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5 Takeaways from Berkshire Hathaway Annual Meeting 2019

The annual shareholders meeting just concluded May 4th, 2019, as Warren Buffett and Charlie Munger, hosted the event for nearly seven hours. To people familiar with this event, this was a time to look forward to as Warren Buffett and Charlie Munger tend to address countless questions and answers while giving a status update on the future projections of Berkshire Hathaway, a holding company that currently owns 92 brands with a market capitalization of approximately $500 billion.

If you did not have the time to sit through the entire event, which are quite good, and need the brass tacks of what happened this article will be a perfect fit for you!

An Overview:

  • No Succession Plan Has Been Announced.
  • Amazon.com is Now Fresh on Berkshire’s Radar.
  • Berkshire is Being “More Liberal” with Buybacks
  • Economic Realism & Critique on Socialism
  • What to Expect for 2019
  • No Succession Plan Has Been Announced:

    Buffett, the most vocal during the meeting, has talk about Charlie & Warren’s successors when it comes to finding new operating managers. Buffett and Munger both in good spirit, joke about being the oldest people in the room, Charlie being 94, and Warren 88.

    While they both remain highly competent in their dedication to Berkshire Hathaway they did finally spotlight this year two operating managers likely to be their successors. Buffett made a point that while their process of looking at companies is “simple” from a long term, compound investors point of view, some of the judgment calls they make (Charlie and Warren), require talent.

    Ajit Jain and Greg Abel were both mentioned as people that only come around once in a lifetime. People that just “get it”, and they “could not have two better operating managers than Greg and Ajit.” Charlie Munger was giving advice in response to a question from a shareholder and made this “talent” point very succinct.

    He shared the story of Mozart; A woman approached Mozart and said “how long do I have to practice before I can write symphonies like you”, to which Mozart responded “10 years of practice”. The woman rebuttal was “but it didn’t take you 10 years of practice before you began writing”, to which Mozart replied: “you’re right, but I never had to ask people how long it would take either.”

    Berkshire Hathaway meetings are filled with powerful, sober, and simple principles that are made to stick with the audience, and it became very obvious that Warren and Charlie felt quite confident in their assessment of the abilities of Greg and Ajit.

    Amazon.com is Now on The Radar for Berkshire Hathaway.

    On May 2nd Warren told CNBC that he is a fan of Jeff Bezo’s and he feels bad for not having bought Amazon shares previously. During the meeting, he did talk between Charlie about how there are a few things that they do miss out on like Uber, Google, and Amazon (earlier).

    That said Warren did make it clear that they weren’t the managers that bought into Amazon, and presumably was referring to Todd Combs or Ted Weschler who oversee about $13 billion of equity investments for Berkshire.

    Warren’s point during the meeting was that Jeff Bezo basically creates financial miracles however, he’s not certain of the growth rate, or the sustainability because as an investor, despite the fact Amazon is run well and does perform well, Warren leaves the expertise of a business like this to others in his investment team.

    Berkshire is Being More Liberal with Buybacks

    Without offering too many specifics, Munger said “we’re going to probably be more liberal when it comes to repurchasing shares,” leaving some people wondering a few things.

    In the first quarter, Berkshire repurchased $1.7 billion of its shares, despite the higher stock market valuations. From Dec 2019 to March of 2019 the holdings rose from $111.9 billion to $114.2 billion. Leaving Berkshire shareholders wondering if they are holding on to cash in order to make larger acquisitions in a down market.

    Economic Realism & Critique on Socialism.

    While shareholders were happy to see the growth in Berkshire Hathaway, Warren did say “just wait until this time next year and see how we’re doing.” When Warren says remarks like that, even in passing, it’s safe to say he has been thinking about a lot of things.

    This statement could reflect his confidence in Berkshire to make great acquisitions in the coming 12 months, while simultaneously informing the shareholders that the swell in the economy could be a sign of an overdue correction in the stock market.

    Warren goes on to make remarks about how his only ambition in business was to create a system that creates long-lasting value for their investors, and a system that continues to succeed well beyond Warren and Munger’s time.

    This leads into Warren’s and Munger’s own personal political views. While Democrats have recently been pushing more socialist agendas in the United States, Munger said “while we’re all in favor of some kind of government social safety net in a country as prosperous as ours”, socialism is unlikely even 40 years from now.

    Warren touches on the idea of conflict with other countries in terms of wars, and dismantles that argument as well, saying that it will be extremely economically stupid on both parties side at this point to get into any kind of military conflict with each other.

    What to Expect of 2019

    Warren and Munger seem to keep a non “doom preacher” attitude despite all the negative news saying that rampant government budget deficits are a danger to our capitalistic economy. They even seem to not be thrown off by the possibility of A.I. (which we are a long way away from) when it comes to still manage to have available jobs.

    Warren and Charlie were careful about what they said and didn’t say but did consider us “gloriously luck” to be Americans.