OMAHA, Neb. — A remake of “Empire State of Mind” with lyrics about Berkshire Hathaway, greeted shareholders this morning. (I’m not sure if it was actually sung by Jay Z and Alicia Keys, but it sure sounded like it. We’ll try to get the lyrics for you at some point.) The song is a throwback — fitting for a Berkshire Hathaway annual meeting, which is the very definition of old-school.
Picking up from what I wrote in today’s Morning Brief, the 2022 Berkshire Hathaway (BRK-A, BRK-B) meeting was both riveting and, well, dare I say SOP. The distinction is a matter of form and content. The form of the meeting is largely the same, (i.e. SOP), as back in 2019, the last in-person event. But the content, what Warren Buffett and Charlie Munger talked about, was pretty interesting.
I’ll start with what’s the same, and that’s simple — the whole shebang. Walking into the convention center and the arena, the Berkshire gang is back. Many thousands of them, packing the hall and shopping (for Berkshire company merchandise) until they’re dropping. True, there were fewer Berkshire companies in the hall. Missing for instance was the usual big Coca-Cola display. (Wonder why that is?)
There are other effects of supply chain pressure, such as no special edition Brooks running shoe (dang!). But supply chain strains didn’t seem to impact See’s Candies; it looked like they had tons, in fact exactly 11 tons. Apparently shareholders had some serious cases of sweet tooth. Buffett told us that See’s had record sales on Friday.
“Anything not sold goes to Charlie and me,” Buffett jokes.
The (Jimmy) Buffett boat, (“when two titans of industry meet”) caught my eye. The boat, designed by chief parrot-head Jimmy Buffett and made by Berkshire’s subsidiary Forest River, goes for $200,000 with a 10% shareholder discount. Buffett said they sold 15 of them by late Saturday afternoon.
The requisite intro video came on with greatest hits clips with stars from “Breaking Bad,” “The Office,” and “Desperate Housewives.” Also included was a classic clip of Buffett from 1991 in front of Congress during the Salomon Brothers scandal, where he uttered the now famous (on Wall Street at least) words: “Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.” I love Myles Udland’s headline on that: “This is the moment America met Warren Buffett.”
The original video piece starring Bill Murray, a shareholder (and actor!) was about the past three pandemic years, and was a sort of an homage to “Groundhog Day.” (Maybe “Caddyshack” next year?) BTW Bill Murray showed up for the meeting as did Apple CEO Tim Cook and JPMorgan CEO Jamie Dimon.
Soon enough, Buffett and Munger — why do they sometimes remind me of Randolph and Mortimer Duke from “Trading Places”? — took the stage to loud and sustained applause.
“I don’t think we’re hearing anything from the index funds,” Buffett quipped.
Buffett and Munger were joined on stage by Berkshire vice chairmen Greg Abel and Ajit Jain. The Fab Four looked to be in fine form.
“It feels good to be in person,” Buffett said. “Charlie and I are a combined 190 years old and I think we’re entitled to see shareholders in person.” More jokes about age and dementia ensued.
‘A few stocks got very interesting to us’
CNBC’s Becky Quick asked a question from a shareholder about why Buffett started buying stocks again (ie. HP, Allegheny and especially Occidental Petroleum), and Buffett launched into a 15-minute-plus soliloquy — with occasional zingers from Charlie — about banks and brokers, the market, his marriage and even the late mobster Bugsy Siegel. And the shareholders lapped it up.
In short: “A few stocks got very interesting to us,” Buffett said. “It’s important to understand…the market in the last couple of years…has been extraordinary, sometimes efficient and other times almost totally a casino….and that existed to an extraordinary degree over the last couple of years. Wall Street makes a lot more money when people are gambling than when they are investing.”
Then Buffett went on to talk about — and marvel about — buying 14% of Oxy Pete as it’s known, in two weeks. (Berkshire also bought billions of dollars of Chevron recently.) Later Buffett said he had “some news.” It was about Activision Blizzard and how BRK now owns 9.5% of the video game giant thanks to an arbitrage strategy, as it is being taken over by Microsoft.
Charlie Munger had some great lines as usual: “We now have computer algorithms trading with other computers. And people buying stocks who know nothing, being advised by people who know even less. It’s an incredibly crazy situation.”
Continuing on that point, Munger said, “All this activity makes it easier for us.”
“We rely on it in fact,” Buffett added.
One thing Buffett talked to me at great length about, almost obsessively even, on a January phone call was how much he wished he could count and communicate with all these shareholders. “I don’t know how many we have,” he told me. “I’ve tried to find out.”
To that point, Buffett today spoke of Broadridge, a services firm that bills him for communicating with his shareholders. They’ve told him they have 3.5 million BRK accounts. (There are probably quite a few more accounts than individual shareholders.)
I was thinking about that as I looked down over the filled CHI Health Center, capacity 17,560. Assuming there are a few thousand people in overflow rooms, that’s still probably below 1% of the total number of shareholders. I’m sure that’s not lost on Buffett. He’s sitting in a packed arena and only reaching a tiny fraction of his audience.
And I could hear it in his voice when I spoke to him earlier this year. The great desire he has to speak with all of them.
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