Warren and Charlie looking ducky *see end of post for details on upcoming duck giveaway
If you pay any attention to financial media, you should know that the Berkshire Hathaway annual meeting took place this past weekend. This is a shareholder meeting unlike any other. ‘Circus’ may be a better way to describe it. It is a 3 day event with a party, question and answer session, cookout, chess Grandmaster and even a 5K race. I’ve been a long time shareholder of Berkshire Hathaway and a Warren Buffett forever. Going to this meeting has always been on my bucket list, so Mrs. 1500 and I decided to go this year.
Friday night party, you’ve never seen so many rich people go nuts for free food
To host the Saturday part of the meeting, Berkshire rents out the CenturyLink Center in Omaha which has a capacity of 17,000. When the main presentation started, this thing was filled to capacity. There were overfill rooms with TVs for those who couldn’t find a seat in the main arena. The atmosphere was electric. Really, I felt like I was 17, attending my first rock concert (AC/DC). Where else are you going to be able to sit in a room with at least 3 billionaires (Buffett, Charlie Munger and Bill Gates) and be able to ask 2 of them questions?
You may be asking yourself why you should read this if you don’t follow Buffett or Berkshire Hathaway? I’ll throw out 3 good reasons:
- Berkshire Hathaway has beaten the S&P 39 out of 48 years. This is absolutely incredible performance. Buffett and Munger are truly two of the greatest investors of our time.
- Buffett has a 10 year bet against hedge funds and halfway through, he is winning. Buffett’s philosophies and management styles couldn’t be more different from a hedge fund. He’s beating some of the smartest brains in the business.
- I believe that Buffett is a genuine and good person. One thing that came up at the meeting is that he owes much of his success to treating others well (more on that next week). Also, he is giving away 99% of his wealth.
I can’t possibly do this event justice with one post, so I’m splitting it up into 3:
- Overview: Today’s post will be an overview of Berkshire Hathaway, a description of the shareholder meeting and some high level observations of the event.
- Buffett Wisdom: The meat of the meeting is the question and answer session with Buffett and Munger. I took 20 pages of furious notes. On 5/14, I’ll discuss some of the more interesting questions and Buffett’s/Munger’s answers.
- The Big Lesson: There was a common theme that kept coming up in Buffett and Munger’s answers. I think it’s a very important lesson for any investor and I look forward to writing about it on 5/21. I’ll go out on a limb and say it’s probably the most important lesson to investors.
What is Berkshire Hathaway?
Berkshire Hathaway is a holding company. A holding company doesn’t produce any goods or services itself, but owns other companies in part or whole. You may be surprised at some of the companies owned by Berkshire: Dairy Queen, Brooks, Borsheim’s, See’s Candy and Geico are all wholly owned under the Berkshire umbrella. Additionally, Berkshire owns shares of companies including American Express, Coke, IBM and Wells Fargo.
What is the shareholder meeting like?
Buffet, Munger, Gates and my finger
In short, it’s pretty incredible. This isn’t your average shareholder meeting. Of course there is the corporate governance stuff. But you can also challenge a blindfolded chess Grandmaster who takes on 5 other people simultaneously. You can challenge a world champion ping pong player. Best of all, you can ask Buffett and Munger a question if your name is picked.
Friday night kicked off with a cocktail reception at Borsheims, a jewelry store that Berkshire owns. There was live music along with free drinks and food. This was a zoo as people came out in force to attend. There were people dressed up in suits and there were hipster looking people with purple hair.
The main meeting is an all day event. It opened up with a movie that was a combination of commercials for various Berkshire companies and short movies. One of the movies features Arnold Schwarzenegger. Another featured the guys from Breaking Bad. They had decided to stop cooking drugs in favor of peanut brittle and Buffett came calling to buy their company. It was hilarious, especially the part when Munger uttered ”brittle bitches!”
The movie concluded with a Berkshire take on the YMCA song. BKHA/BKHB replaced the traditional letters “We love our managers at B – K – H – A!” At some point, Buffett came out on stage and started dancing, doing the letter thing with his arms. For 82, this guy is in shape!
Next, there was a 5 hour question and answer session with a break for lunch. Shareholders and financial journalists alike get to ask questions. Buffett and Munger do not know the questions ahead of time. The answers were fascinating and I’ll discuss some of them next week. This year, Buffett invited a famous Berkshire Hathaway bear, Doug Kass, to ask questions. I thought it was pretty neat that someone with a dissenting view was invited as a challenger.
After the meeting was over, there was a cookout at Nebraska Furniture Mart, another Berkshire company. The weather was cold and rainy and this was an outdoor event, so we skipped it.
On Sunday, there is a 5K race. I would have loved to participate, but my two torn knees advised otherwise.
I’m a sucker for a clever t-shirt
First and foremost, if you ever have a chance, ATTEND THIS MEETING. All you need is one B share (currently trading at $110) to be able to go. Also, do it soon. Buffett is 82 and Munger is 89. They won’t be around forever.
- Buffett was very sharp. He cracked jokes off the cuff frequently and was quick with his answers. I can see him going strong for a bit longer.
- Munger was funny too. At one point, Doug Kass asked a very long winded question challenging Berkshire to a bet that he could beat their returns. Charlie’s answer was terse and quick: “The answer is no.” The crowd cracked up.
- Some people asked really dumb questions. Someone asked when the A shares would be split. Anyone who knows Buffett knows that this isn’t going to happen; that is what the B shares are for.
- There were people of all ages and from all over the world. While the average age skewed high, it was neat to see young people there, some with their children.
Stay tuned for next week when I’ll review some of the more interesting parts of the Q and A session.
*At the end of the 3rd post in this series, I’ll give away a new set of Warren/Charlie ducks. These ducks are only available at the Berkshire meeting and are still in their original packaging. Tune into posts 2 and 3 for more details!