WARREN BUFFETT’S BERKSHIRE HATHAWAY INC.
HELD ITS MYTHICALLY POPULAR ANNUAL GENERAL MEETING IN OMAHA, NEBRASKA THIS WEEKEND. THE POST’S TRISTIN HOPPER PROVIDES AN ON-THE-GROUND REPORT.
IT’S GOING TO BE FINE
Doomsaying is au couture in the United States right now, which makes it all the more unique that Buffett is consistently one of the country’s most relentlessly optimistic public figures. To kick off the meeting, Buffett produced a copy of The New York Times from March 1942 emblazoned with grim headlines describing the United States’ then-losing war with Japan. Despite this, Buffett noted that US$10,000 indexed against the U.S. economy at that time would have blossomed into US$51 million by 2018. “Multiple times in my life, people have felt that the country was more divided than ever ... I’ve heard everything,” he said. And speaking of wars with Asia, Buffett also expressed stoic confidence that the ongoing trade dispute with China would simmer down before it gets too destructive.
HAPPIEST AGM EVER
Annual general meetings — particularly those held by holding companies — are often sedate affairs featuring vast quantities of male pattern baldness. But Berkshire Hathaway attracts young and old, bald and do-ragged. It’s also surprisingly common to hear the word “woo!” at its various events. Borsheim’s is a major Omaha jewelry store owned by Berkshire Hathaway. On Friday night, they packed hundreds of shareholders into their store and got them drunk for free. Naturally, the event was swimming with Creighton University students savvy enough to score a hookup with a shareholder. Berkshire Hathaway’s many, many subsidiary companies all set up in the Omaha Convention Centre, resulting in a carnival atmosphere complete with the Oscar Mayer Wienermobile, the Geico gecko mascot and Dairy Queen dilly bars in every fist. The cavernous Nebraska Furniture Warehouse, another Berkshire subsidiary, holds a shareholder barbecue in its parking lot as well as Ping-Pong tournaments and, in previous years, a newspaperthrowing contest with Buffett himself. And before the official AGM kicks off, shareholders are treated to a charmingly low-budget joke video featuring Buffett fighting Floyd Mayweather, weight training with Arnold Schwarzenegger and beating LeBron James in a one-on-one. In keeping with Buffett’s legendary thrift, the celebrities all performed for free, on condition that the video never be seen by those outside the Berkshire Hathaway tribe.
REVERED Q&A
The revered centrepiece of the event is its legendary “Q and A” session: Buffett and his co-chairman Charlie Munger side-by-side at a table, eating peanut brittle, sipping diet coke and spending five hours pontificating over questions from shareholders. Some are technical queries, others are philosophical questions about the state of the world, others are children asking for investment advice. What makes the session particularly famous is the married couple-esque dynamic between the two: Buffett the plain-spoken philosopher, Munger the blunt man-offew-words. “Warren is very good at doing nothing,” Munger said about the prospect of Buffett’s semi-retirement. When a shareholder asked about divesting from guns Munger replied, “we’re not going to ban guns surrounded by wild turkeys in Omaha.” To back up his claim that a scandal can improve the running of a business, he said “I think Harvey Weinstein has done a lot for improving behaviour.” When a young shareholder asked a jargon-filled question about investing formulas, Munger told him to “go back to graduate school.” Cryptocurrency trading, naturally, received one of Munger’s sharpest quips: “Somebody else is trading turds and you decide I can’t be left out.”
A FESTIVAL CROWD
As one British Columbia couple told this reporter at Borsheim’s, they went to Desert Trip in 2016 to see Bob Dylan before he died, and this year they came to Omaha to see Warren Buffett for the same reason. A single share of Berkshire Hathaway B stock was trading at US$195.64 on Friday, about the cost of good music festival tickets. And it’s indeed as music festival-y as these types of events get. The question-and-answer session is delivered to a packed crowd of 17,000 in Omaha’s CenturyLink Centre and giddy shareholders began lining up outside before 4 a.m.
THERE WAS DEATH TALK
Buffett is 87. Munger is a 94-year-old Second World War veteran. Answering five hours of questions is obviously a good sign of vitality, but there were still a lot of delicate questions about succession. “I’d like to think I’ll be missed a little, but you won’t notice it,” Buffett said, while also noting that one Berkshire Hathaway manager, Rose Blumkin, made it to 103 before retirement. It’s hard to overstate the pair’s presence over the event. Their faces are emblazoned on everything from jewelry to rubber ducks and there’s at least six photo stations in the exhibition hall where shareholders can pose with Buffett and Munger cutouts. For Berkshire Hathaway, they’re already the equivalent of a Walt Disney or a Colonel Sanders: semimythical figures who will loom over the company decades after their death. Still, Buffett repeatedly assured shareholders that the company’s core principles would long outlive him. “My phone is not ringing off the hook with good deals, so maybe my reputation isn’t as useful as you think,” he said.
BIZARRO TRUMP
If a comic book writer were to craft the exact antithesis of U.S. president Donald Trump, they could do no better than the Sage of Omaha. Where Trump spends hours each day watching TV, Buffett is famous for reading up to six hours each day. Where Trump was covering large swaths of Manhattan in gold leaf, Buffett doesn’t like to spend more than $3 on breakfast. Where Trump appended his name to a book entitled Crippled America, Buffett likes to say the “tailwind” behind the U.S. economy is strong no matter who is president. Most notably, Buffett often refers to his “stupidity” and “mistakes,” and repeatedly assures shareholders that what he does “is not a complicated business.” This year, after a question regarding serious misconduct at Wells Fargo (a Berkshire holding), Buffett gave a response that would be unusual for most corporate heads: A “guarantee” that more unpleasant things are likely happening in other Berkshire Hathaway companies. “We have 370,000 employees. We can’t assume all of them are acting like Ben Franklin,” he said. While there are no goldplated buildings anywhere bearing Buffett’s name, he has quietly built a personal brand that is exponentially more valuable than Trump’s. One shareholder called it the “Buffett seal of approval,” a type of reputational force field that adds billions in value to Berkshire properties.
RICH AND MODEST
On Friday, a single share of class A stock in Berkshire Hathaway traded at US$292,600. There are some extraordinarily wealthy people at this event, many of whom were made much more so by knowing Warren Buffett. Nevertheless, they’re near-impossible to spot. The only suits seem to be worn by purse-lipped European analysts. Everyone else wore polo shirts, cowboy hats and parked mid-range Americanmade cars outside. Even board member Bill Gates showed up in jeans and an orange sweater. Introduced as “William Gates,” he was easy to miss if you weren’t paying attention.
AN ICON TO CHINESE
Everyone comes to Berkshire Hathaway. Spend a few minutes in one of the AGM’s many lineups and one can hear Spanish, Hindi, Russian and whatever it is they speak in Australia. But the Chinese contingent has grown particularly large in recent years. As China enters its third decade of meteoric growth, Warren Buffett has become an icon to nouveau riche Chinese. As one Chinese attendee told me, the explosive Chinese economy has generally favoured “get rich quick” entrepreneurs. But as growth slows and the Chinese economy matures, a new class of investor has gotten wise to Buffett’s “buyand-hold” strategy of stable investments. If China ever produces the world’s richest individual, it’s entirely possible he or she was in that room taking notes as Buffett expounded on why nobody has any idea how to write insurance rates for cybercrime, and why he never put money into Amazon. “It’s a miracle, and if I think something will be a miracle I tend not to bet on it,” he said.
FEW ENEMIES
It’s very rare that someone is simultaneously able to accumulate an 11-figure net worth while racking up vanishingly few enemies. Just ask Mark Zuckerberg, George Soros or the Koch Brothers. But in Omaha, Buffett is revered. As one example, the Omaha WorldHerald was one of the last in the United States to phase out wide-format pages. “Warren liked that size,” explained a tour guide at the paper’s printing facility. Despite Buffett becoming the world’s all-powerful investing god king, Nebraskans deeply respect that Buffett has retained his simple Midwestern tastes. The billionaire continues to live in the same modest Omaha home he bought in 1958. He frequently dines at Village Inn, a local equivalent of Denny’s. This reporter tried valiantly to find a single person in Omaha who didn’t care for their city’s most famous son. The only result? One university student who said she had a really conservative friend of a friend who didn’t like how Buffett’s daughter has donated millions to Planned Parenthood.