Every year, investors gather in Omaha to attend the Berkshire Hathaway (BKR.B) annual shareholders meeting, eager to soak in the wisdom of Warren Buffett and gain insights into the conglomerate’s strategies.
This year held particular significance as it marked the first time Buffett addressed shareholder queries since the passing of Charlie Munger, his longtime partner and vice chairman. In his annual letter to Berkshire shareholders, Buffett paid tribute to Munger, recognizing him as the architect behind the modern Berkshire Hathaway.
Buffett’s right-hand men, Greg Abel and Ajit Jain, joined the conversation, engaging with shareholders for hours. Together, they delved into discussions about Berkshire’s future, its legacy, current economy, and much more.
Here are five key highlights that had everyone talking:
Strategic Shifts: Apple, Buffett’s Jewel:
In a surprising strategic shift, Berkshire Hathaway has sold about 13% of its Apple (AAPL) shares, lowering the stake’s value to $135.4B from $174.3B. Despite the reduction, Warren Buffett praised Apple, comparing it favorably to long-term holdings like American Express (AXP) and Coca-Cola (KO). Despite selling a portion of their largest holding, Buffett’s admiration for Apple remains undiminished, stating that Apple’s Iphone “may be the greatest product of all time,” with Apple CEO Tim Cook in the audience.
Q1 earnings growth:
Before the meeting started, Berkshire released its Q1 earnings report. The company marked the first quarter with operating earnings surging 39% to $11.22 billion compared to the previous year. This increase was largely driven by a substantial rise in insurance underwriting earnings, which jumped by 185% to $2.598 billion, along with significant gains in other segments such as Geico and insurance investment income. Despite this positive performance, overall net earnings for the quarter fell by 64% to $12.7 billion, attributed to fluctuations in Berkshire’s stock investments.
A Record Cash Pile:
Berkshire Hathaway’s cash reserves hit a record high, soaring to an impressive $182 billion by the close of Q1. Buffett hinted that this figure could climb even higher, surpassing the $200 billion mark soon. This remarkable feat underscores Berkshire’s financial strength and Buffett’s savvy in managing capital. “I don’t mind at all under current conditions building the cash position,” Buffett remarked, indicating a readiness to capitalize on opportunities amidst market uncertainties.
Navigating Succession:
With Charlie Munger’s notable absence, Berkshire Hathaway’s succession planning took the spotlight at this year’s annual meeting. Warren Buffett provided clarity on the company’s succession plan, emphasizing the pivotal role of designated successor Greg Abel. Insurance part of the business will be in hands of Ajit Jain. Buffett stated: “We’ve really got the problem solved for the next 20 years unless something untoward happens then the directors need to find probably within our own organization,” he said.
Opportunities outside the US:
Once again, Buffett showed his strong dedication to investing in America at the Berkshire Hathaway annual shareholders meeting. While emphasizing his preference for domestic investments, he acknowledged a commitment to investing in Japan. Buffett stated that American companies would likely remain central to Berkshire’s investments but hinted at potential opportunities in India, saying, “I would say that’s something that more energetic management at Berkshire could pursue because we do have a reputation now and is known around the world and our Japanese experience has been fascinating. In that respect, so there may be an unexplored or unattended to opportunities and area (in India).”
Insights EVs and insurance:
Jain provided insights into industry challenges, cautioning about Tesla’s insurance ambitions. He emphasized the need to consider the soaring costs associated with accidents despite advancements in technology, stating, “The point I want to make in terms of Tesla and the fact that they feel that because of their technology the number of accidents [will] come down. That is certainly provable. But what needs to be factored in as well is the pay cost of each one of these accidents has skyrocketed.”
The AI Dilemma:
Buffett raised concerns about AI’s risks and rewards, cautioning about its potential for scams and its ability to generate deceptive content. Admitting his lack of expertise, he highlighted AI’s dual nature, stating, “Obviously, AI has potential for good things too, but … I do think, as someone who doesn’t understand a damn thing about it, it has enormous potential for good and enormous potential for harm.” He drew parallels to the atomic bomb’s impact, stressing the need to grasp AI’s societal implications.
After a 6 hours long Q&A, Warren Buffett drew huge applause and ended the meeting stating “If you are lucky, ensure a bunch of other people are lucky too. I hope you come next year and I hope I come too,” said Buffett.
I look forward to continuing to learn from Warren, Ajit, and Greg in the years to come. In a world full of new ideas and fast solutions, it’s easy to lose sight of what’s truly important. The annual meeting remains inspiring, reminding us of our core values amid the chaos of modern life. While some may say Buffett repeats himself each year, I see the beauty in his consistent message. Warren and Charlie consistently emphasize the same fundamental principles that will always remain the same and will endure despite Charlie’s passing.
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