Buffett defends practices at company’s annual meeting
OMAHA, Neb. — Berkshire Hathaway shareholders always celebrate Chairman and CEO Warren Buffett at the company’s annual meeting, but amid the praise Saturday, investors also questioned a couple of the conglomerate’s recent business moves.
Buffett marked 50 years of leading Berkshire on Saturday by spending hours answering questions alongside Vice Chairman Charlie Munger before a crowd of more than 40,000 people from around the globe.
The sentiment at the meeting was overwhelmingly positive, and Buffett was again surrounded by a mob of admirers as he toured the product booths in the morning. But the two men faced pointed questions about Berkshire’s association with the cost-cutting 3G Capital investment firm and about the lending practices at the company’s manufactured home unit.
Berkshire teamed up with the Brazilian investors at 3G two years ago to buy ketchup maker Heinz in a $23 billion deal that was followed by thousands of job cuts. Now Berkshire and 3G are buying branded food giant Kraft Foods.
Several shareholders questioned whether the cost cutting and restructuring methods 3G employs fit with Berkshire’s model of buying good companies and allowing them to continue largely unchanged.
“We’ve never said companies should employ more people than they needed,” Buffett said.
Both Buffett and Munger operate with tiny staffs of fewer than 30.
Clayton Homes is receiving scrutiny because of a recent story by The Seattle Times and the Center for Public Integrity that questioned its lending practices. The story cited examples of high interest rates and customers who felt misled because they didn’t realize the lender they were dealing with was owned by Clayton.
Buffett came ready with slides of Clayton statistics for his defense of the company that accounted for 45 percent of the manufactured homes sold nationwide last year.
“Clayton follows
pat- tern that is exemplary rather extraordinary,” said.
Buffett said Clayton retains most of its mortgages after it lends to buyers, so it loses money if buyers default. The manufactured homes Clayton builds in a factory and brings to a site appeal to many people who can’t afford other options.
“I make no apologies whatsoever for Clayton’s lending terms,” Buffett said.
After Buffett’s comments, a spokesman for the Center for Public Integrity, William Gray, said the group and The Seattle Times stand behind their original Clayton story.
Shareholder James Wilbur said he and his wife drove from Seattle to Omaha because they wanted to experience the event while the 84-year-old Buffett and 91-year-old Munger are both still around. and he