OMAHA — Warren Buffett noted to Berkshire Hathaway shareholders near the start of Saturday’s annual meeting that the company is being run by two guys whose combined age is approaching 190.
Given that, Buffett joked that it’s important shareholders get a chance to see them in person, just to be sure they’re still alive and functioning — a chance they were denied the last two years because of the COVID-19 pandemic.
“Charlie (Munger) always says, ‘All I want to know is where I’ll die, so, I won’t go there,’” Buffett said to laughs. “It’s pretty sound.”
“It’s worked so far,” Munger quipped in response.
It was one of many familiar scenes inside CHI Health Center on Saturday, with Berkshire’s 91-year-old chairman and his 98-year-old right-hand man once again cracking jokes in front of thousands of shareholders.
Things were still not completely back to normal, as there were hundreds of empty seats in the upper reaches of the 17,000-seat CHI Center — something not seen in past years when the meeting drew overflow crowds of more than 30,000 people.
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But after the pandemic forced the last two meetings to be streamed online, Buffett clearly relished the chance to bring Berkshire’s loyal and devoted shareholders back to his hometown for what he likes to call “the Woodstock of Capitalism.”
“This really feels good to be back and doing this in person again,” he said right after he opened the meeting to 30 seconds of sustained applause.
Buffett and Munger proceeded to hold court for more than six hours. Among countless topics, they explained the recent surge in Berkshire investment activity, revealed why Buffett has recently avoided discussing politics, handed out advice on how people can best weather the nation’s high inflation and offered their usual assurances on the company’s prospects after Buffett and Munger are gone.
Buffett showed that even at his age, he still has much physical endurance and mental acuity, easily recalling off the top of his head names and events from the distant past and numbers and details related to Berkshire holdings.
Shareholders clearly were happy to see Buffett again, too.
Sreeni Meka, a financial adviser from Memphis, Tennessee, had been regularly attending the annual shareholders meeting since 2007 until the pandemic forced it to go virtual the previous two years.
"I was feeling like a fish out of water for the past two years," he said. "I'm glad to hear from the Oracle of Omaha again. It means a lot."
Buffett was asked early on about two big recent investments, in insurer Allegheny and in Occidental Petroleum. Both surprisingly came right after Buffett had written days earlier in his annual letter to shareholders that he and Munger saw “little that excites us.”
Buffett noted that the CEO of Allegheny had sent him an annual report that Buffett happened to read the same February weekend that the letter came out. The reading got him more interested in the company that had long been on his radar.
“I decided it was a good place to put Berkshire's money,” he said. “It was there in black and white. There is nothing mysterious about it.”
Buffett expressed amazement he was able to buy 14% of Occidental. Considering that big institutional investors own about 40% of the company’s stock, that amounted to nearly a fourth of the company’s other remaining shares.
He said it was as if the stock was “poker chips,” reflective of the gambling mentality many take toward buying and selling stocks as opposed to Buffett’s buy-and-hold philosophy.
“It’s almost a mania of speculation we now have,” Munger agreed.
Buffett said Berkshire’s operations have seen “an extraordinary” amount of inflation.
Buffett explained current inflation is a natural result of all the money the federal government pumped into the economy because of the pandemic’s sudden impacts on people and businesses.
“If they had not done it, lives would be a whole lot worse,” he said.
He said Berkshire is built to withstand such inflationary conditions, just as it has proven it can ride out big economic downturns like those seen in 2008 and 2020.
“We want Berkshire Hathaway to be in a position to operate if the economy stops, and that can always happen,” he said. “So with those cheery words …”
In response to a question from a young investor, Buffett said the best way individuals can protect themselves from inflation is to develop a skill that people will pay them to perform regardless of what it costs.
“The best protection against inflation is your own earning power,” he said. “Your skill will not be taken away.”
Buffett also explained why he, in recent years, has been reluctant to venture into politics, saying he came to fear the backlash created for Berkshire, its companies and shareholders. This from a man who once defended his political statements by saying he did not put his citizenship into a blind trust when he took over as Berkshire’s CEO.
He said he had learned in recent years when he speaks on politics, he makes some people temporarily happy and others “sustainably mad.”
“Since they can’t scream at me, they may have come against our companies,” he said. “I’ve decidedly backed off.”
Buffett and Munger shared the stage with other top Berkshire managers Greg Abel and Ajit Jain, a tradition that started in last year’s remote meeting broadcast from California.
The foursome early on faced questions about the performance of Berkshire railroad and insurance affiliates compared with leading competitors.
One shareholder from Nebraska noted that Omaha-based Union Pacific railroad has been outperforming Berkshire’s BNSF in terms of operating ratio, in effect the efficiency of its operations.
Abel, who oversees Berkshire’s non-insurance businesses, praised BNSF’s operating performance, but acknowledged more needs to be done. Munger then asked Abel if he would trade BNSF for Union Pacific.
“Never,” Abel said. “We have a great franchise and a great leadership team running it.”
Buffett then offered his own praise for both railroads, including the competitor based in his hometown.
“A hundred years from now, (BNSF) will be a vital asset of the economy and a vital asset of Berkshire,” he said. “The U.P. will be here at that time, too, and it will be a better railroad 100 years from now, too.”
Jain, who oversees Berkshire’s insurance operations, was asked why auto insurer Progressive recently has been outperforming Berkshire’s Geico in profit margin and growth rate.
Jain attributed it to the fact Progressive has a big head start in the use of telematics — essentially using data from rateholders to better understand driver behavior.
He said Geico has in recent years also gotten into telematics. It will take time to catch up, he said, but expressed confidence that results will improve.
“It’s a long journey, but the journey has started and the initial results are promising,” he said.
Buffett praised Jain’s long-term performance in running Berkshire’s insurance division, a major driver of Berkshire profits and cash.
“Ajit is responsible for adding more value to Berkshire than the total net value of Progressive,” Buffett said.
One shareholder asked how Berkshire’s insurance companies could be protected against huge claims in the event of a nuclear attack. Buffett said the simple answer was there was nothing that could be done.
If such a horrific event were to occur, he said, “you’ve got other things to worry about than the value of your Berkshire (stock).”
Given the age of Berkshire’s leaders, the question of the durability of Berkshire’s culture naturally came up, as it does every year.
Buffett again expressed confidence he has built a company that will endure long after he is gone. He noted that not only are Berkshire’s board and leaders committed to the current culture, the shareholders are, too.
“If we have the same culture, we will be here 100 years from now,” he said. “Berkshire is built forever.”
By the end of the meeting, it was clear Buffett has no plans to step away anytime soon. He talked about how much he loves to continue to build Berkshire.
“It’s an ever-expanding canvas,” he said, “and I get to paint what I want.”
Staff writer Dan Crisler contributed to this story.