Forget the Oscars. If you’re looking for star power — in the business world, at least — it doesn’t get any bigger than Warren Buffett, and he’ll be live from Los Angeles on Saturday for the latest Berkshire Hathaway annual shareholder meeting.
For the second year in a row, the meeting will be virtual because of Covid-19.
So instead of tens of thousands of shareholders flocking to Nebraska to see the Oracle of Omaha while consuming Berkshire (BRKB)-owned See’s Candies and Dairy Queen Dilly Bars, Buffett and other Berkshire (BRKB) executives will be talking on a livestream hosted by Yahoo Finance.
Buffett, one of the richest people on the planet, is traveling to La La Land for the meeting because that’s where Berkshire vice chairman and longtime confidant Charlie Munger lives. Munger, who is 97, missed the meeting last year.
Buffett and Munger — as well as fellow Berkshire vice chairmen Ajit Jain and Greg Abel — will field questions from shareholders and journalists. All of them awaiting Buffett’s and his lieutenants’ views about the stock market’s stunning rebound and the economy’s recovery over the past year.
A good year for Berkshire
Berkshire Hathaway’s B shares (which cost about $275 apiece, thanks to stock splits) are up nearly 20% in 2021 and have gained more than 45% in the past 12 months. The stock is near an all-time high. (Berkshire’s A shares (BRKA), which don’t split to lower their price, are now trading for more than $415,000.)
This means the company is operating from a position of strength and can make more deals if it so chooses — it’s also sitting on nearly $140 billion in cash. But Buffett has often lamented that he hasn’t been able to do as many acquisitions as he’d like, despite this cash hoard, because company valuations are too expensive.
Instead, Berkshire has continued to plow money into blue chip American stocks. Top holdings include Apple (AAPL), Coca-Cola (KO), Bank of America (BAC) and Kraft Heinz (KHC). Berkshire has even started to dabble a little more in the tech sector. Besides Apple (AAPL), Berkshire now also has a stake in Verizon (VZ) (which owns Yahoo) as well as a small position in Amazon (AMZN).
Buffett and Munger will likely be asked about these investments and whether the Berkshire portfolio might shift even more toward growth stocks. Berkshire also has a stake in Snowflake, a cloud database software firm that went public last year.
It’s clear that Berkshire is adapting to a changing stock market — and is likely being nudged that way by two other top Berkshire executives who help Buffett run the portfolio, Ted Weschler and Todd Combs. Combs is also CEO of Berkshire-owned insurance giant Geico.
But it’s unlikely that Berkshire will suddenly ditch the philosophy of buying quality companies for the long term. So don’t expect either Buffett or Munger to be singing the praises of GameStop (GME), AMC (AMC) and other so-called meme stocks.
If asked, Buffett and Munger likely still won’t show much love for bitcoin either, despite the huge surge in its price and that of other cryptocurrencies. Buffett called bitcoin “rat poison squared” a few years ago, and Munger dismissed it as “worthless, artificial gold.”
That won’t win Buffett and Munger any fans from bitcoin bulls like Elon Musk. (Berkshire, by the way, owns stakes in GM (GM) and Chinese electric car maker BYD (BYDDF) but not Musk’s Tesla (TSLA).)
But Buffett is savvy enough to realize that the investment landscape and economy have changed dramatically since he first took control of Berkshire Hathaway in 1965. That’s why many investors are also eager to hear more from Jain and Abel Saturday.
Jain, who runs Berkshire’s massive insurance operations, and Abel, who heads all of Berkshire’s other businesses in the energy, transportation, manufacturing and retail sectors, are expected to lead Berkshire Hathaway once Buffett and Munger retire or pass away.
Buffett turns 91 in August, so succession planning has become an important issue. Buffett has acknowledged his (and Munger’s) mortality with Midwestern dry wit, assuring investors that life will go on without them.
“Charlie and I long ago entered the urgent zone,” he wrote in the 2020 shareholder letter. “That’s not exactly great news for us. But Berkshire shareholders need not worry: Your company is 100% prepared for our departure.”
