance business.
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|BRK.A||BERKSHIRE HATHAWAY INC.||499,000.00||+2,200.00||+0.44%|
All four will come armed with a stock market performance that shareholders are sure to applaud: Over the past twelve months, Berkshire shares have returned 30% versus 8% for the S&P.
HOW DID BUFFETT DO IT?
With a net worth of $120 billion today, Buffett is the sixth-richest person in the world, but when he started his investment firm in 1965, he was just the timid neighbor of Nebraska. that he forced himself to take the Dale Carnegie course. How to make friends and influence people’ so that he can deal with potential investors. He went door to door asking friends and family to try his luck with the Omaha kid who said he could make his hard-earned money grow by investing and buying businesses outright cash producers that produced unique, quality products that were best in class: think Geico Insurance, American Express, Coca-Cola, See’s Candies. In fact, See made so much money that after buying the whole business, he used his cash flow to fund the purchase of other businesses, including an entire railroad.
He also skillfully collects huge blocks of shares in companies that suit his needs. Berkshire’s $340 billion stock portfolio is a green whale – chock-full of Apple, Bank of America, Kroger and, most recently, HP Inc. and Occidental Petroleum.
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Buffett shareholders will not arrive entirely satisfied, however. It sits on a $144 billion pile of cash, most of which is parked in low-yielding Treasuries. The chintzy returns didn’t thrill investors who have already questioned why he didn’t put the money to work. Yes, it did stock buybacks, $27 billion last year alone, but that barely made a dent. Buffett refuses to pay a dividend, preferring instead to reinvest the profits in new ventures, and yet he also complains that there is not much that checks his boxes *and *is not overvalued.
THE 800-LB. BULL IN THE ROOM
Perhaps the number one question for the crowd: will this be the last in-person reunion featuring the Warren & Charlie show? Both have failing physical faculties. Buffett is hard of hearing, and at 98, Munger’s mind is sharper than ever (his new hobby is architecture) but he’s mostly in a wheelchair with limited eyesight. (At the 2017 reunion, the two took the stage and Buffett joked, “It’s Charlie and I’m Warren. You can tell us apart because he can hear and I can see.”)
Although he named his Abel and Jain his successors, he said in a recent interview that Abel, who will lead all non-insurance operations, “hasn’t started to warm up yet”, can – be an indication that Buffett is far from loosening his grip on the Berkshire scepter, let alone handing it over to Abel.
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Could it be because Buffett fears Berkshire shares will sell off if he does? He has often said that Jain and Abel, as well as his equity investment heads Ted Wechsler and Todd Combs, are smarter than him, but don’t believe him. While each is brilliant in their field, the mere fact that Buffett has positioned four people to do the job he has done single-handedly for years speaks volumes. No wonder shareholders come from as far away as China and Australia to cling to his every word.
Liz Claman will report live from Berkshire Hathaway’s shareholder weekend starting Friday.
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