OMAHA, Neb.—The
Berkshire Hathaway
annual shareholders assembly is again in individual for 2022, after a two-year pandemic hiatus moved the so-called “Woodstock for Capitalists” on-line. Warren Buffett addressed the corporate’s huge inventory purchases within the first quarter, the efficiency of its assortment of companies, and added his signature folksy anecdotes and life recommendation.
Tens of hundreds of Buffett devotees are again in Omaha, Nebraska to listen to from the legendary investor and Berkshire Hathaway (ticker: BRK.A, BRK.B) CEO, scoop up reductions at a shareholder-only purchasing day, and swap tales of their experiences following Berkshire through the years.
The assembly started with a film that includes highlights and ads from Berkshire’s quite a few subsidiaries and fairness investments—together with Berkshire Hathaway Energy, Borsheims,
Apple
(AAPL), and
American Express
(AXP). It additionally included humorous skits starring Buffett and his longtime good friend and advisor Charlie Munger, and Berkshire-themed parodies of “Uptown Funk” and “Empire State of Mind.”
Flanked by Berkshire’s three vice chairmen—Munger, Greg Abel, and Ajit Jain—a jovial Buffett obtained a standing ovation and instantly started cracking jokes: “You don’t hear that kind of welcome for the index funds,” he quipped. “The two of us are 190 years old,” Buffett added, referring to himself, 91, and Munger, 98.
Holding up a field of See’s Candies peanut brittle, Buffett spoke about Mary See, whose black-and-white picture adorns See’s merchandise. She handed away in 1939. “A lot of people think this is me in drag, but that’s not true,” Buffett stated. “There’s a resemblance, but these rumors are started by our competitors.”
Buffett continued with an summary of Berkshire’s first-quarter monetary outcomes, which have been launched on Saturday morning. Operating earnings after taxes rose lower than 1% from the year-earlier interval, to about $7 billion. The firm lowered the tempo of its inventory buybacks, however Berkshire was energetic in buying different corporations’ shares.
Berkshire spent $3.2 billion on share repurchases within the first quarter, and purchased $51.9 billion in different equities. The firm additionally bought $10.3 billion price of non-Berkshire shares. Berkshire ended the interval with $102.7 billion in money and U.S. Treasury payments.
“We will always have a lot of cash on hand,” Buffett stated.
Buffett and Munger addressed what they known as “gambling” within the inventory market, together with high-frequency buying and selling, choices methods, and different speculative conduct. That can result in short-term swings in costs which are shopping for alternatives for Berkshire, the
Oracle
of Omaha stated. “Sometimes markets do crazy things,” Buffett stated. “That’s good for Berkshire, not because we’re smart…but because we’re sane.”
The first query of the assembly was about Berkshire rapidly turning into extra energetic within the inventory market. In Buffett’s 2021 annual shareholder letter, dated Feb. 26, he wrote that there have been few enticing alternatives on the market. Since then, Berkshire struck a deal to accumulate insurer
Alleghany
for $11.6 billion, and scooped up billions of {dollars} of shares of
Chevron
(CVX),
Occidental Petroleum
(OXY), and
HP
(HPQ).
Asked what modified, Munger stated: “We found some things we preferred owning to Treasury bills.” Buffett added, “As usual, Charlie has given the full answer, but I’ll still talk more and say less.”
Buffett defined that Occidental’s capital-return plans and better oil costs within the wake of Russia’s invasion of Ukraine made the inventory a purchase, and that Alleghany was a pure match for Berkshire’s insurance coverage operations.
Buffett additionally stated that Berkshire purchased further
Apple
inventory within the first quarter. The firm owned about 911 million shares of the iPhone maker on the finish of March, versus 907.6 million on the finish of 2021.
Buffett extolled the virtues of inventory buybacks for shareholders, mentioning that Berkshire’s stake in
American Express
had grown to about 20%, from 11%, through the years—with out Berkshire shopping for any further inventory.
“Imagine you owned a farm and had 640 acres, farmed it every year, made a little money on it, enjoyed farming, and somehow 20 years later it turned into 1,100 or 1,200 acres,” Buffett stated. “If you do it at the right price, there’s nothing better than buying back part of your own business.”
Another query addressed the efficiency of Berkshire’s Geico and BNSF Railway subsidiaries relative to rivals. Buffett kicked it over to Jain, who oversees Berkshire’s insurance coverage operations, and Abel, who oversees non-insurance operations.
Jain admitted that recently
Progressive
(PGR) has carried out higher than Geico when it comes to its revenue margin and progress fee. He attributed that to the Berkshire subsidiary’s later entry into telematics, or usage-based insurance coverage, which adjusts clients’ charges based mostly on how they drive.
Progressive
has years of further knowledge and expertise within the enterprise, however Jain stated that Geico was seeing promising early outcomes from its telematics insurance policies, branded as DriveEasy.
Abel defended the strategy of BNSF, which hasn’t been in a position to embrace precision-scheduled railroading as a lot of the railroad trade has.
Berkshire inventory has climbed about 7% to this point this yr, versus a 13% decline for the
S&P 500.
This is a growing story. Check again for updates.
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com