I’m on a plane right now from Omaha Nebraska to New York. I am traveling from the Berkshire Hathaway Shareholder Meeting to GE for MDC training tomorrow. I might be tired but I couldn’t miss this annual meeting. Turns out I have held a number of BRKb shares for a number of years. I have always admired what Warren Buffett has done with his business and often talk of him in my classes.
This last winter I was visiting my good friend and former client from MacDermid Steven Largan. Stephen is now in private equity (Yorkshire Capital) and is the former CEO/President of MacDermid a specialty chemical company. Stephen is somewhat of a mentor to me. Anyway, in a meeting with him he suggested that I attend the Berkshire meeting this year. Stephen goes almost every year. He reminded me that Warren Buffett was now 82 and ever entertaining side kick Charlie Munger is now 89. He warned there won’t be many more years to see these two in action.
I decided to make the pilgrimage with my 23 year old son Jordan. The event did not disappoint. The event attracted 35,000 plus attendees. The meeting is held in the 18,000 seats Century Link arena and convention hall in downtown Omaha. The doors open at 7:00am and the meeting starts at 8:30am with a one hour movie then Buffet and Munger take the stage for questions from 9:30am to 3:30pm, with a break for lunch, from the media, shareholders and new for this year a Wall Street short seller that is shorting Berkshire stock (a short seller bets that a stock will go down). Jordan and I arrived at 7:00am and were able to secure seats in the back of the main floor by 7:45 the arena was full…CRAZY
The meeting was great. Long but great. Warren and Charlie were witty, smart, and at times profound. The businesses are doing great. During and before the session many of the Berkshire companies display their wares in the convention hall. They sell discounted product exclusive to shareholders. A partial list of the exhibitors/sellers included Gieco Insurance, Sees Candy, Dairy Queen, Brooks Athletic s, Justin Cowboy and Working Boots, The Pampered Chef, Worldbook Encyclopedia, Ginsu Knives, Omaha Furniture Mart, Fruit of the Loom and Coca Cola to name a few. Yep it is true Shareholders can buy discounted auto policies from Geico and get a gecko as a parting gift. We took in the shops and scored some Sees candy, Brooks Berkshire Hathaway signature running shoes (I have a bit of a shoe fetish I struggle with), Fruit of the Loom Berkshire boxers and shirts, and some Coca Cola. Yes, as a shareholder I’m sure I contributed to profits.
The meeting was great. Buffett and Munger still have a lot to say that we all can learn from. Buffett espouses measuring the intrinsic value of a stock measured by cash on hand plus projected present value of its returns over several years (to keep it simple). He always looks for cash flows and runs his holding company out of Omaha with a staff of 24. Their total revenue for 2012 was over $160 billion. He actually said in the meeting he was considering adding a head this year to go to 25 after several years of standing pat.
There were many questions on succession and if they can maintain their 19% return the next 50 years as they have in the past. About double the performance of the S&P 500 over those years (by the way their answer was probably not double S&P but still a lot better than the index). We learned that Charlie Munger is very funny and insightful and Mr. Buffett still has lots of energy.
A couple of nice quotes and anecdotes:
Mr. Buffett said I can be forgiving when one of my company mangers made decisions that lost money but I am ruthless if there are any ethical issues.
Mr. Munger said that accounting data can be manipulated and massaged to make a firm look good. It’s like when Italy gets behind in their mail, they simply throw a couple of days of mail away and then they are caught up. (After Munger said that Buffett quickly said Charlie did not mean to say Italy he meant a European country.)
When asked how the Berkshire stock would do after they are gone. Munger said all I can say is if any of the Munger family in the audience today sells their stock after he is gone they are idiots.
Mr. Buffett was very optimistic about the economy and thought he would like to be starting out today rather than in the 1940’s when he did. Mr. Munger was a little less optimistic but still bullish on Berkshire.
Omaha was really cold and rainy. Ii was in the 30’s and 40’s all weekend. A great weekend for finance! 🙂