What we covered here
- Berkshire Hathaway (BRKB) held its annual shareholder meeting.
- Warren Buffett and Charlie Munger answered questions from investors on everything from stock buybacks to Wells Fargo to Brexit.
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What’s happening at Berkshire Hathaway’s annual meeting 2019
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And that's it from Omaha!
The Q&A at the Berkshire meeting has wrapped up. It’s been a long day and Buffett and Munger touched on a lot of important topics. My final two cents?
- Very interesting that Ajit Jain and Greg Abel both stood up to answer questions
- Surprised no one asked Buffett for thoughts on Facebook (FB) as company or stock
- Amazed so many still flock to Omaha when you can watch on Yahoo Finance
And on that note, it’s time to head to the airport. Thanks for reading!
Buffett isn't worried about Tesla offering auto insurance
Berkshire Hathaway has a lot of competitors. Will Tesla (TSLA) soon be one of them?
Tesla CEO Elon Musk recently said during the company’s last earnings call that the company plans to offer auto insurance to buyers of its electric cars.
Warren Buffett does not seem too nervous. He joked that insurance companies were as likely to be as successful building cars as auto companies selling insurance.
Charlie Munger says it's 'stupid' for US and China to not get along
Berkshire Hathaway vice chairman Charlie Munger does not mince words.
When asked by a shareholder about the company’s willingness to do more business in China if that country relaxed regulations, Munger pointed out that Berkshire-owned Dairy Queen is already successful there.
And then Munger, a Republican, decided to make a broader comment about US-China relations that could be viewed as a criticism of President Trump’s trade policies.
“Think how stupid it would be if the two countries didn’t get along. Stupid on both sides I might add,” he said.
Buffett suggested that Berkshire was eager to do more in China as well.
“It’s a big market, and we like big markets,” he said.
Buffett bullish on UK and Europe despite Brexit
Berkshire Hathaway isn’t as well-known in the United Kingdom and Europe as it is in America. And Warren Buffett wants to change that – despite the uncertainty being created by Brexit.
Buffett responded to a question about the UK by saying he thinks it was probably a mistake for the British people to vote to leave the European Union instead of remain in it. That said, he said he’s hoping to do deals in the UK and Europe no matter how Brexit turns out.
“I would like to see Berkshire Hathaway more well known in the UK and Europe,” he said, adding that he’d love it if more businesses there would look to Berkshire as a potential buyer of their assets.
Still, as CNN Business’ Julia Horowitz notes, investing in the UK may not be the best idea for Berkshire. He’s tried before and it hasn’t worked out so well. Berkshire’s investment in British supermarket chain Tesco was a major flop.
Buffett fields questions on Geico, Boeing and more
We’re back from lunch break here in Omaha and Warren Buffett is continuing to answer questions from shareholders on a variety of topics.
Boeing
Buffett said he didn’t expect any significant changes to flight training in light of two recent fatal Boeing 737 Max crashes. That’s important since Berkshire owns stakes in four major US airlines.
Geico vs. Progressive
Buffett also was asked about the competitive battle between Berkshire’s (BRKB) Geico and Progressive. That prompted insurance chief Ajit Jain to step up for a second time and address the crowd.
Environmental, social and governance metrics
Buffett was also asked whether or not Berkshire Hathaway would score well on various environmental, social and governance (ESG) metrics. Buffett thought they would.
Buffett: Bezos has created a 'miracle' with Amazon
Warren Buffett fielded questions from CNN’s Poppy Harlow about Amazon (AMZN), and he described the digital shopping giant as an “absolute miracle” unlike anything else in the corporate world.
The investing guru also jokingly told reporters during the Berkshire (BRKB) annual shareholder meeting that he would get a transfusion of CEO Jeff Bezos’ blood if he could.
Bezos “kept looking at what was coming in and saw what was possible, and he’s unbelievable,” Buffett said.
The end of the Warren and Charlie show?
It was inevitable that someone would ask about a Berkshire (BRKB) succession plan. Warren Buffett will turn 89 in August and Charlie Munger is 95.
So why not invite top Berkshire executives Ajit Jain and Greg Abel as well as portfolio managers Ted Weschler and Todd Combs on stage?
Buffett hinted that Jain, who is in charge of the company’s insurance businesses, and Abel, who runs the non-insurance subsidiaries, could one day join him and Munger to answer shareholder questions. (Jain did later answer a question while standing in the audience.)
He added that he and Munger “won’t be around forever.”
But Buffett ruled out the possibility of Combs and Weschler answering questions about the stocks they are buying, citing SEC rules about disclosure.
Is Wayfair hurting Berkshire's furniture business?
Berkshire Hathaway may finally own shares of Amazon. But one shareholder wanted to know about Wayfair (W), the online retailer that has upended the home furnishing industry.
Buffett said “the jury is still out” on the long-term success of Wayfair since it is still losing money even though sales have surged. But it seems like Wayfair may be hurting Berkshire a bit.
The company, which owns Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan’s, said Saturday that furnishing sales fell 4% in the first quarter and that pre-tax profits plunged 42%.
But Buffett says Berkshire’s furniture companies are up to the challenge. He said Nebraska Furniture Mart is doing a “significant” amount of business from people who buy online and pick up in stores. This so-called click and collect model is one that many food retailers have adopted to combat Amazon.
'We blew it' by not investing in Google
Warren Buffett was asked about whether Berkshire Hathaway’s (BRKB) investing philosophy is changing now that the company has bought a stake in Amazon (AMZN) – a company with a very high price-to-earnings ratio.
The “Oracle of Omaha” defended the purchase, which he noted was made by one of his two investing lieutenants – Ted Weschler and Todd Combs. Buffett said that Berkshire is still a value investor.
Interestingly though, Buffett and Charlie Munger both said that one of their biggest regrets was not buying shares of Google owner Alphabet (GOOGL). They said they each saw how great SEO was for Berkshire-owned Geico but that they still didn’t buy Google.
Munger joked they were just “sucking their thumbs” and that he feels like a “horse’s ass” for not identifying it as a great investment earlier.
Warren Buffett isn't becoming a socialist any time soon
Politics just came up at the meeting. One line from Buffett that got applause from the crowd:
That’s a surprise to no one. Berkshire just posted $21.7 billion in overall profit.
Buffett says Wells Fargo did 'crazy things'
Warren Buffett is Wells Fargo’s largest and most powerful shareholder. (Berkshire Hathaway (BRKB) owns nearly 10% of the troubled bank.) So it’s not a surprise that shareholders wanted to hear his thoughts on what’s going on there.
In April, Buffett weighed in on what kind of CEO Wells Fargo should hire next. Now Charlie Munger shares his thoughts:
Buffett also said he wished CEOs wouldn’t go away “so rich” after doing dumb things. That got applause from the crowd.
First question for Buffett is about buybacks
The great thing about the Berkshire Hathaway (BRKB) shareholder meeting is that it is devoted almost entirely to questions from investors. The first one lobbed at Buffett on Saturday was about Berkshire’s latest flurry of stock buybacks. Will that continue or is the company looking for acquisitions?
Buffett said that he has “no ambition to spend a dime” on more buybacks unless he thinks Berkshire shareholders will be better off. But as long the stock trades at what he believes to be a discount to the broader market, “we could easily spend very substantial sums” on more repurchases.
Attendance at Berkshire's annual meeting is breaking a record
Interest in what Warren Buffett has to say isn’t slowing down. Attendance at this year’s Berkshire Hathaway’s (BRKB) shareholders meeting is setting a new record, Buffett told the crowd.
Warren Buffett and Apple team up for a new app
Buffett is famous for being a bit of a technophobe. But that hasn’t stopped him from launching a new app – with the help of Apple (AAPL) CEO Tim Cook.
If you go to the App Store, there is now a new game called Warren Buffett’s Paper Wizard. It’s a nod to Buffett’s childhood job of delivering newspapers. Buffett used to do a live paper toss at the shareholder meeting, but he’s now doing it virtually instead.
In an amusing video promo at the start of the shareholder meeting Saturday, Buffett was shown trying and failing to come up with ideas for an app, including a Time Machine where Buffett tells a kid version of himself to buy Apple stock – which is now Berkshire’s largest holding.
Cook then comes up with the idea for a newspaper toss.
Yes, Warren Buffett still hates Bitcoin
Last year Warren Buffett called Bitcoin “rat poison” that “will come to bad endings.” He hasn’t changed his mind.
Buffett told reporters in Omaha that cryptocurrencies are worth about as much as the button on his jacket.
Berkshire Hathaway posts quarterly profit, but it has a Kraft Heinz problem
Berkshire Hathaway’s latest earnings came out in conjunction with the company’s annual shareholder meeting this weekend. Here’s a quick look at the numbers – and an unusual admission about its investment in Kraft Heinz (KHC).
- Net income was $21.7 billion, compared to a loss of $1.1 billion
- Operating income up 5.5% from a year ago to $5.6 billion
- Cash rose 2% from December to $114.1 billion
But Berkshire (BRKB) disclosed a bit of a bombshell in its 10-Q filing with the SEC about its nearly 27% stake in troubled food giant Kraft Heinz. Berkshire said that it did not report any income from Kraft Heinz because it doesn’t have enough data from the company.
During a walk-around with CNN’s Poppy Harlow and other reporters Saturday morning before the Berkshire shareholder meeting, Buffett said that the news is “very unusual” and suggested that it may be due to a dispute that Kraft Heinz is having with its auditor PwC.
Warren Buffett makes the rounds
The “Oracle of Omaha” got a rock star’s reception before he and Berkshire vice chair Charlie Munger answer questions from investors.
Plant-based food craze isn't slowing down DQ
Beyond Meat (BYND) just had a scorching debut on Wall Street and Impossible Foods is having trouble keeping up with demand for its plant-based burgers. But Berkshire-owned Dairy Queen, or DQ for short, isn’t shy about serving up guilty pleasures like burgers and ice cream.
“We looked at plant-based proteins a few years ago but the timing wasn’t right,” said DQ CEO Troy Bader. “There may be a time for it but with some trends you don’t want to lead.”
Still, Bader acknowledged that consumers are trying to eat in a more healthy manner. And while you shouldn’t expect DQ to start selling vegan burgers any time soon, the company has been mixing up its menu a bit to cater to people who may be counting calories.
Buffett says it's 'long overdue' for women to be considered investing gurus
Berkshire Hathaway’s (BRKB) annual shareholder meeting isn’t the only investor event going on in Omaha this weekend.
A group of top female investors held what they dubbed the Variant Perspectives Conference on Friday at the Hilton across the street from the CHI Health Center where the Berkshire gathering was taking place…and Buffett showed up.
Buffett said it was “long overdue” for a conference led by women investors, adding that “track records should open doors.” He also said:
Barbara Ann Bernard, founder and chief investment officer of Wincrest Capital and one of the Variant event’s organizers, told me she was thrilled that Buffett showed up and noted that after years of not having many high profile women at Berkshire, the company now has four female directors on its board.
“Men are not the problem. They are the solution,” Bernard said.
Bernard noted that hedge funds run by women have outperformed a broader index of funds over the past few years. That’s proof that more women deserve a chance to be portfolio managers.
“This isn’t a pity party,” she said. “The issue is scale. We need more mentors.”
Benjamin Moore CEO is bullish on housing
The housing market has done extremely well over the past few years thanks to low interest rates and steady job growth. That’s great news for paint giant Benjamin Moore, the Berkshire-owned company that competes with Sherwin Williams (SHW), PPG (PPG) and Behr.
But Benjamin Moore CEO Dan Calkins said that there is one problem. A well-publicized shortage of workers in the housing industry means that sales could be even better than they already are – even though he said the housing market is “hot.”
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