To attend the meeting of Berkshire Hathaway, Warren Buffett’s company, it is necessary to be a shareholder and be vaccinated against covid. After two years in which the meeting has been held electronically due to the pandemic, thousands of investors have come this weekend as pilgrims to Omaha, a city of 475,000 inhabitants in the state of Nebraska, not far from the geographic center of the United States. United States, to hear Buffett’s comments live this Saturday, who has not disappointed his believers.
Received with a thunderous ovation as if he were a rock star, with an ice bucket full of cokes at his side and some boxes of chocolates in front of him, Buffett jokingly reviewed the figures for the first quarter. Although first-quarter net profit has fallen by half due to derivative adjustments, according to figures released yesterday, Berkshire Hathaway shareholders have reason this year to be happy. The company’s shares are up 8.5% year-to-date, while the S&P 500 index is down 13%.
Buffett has been criticized for not having taken advantage of the pandemic to be more aggressive with his investments when prices were rock bottom, missing one of the rare opportunities. This Saturday he justified himself by showing his most conservative side: “We have an extreme aversion to incurring permanent losses with your funds,” he explained. “Psychologically, we would die if we lost a lot of his money. We don’t know what the economy will do, but we do know that we wake up every morning and want to have safe investments.”
Buffett has now taken advantage of the bad market moment to return to the fray with purchases for some 51,856 million dollars (about 49,400 million euros). At the end of the first quarter, Berkshire Hathaway had its portfolio investments in Apple ($159.1 billion), Bank of America ($42.6 billion), American Express ($28.4 billion), Chevron ($25.9 billion), Coca-Cola, Kraft Heinz, HP and many other companies, in addition to the unlisted businesses it controls.
This Saturday Buffett broke the news that Berkshire also has 9.5% of Activision, a company that is being bought by Microsoft, but that is trading well below the offer price due to investor distrust that the operation come to fruition due to competition problems. His bet is that the purchase of the creator of Call of Duty is completed.
He knows in depth all the sides of the coin.
Bet on the oil companies
The company still has more than 100,000 million in cash in case opportunities arise. His big recent bet has been oil, with strong investments in Chevron and Occidental, which are rising like foam on the stock market with the war in Ukraine and the energy crisis. “We have invested more than 40,000 million in a hurry, in three weeks, and now we are more lethargic,” said Buffett, who has defended maintaining a ten-high cash position: “It’s like oxygen.”
The Oracle of Omaha, as it is known, has been fielding questions for about six hours. Those who have taken the floor had been chosen by lottery. Almost any subject is raised to Buffett, but there are two that were prohibited: politics and his future investments, as they made clear the rules of courtesy of the event. Even so, Buffett has made a reflection about the polarization of the country. “People are behaving in a more tribal way,” he said, later warning that “it can be very dangerous when one group says that two plus two equals five and another says that two plus two equals three.”
The stock market as a casino
Buffett has exposed his philosophy of investing for the long term, of looking for companies with solid and profitable businesses at a good price. And he has not spared criticism of the most speculative movements. “The market is often almost entirely a casino, a gambling hall,” he has said, taking aim at Wall Street banks for incentivizing him to charge commissions: “They make a lot of money when people gamble.” But Berkshire also takes advantage of it: “The market does crazy things and sometimes that gives us opportunities. It’s not because we’re smart, it’s because we’re sane,” Buffett said.
The vice president of Berkshire Hathaway, Charlie Munger, who was at his side, has reaffirmed the idea: “We have computers with algorithms that operate against other computers. We have people who know nothing about the stock market, advised by stockbrokers who know even less”, he added.
They have asked him about the high inflation in the United States: “It is a scam for the investor in bonds, for the investor in the Stock Market, for those who keep the money in the mattress, it is a scam for almost everyone”, he has sentenced, before blaming the avalanche of money in the form of checks from the Government to families and companies and injections of liquidity from the Federal Reserve. “If you print a lot of money, it will be worth less”, he has stated, although he has saved the president of the Fed from his criticism: “Jay Powell is a hero. He is very simple. He did what he had to do.”
Both Buffett and Munger have unleashed several broadsides against bitcoin. “Whether it’s going to go up or down next year or in five or 10 years, I don’t know. But what I’m pretty sure of is that it doesn’t produce anything,” said Buffett, who sees it as “magical” in the worst sense. Munger has been especially harsh: “In my life I try to avoid things that are stupid, evil or make me look bad compared to someone. And bitcoin has all three.” He justified his claim that it is stupid to invest in bitcoin by saying that “it is likely to go to zero.”
The multipurpose pavilion with capacity for some 18,000 attendees where the meeting was held opened its doors at 7 in the morning, local time, although there were already queues to access since dawn. Rarely has the basketball and hockey games that it normally hosts been as crowded as this Saturday. At 9:15 the great moment has come when Buffett has appeared to start answering his shareholders. Such was the interest that this year for the first time CNBC has broadcast the event live.
Actually, the so-called woodstock of capitalism It is much more than a meeting. It is quite a festival that includes a large fair of products manufactured or related to the group, called the Berkshire Bargain Bazaar, a massive picnic for shareholders and parallel meetings, with a program that runs from Friday to Sunday.
Along with the thousands of ordinary shareholders there were also numerous personalities from the business world such as the head of Apple, Tim Cook; from philanthropy, like Microsoft founder Bill Gates, or celebrities like actor Bill Murray.
Shareholders are aware that for biological reasons it is not very likely that the duo of Buffett, 91, and his right-hand man, Munger, 98, will be seen again many times at the meeting. This Saturday the round of questions has been divided into two sessions, with a short break for lunch, and the executive vice-presidents responsible for the insurance areas, Ajit Jain, 70, and the rest of the businesses, Gregory Abel, also participated in the first session, although both rather like stone guests.
Abel, 59, was tapped last year by Munger, apparently accidentally, to succeed Buffett as the group’s chief executive, albeit with Buffett’s son Howard, 67, as non-executive chairman.
Warren Buffett has a salary of $100,000, plus security expenses paid by the company. His partner Charlie Munger earns the same, far behind both Jain and Abel, who earned $19 million each. Buffett’s ideal of corporate governance is somewhat peculiar. He despises the notion of an independent director and does not seek diversity on his board as a policy either and, despite the request of some shareholders, he rejects the group giving more explanations about its policy regarding climate change, since he considers that its investees already do so. .
Some shareholders, including Calpers, the largest pension fund in the United States, have already raised in the meeting this same year separate the presidency from the executive functions, as is customary in the corporate world, which in practice would imply stripping Buffett of part of his powers. There are not many who support the idea and Munger disqualifies it by resorting to the Odyssey: “It is the most ridiculous criticism I have ever heard. It’s like Ulysses came back from winning the Battle of Troy and some guy said, ‘I don’t like the way you held the spear when you won that battle.’
In Berkshire Hathaway there is no discussion. As long as he lives and wants, Buffett will monopolize the presidential and executive power. Like an old Homeric hero.