The Atlanta Journal-Constitution
Thousands pack Omaha arena to hear Buffett
Investment guru said that he is uneasy about the use of AI.
OMAHA, NEB. — Warren Buffett’s Berkshire Hathaway reported a steep drop in earnings Saturday as the paper value of its investments plummeted and it pared its Apple holdings. Nevertheless, tens of thousands of shareholders looked forward to hearing from Buffett directly, buoyed by a jump in performance of the many companies Berkshire operates directly.
Berkshire reported a $12.7 billion profit, or $8,825 per Class A share, in the first quarter, down 64% from $35.5 billion, or $24,377 per A share a year ago. Buffett, 93, encourages investors to pay more atten- tion to the conglomerate’s operating earnings that exclude the investment fig- ures. Operating earnings jumped 39% to $11.222 bil- lion, or $7,796.47 per Class A share, led by insurance companies’ strong perfor- mance.
By that measure, Berk- shire beat expectations of the three analysts surveyed by FactSet Research, who had predicted operating earn- ings of $6,701.87 per Class A share.
As part of Buffett’s stock sales, he trimmed about 13% of Berkshire’s massive Apple stake. Holdings in the iPhone maker still are Berkshire’s biggest stake, making up $135.4 billion of the com- pany’s $364 billion portfolio. Buffett said he expects Apple to remain the biggest investment for years, even when his already-anointed successor, Greg Abel, even- tually takes over.
As for Berkshire’s core insurance businesses, the conglomerate reported a $2.6 billion underwriting profit at its insurers, up from $911 million a year ago.
BNSF railroad’s profits dropped 8% to $1.143 bil- lion, but most of Berkshire’s many other companies deliv- ered solid results, includ
ing a 72% jump in operat- ing profit at the utility unit that added $717 million to earnings.
Cash on hand rose to a record $188.993 billion in the quarter.
“We’d love to spend it but we won’t spend it unless we’re doing something with very little risk that will make us a lot of money,” Buffett said.
Thousands attend ‘Woodstock for Capitalists’
More than 10,000 filled the CHI Health Center arena, which holds 17,500, eager to vacuum up tidbits of wisdom from Buffett, who famously dubbed the meeting “Wood- stock for Capitalists.”
But a key ingredient was missing this year: It was the first meeting since vice chairman Charlie Munger died.
The meeting opened with a video tribute highlight- ing some of Munger’s bestknown quotes, including classic lines like “If people weren’t so often wrong, we wouldn’t be so rich.” The video also featured classic skits the investors made with Hollywood stars over the years, including a “Des- perate Housewives” spoof where one of the women introduced Munger as her
boyfriend and another in which actress Jamie Lee Cur- tis swooned over him.
As the video ended, the arena erupted in a prolonged standing ovation honoring Munger, whom Buffett called “the architect of Berkshire Hathaway.”
Buffett said Munger remained curious about the world up until the end of his life at 99, attending dinner parties, meetings and reg- ular Zoom calls. “Like his hero Ben Franklin, Charlie wanted to understand every- thing,” Buffett said.
For decades, Munger and Buffett functioned as a clas- sic comedy duo, with Buf- fett offering lengthy setups to Munger’s witty one-liners. Munger once referred to unproven internet com- panies as “turds.”
Together, the pair trans- formed Berkshire from a fail- ing textile mill into a mas- sive conglomerate made up of a variety of interests, from insurance companies such as Geico to BNSF rail- road to several major util- ities and an assortment of other companies.
Munger often summed up the key Berkshire’s success as “trying to be consistently not stupid, instead of trying to be very intelligent.” He and Buffett also were known for sticking to businesses they understood well.
“Warren always did at least 80% of the talking. But Charlie was a great foil,” said Stansberry Research analyst Whitney Tilson, who was looking forward to his 27th consecutive meeting.
Anything and everything
As always, Buffett addressed a variety of topics Saturday, though he never talks politics or reveals what he is buying. The stock he has been buying over the past year will remain a secret until he’s required to disclose it in filings.
He described a recent uneasy experience with artificial intelligence, saying he saw a fake image of himself delivering a message in his voice about something he said he never would say. He predicted the technology will be a boon for scammers, and he’s not sure if it will do more good than harm. The fake video was so convincing Buffett said he might have sent money to himself.
“It has enormous potential for good and enormous potential for harm, and I just don’t know how that plays out,” he said.
On climate change, Jain said it’s creating larger losses for insurance companies and driving up prices. It’s hard to know if prices are increasing enough to handle the risk, but at least insurers have the opportunity to recalibrate their premiums each year, Jain said.
“We get a lot of letters from people concerned about climate change — and I don’t think they’re wrong,” Buffett said. “But they don’t understand the insurance business.”
Overall, Buffett said Berkshire’s system of having all the noninsurance companies report to Abel and the insurers report to Jain is working well. He said he hardly gets any calls from managers any more because they get more guidance from Abel and Jain.
“This place would work extremely well the next day if something happened to me,” Buffett said.