Wisdom from Omaha
At Berkshire Hathaway’s recent annual meeting in Omaha, Nebraska, CEO Warren Buffett and his partner Charlie Munger took dozens of questions from shareholders, journalists and stock analysts over more than five hours. Here are some highlights, paraphrased:
• On stock buybacks: When asked about Apple’s plan to spend $100 billion buying back some of its stock, Buffett explained that it can make sense. (Doing so essentially retires those shares, reducing the company’s total share count and making remaining shares more valuable.) Buybacks should only happen when the shares are undervalued, though, and when the companies don’t have more productive uses for that money, such as reinvesting in further growth.
Buffett noted that via buybacks, Berkshire’s 5 percent stake in Apple might grow to a 7 percent stake.
• On women in management: It’s true that most of the managers who lead Berkshire’s many businesses are men, but Buffett noted that many of them had the job when their company became part of Berkshire — there’s little turnover. Still, about half of the new CEOs Buffett has appointed in the past several years have been women.
Buffett suggested that the #metoo movement (of women coming forward about sexual harassment or abuse) will be good for the economy. He has pointed out in the past how half of the talent in America has been undertapped, and thinks that women are now more likely to have workforce opportunities.
• On the importance of learning: Munger opined: “If you’re going to live a long time, you have to keep learning — what you formerly knew is never enough. So if you don’t learn to constantly revise your earlier conclusions, and get better ones, you are — I always use the same metaphor — you’re like a one-legged man in an a — kicking contest.”
Read Buffett’s enlightening annual letters to shareholders at berkshirehathaway.com. Roger Lowenstein’s book, “Buffett: The Making of an American Capitalist” (Random House, $20) is an excellent read, too. (The Motley Fool owns shares of and has recommended Berkshire Hathaway.)