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>>> Berkshire Hathaway's Annual Meeting


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https://www.barrons.com/livecoverage/berkshire-hathaway-warren-buffett-annual-shareholder-meeting/card/berkshire-won-t-be-investing-in-automakers-buffett-says-


Live coverage of the conglomerate's shareholders event and first-quarter results.

May 6, 2023

The Latest From Berkshire Hathaway, Warren Buffett, and Charlie Munger

The Q&A session at Berkshire Hathaway’s 2023 annual shareholders’ meeting ended early on Saturday, after back-to-back three-hour sessions of questioning for the conglomerate’s management.

CEO Warren Buffett and vice chairmen Charlie Munger, Ajit Jain, and Greg Abel addressed queries from shareholders about Berkshire’s business performance, their thoughts on macroeconomic issues and the recent banking turmoil

Buffett, 92, and Munger, 99, sprinkled in genial anecdotes and grandfatherly advice for Berkshire’s younger shareholders. Attendance was high at this year’s so-called “Woodstock for Capitalists,” after a relatively muted 2022 confab following two year of virtual meetings during the Covid-19 pandemic.

Berkshire’s first-quarter results were released earlier on Saturday morning, showing a 12.6% rise in operating profit, to $8.1 billion, and a faster pace of buybacks compared with the fourth quarter of 2022.

-- Andrew Bary and Nicholas Jasinski

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Berkshire Won’t Be Investing In Automakers, Buffett Says


Berkshire Hathaway (ticker: BRK.A, BRK.B) isn’t likely to invest in shares of automakers like General Motors (GM) or Ford Motor (F), CEO Warren Buffett said at the company’s annual shareholders’ meeting on Saturday.

“Charlie [Munger] and I have long felt that the auto business is just too tough,” Buffett said, adding an anecdote about Henry Ford’s challenges in the industry in the early 1900s.

Buffett said that there are too many global competitors for the automaking business to generate attractive returns. It’s also in the midst of a transition to electric vehicles, which imposes huge capital costs and risks in the near term before it becomes clear which companies will be successful and which won’t.

Berkshire prefers the auto dealership business, where it owns 78 dealerships across the U.S. Those generate more than $8 billion in annual revenue, making Berkshire among the largest dealership groups in the U.S.


Buffett Says Berkshire Remains On the Hunt for an ‘Elephant-Sized’ Acquisition

By Nicholas Jasinski

Berkshire Hathaway (ticker: BRK.A, BRK.B) has nearly $130 billion in cash and Treasury bills on its balance sheet. There’s ongoing speculation about what the company might do with all that dry powder.

At Berkshire’s annual shareholders’ meeting on Saturday, CEO Warren Buffett said that he would rather do a deal for a large company than sit on the cash, earning interest, but that it all depends on the prices available. Things are generally expensive these days.

“If we could buy a company for $15 billion, $75 billion, $100 billion, we could do it,” Buffett said. He noted that it’s more complex to buy a publicly traded company due to the longer timeline, shareholder vote, and other rules. But there just aren’t that many private companies of that scale available.

Buffett spoke about opportunities that emerged during the global financial crisis in 2008, including deals to buy shares in several troubled banks at attractive prices, and said that he expects Berkshire to get similar calls in the future.

“There’s no one else quite like us who can [do a deal] under the right circumstances,” Buffett said.

In the meantime, Berkshire is earning close to 5% on its T-bills. It has also been buying stock in recent years.


Buffett Says Streaming Remains a Challenging Business, Sticks With Paramount

By Nicholas Jasinski

CEO Warren Buffett addressed Berkshire Hathaway’s (ticker: BRK.A, BRK.B) investment in Paramount Global (PARA) at the company’s annual shareholders’ meeting in Omaha on Saturday. The media company is in the midst of an expensive transition from legacy businesses in cable TV and movies to a streaming future.

Paramount shares dropped 28% on May 5 following a disastrous quarterly earnings report that included a large loss and a slash to the company’s dividend.

“It’s not good news when any company cuts its dividend dramatically,” Buffett said.

He noted that the streaming business remains challenging, with numerous competitors keeping prices low. It’s easy to cancel a streaming subscription and hop to a competing service.

“There are a bunch of companies who don’t want to quit,” Buffett said. “Who knows what will happen with pricing.”

Berkshire became the largest holder of Paramount stock last year, with a stake of around 15%. Shares are down by about half since Berkshire began buying in the first quarter of 2022.


PARAMOUNT GLOBAL CL BPARA(U.S.: NASDAQ)


Buffett Faults Bank Risk Taking, Calls for More Active FDIC

By Nicholas Jasinski

Berkshire Hathaway (ticker: BRK.A, BRK.B) CEO Warren Buffett sees excessive risk taking at banks as the root of the 2023 banking turmoil. He called for more conservative banking practices and better communication from regulators at Berkshire’s 2023 annual shareholders’ meeting.

“The situation in banking is what it always was,” Buffett said. “Fear is contagious. Sometimes the fear is justified, sometimes it isn’t.” Buffett recalled that his father, Howard Buffett, lost his job during a bank run in the Great Depression.

Buffett praised the Federal Deposit Insurance Corp. for the greater stability of the banking system offered by the regulators’ deposit insurance, but said that it needed to better communicate with the American public to prevent further potential bank runs and potentially consider guaranteeing 100% of deposits until the current turmoil has passed. That’s especially relevant today, when digital banking makes deposits less “sticky,” he said.

Buffett faulted management at First Republic Bank—which was shut down by the Federal Deposit Insurance Corp. last month before its takeover by JPMorgan Chase (JPM)—for concentrating its balance sheet in low-yielding assets that lost value as interest rates rose over the past year.

Buffett placed signs reading “Available for Sale” and “Held-to-Maturity” on the table in front of him and Charlie Munger, Berkshire’s vice chairman, to laughs from the audience. Those are terms that refer to the accounting treatment of securities on a bank’s balance sheet.

“I’m old fashioned,” Munger said. “I liked it when banks didn’t do investment banking…I think having a lot of investment bankers trying to get rich isn’t a good thing. I think bankers should be more like engineers, thinking about what could go wrong.”


May 6, 2023 at 1:15 pm ET

Abel Says He’ll Continue Buffett’s Approach to Share Buybacks

By Nicholas Jasinski

Berkshire Hathaway’s (ticker: BRK.A, BRK.B) vice chairman Greg Abel, Warren Buffett’s appointed successor as CEO, will continue to buy back stock when it appears cheap and the best use of the conglomerate’s cash.

Berkshire bought back $4.4 billion of stock in the first three months of 2023, up from $2.6 billion in the fourth quarter of 2022.

“Greg understands capital allocation as well as I do…and I expect he’ll make those decisions under the same framework that Charlie and I do,” Buffett said.

Buffett is all about intrinsic value, and seeks to buy back Berkshire stock when its price falls below that estimate. He has praised companies like Apple (AAPL) for using excess capital to repurchase shares. He has also criticized management teams for buying back their company’s stock at inflated prices in the past.

“When the opportunity presents itself, we’ll want to be an active purchaser of Berkshire shares,” Abel said. “It’s great for our shareholders to be able to own a larger share in all of Berkshire’s businesses.”

APPLE INC.AAPL(U.S.: NASDAQ)


May 6, 2023 at 12:51 pm ET

Buffett’s TSMC Sale Due to Geopolitical Concerns

By Nicholas Jasinski

CEO Warren Buffett sold Berkshire Hathaway’s (ticker: BRK.A, BRK.B) more-than $4 billion stake in Taiwan Semiconductor Manufacturing Company (TSM) only a few months after acquiring the shares late last year. The Taiwanese semiconductor maker is the world’s leading producer of cutting-edge chips.

Buffett preaches buy-and-hold investing, so the quick entry and exit from the position was a rare short-term move from the 92 year old. That wasn’t a reflection of a change in his assessment of TSMC’s business, Buffett said Saturday at Berkshire’s annual shareholders’ meeting—there’s no one in the same league in the chip industry as TSMC.

“Taiwan Semiconductor is one of the best managed and most important companies in the world, and you’ll be able to say the same thing five, 10, or 20 years from now,” Buffett said. “I don’t like its location.”

A potential U.S.-China geopolitical spat that escalates is a cause for concern for Buffett, with Taiwan likely to be at the epicenter of any conflict.

“My view is that Warren ought to feel comfortable if he wants to,” said Berkshire vice chairman Charlie Munger, in between bites of peanut brittle from See’s Candies. “Put that in the minutes!” Buffett responded.


TAIWAN SEMICONDUCTOR MANUFACTURING CO. LTD. ADRTSM(U.S.: NYSE)


May 6, 2023 at 12:16 pm ET

Insurance Profits Are Up at Berkshire, But Jain Worries About a Florida Hurricane

By Nicholas Jasinski

Pricing is strong and improving in catastrophe insurance after a tough decade and a half for the category, Berkshire Hathaway’s (ticker: BRK.A, BRK.B) vice chairman in charge of insurance operations Ajit Jain said at the company’s annual shareholders’ meeting on Saturday. Those are policies that insure homes and businesses against natural disasters including earthquakes and hurricanes.

That has helped to drive better underwriting profits at Berkshire’s reinsurance businesses.

Jain warned that the company’s exposure was “unbalanced,” however, with particularly large concentration in Florida. Across all of Berkshire’s insurance operations, the conglomerate could see a loss of up to $15 billion if there’s a majorly destructive hurricane in Florida this year—if there isn’t, it could mean a profit of up to $7 billion, Jain estimated.

Jain said that the recently acquired insurer Alleghany, which Berkshire bought last year for about $11.6 billion, would continue doing business as it had before the deal.

“We treat our operating units independent of each other,” Jain said. “Alleghany will keep doing what they’re doing and they’ve been very successful at it.”


May 6, 2023 at 12:13 pm ET

Berkshire Hathaway Is Taking Part In the Energy Transition

By Nicholas Jasinski

Berkshire Hathaway (ticker: BRK.A, BRK.B) CEO Warren Buffett and vice chairman Greg Abel addressed the conglomerate’s efforts to boost its participation in renewable energy generation at the conglomerate’s 2023 annual shareholders’ meeting in Omaha on Saturday.

“There’s no question there’s an energy transition going on,” said Abel, who oversees Berkshire’s non-insurance businesses, including Berkshire Hathaway Energy. He said the utility company is working to reduce its carbon footprint by 50% in 2030 relative to 2005 levels.

Berkshire Hathaway Energy is investing in windmills and other clean energy generation, plus extending transmission lines to more renewable energy sources, which by their nature are more distributed than traditional power plants.

“It’s a very, very good business opportunity for us,” Abel added.

Buffett said that the United States’ approach to renewable energy is overly fragmented, with different rules and regulations state by state and no society-wide organized effort. He drew a comparison to the World War II-era coordination between the federal government and American businesses to reorient the nation’s industrial economy to support the war effort.

“The capital is there, the people are there, the objective is obvious, we just don’t seem to be able to do it in peacetime,” Buffett said.


May 6, 2023 at 11:14 am ET

Buffett and Munger Disagree on the Future of Value Investing

By Nicholas Jasinski

Legendary value investors Warren Buffett and Charlie Munger see divergent paths for value investors in the coming years. The Berkshire Hathaway (ticker: BRK.A, BRK.B) managers were responding to shareholders’ questions at the company’s annual meeting in Omaha on Saturday.

“I think value investors are going to have a harder time now that there are so many of them competing for a diminished set of opportunities,” Munger said. “My advice to value investors is to get used to making less.”

“Charlie has been telling me the same thing the whole time we’ve known each other,” Buffett said. The two first met over dinner in 1959.

Buffett sees more opportunities than his long-time partner. “What gives you opportunities is other people doing dumb things,” he said. “...And there’s been a great increase in people doing dumb things.”

The 92-year-old value investor noted that Berkshire’s current scale can be both an advantage and a disadvantage, with many potential opportunities too small to move the needle for the $719 billion conglomerate.

A long-term investing horizon is still key to realizing value in investing, Buffett said. “I’d love to be born today, start out with not too much money, and turn it into a lot of money,” he said. “I’m sure Charlie would too.”

“I’d like my big pile [of money] to stay just the way it is,” Munger quipped, to laughs from the crowd. He has a net worth of approximately $2.4 billion, according to Forbes.


May 6, 2023 at 11:07 am ET

Buffett, 92, and Munger, 99 Aren’t Particularly Bullish on AI, Robotics

By Nicholas Jasinski

A shareholder asked Berkshire Hathaway's Warren Buffett and Charlie Munger to share their thoughts on artificial intelligence and robotics and which businesses stood to be disrupted most. “I thank you for asking Charlie that question,” Buffett, 92, demurred.

Munger, 99, noted that he was impressed by the level of automation at BYD (ticker: BYDDY) factories in Asia. But, “I think regular old intelligence works just fine,” Munger added.

“There won’t be any AI that will replace Ajit [Jain, Berkshire vice chairman],” Buffett quipped. He went on to warn about the potential risks of AI technologies, drawing a parallel to the development of the atomic bomb.

BYD CO. LTD. ADR BYDDY(U.S.: OTC)

May 6, 2023 at 11:04 am ET

Buffett’s Vice Chairmen Discuss Berkshire’s Businesses

By Nicholas Jasinski

Berkshire Hathaway CEO Warren Buffett kicked a question about the company’s subsidiaries’ performance to his deputies.

Geico is coming off a strong first quarter, with an underwriting profit of $703 million, versus a loss of $178 million in the year-ago quarter.

Ajit Jain, who oversees Berkshire’s insurance operations, said that Geico is working to close the gap with competitors on its employment of telematics, or usage-based insurance, which adjusts customers’ rates based on how they drive.

“Geico’s technology needs a lot more work than I thought it would,” Jain said, noting that the company uses more than 600 distinct tech platforms.

Greg Abel, who oversees non-insurance operations and is in line to succeed Buffett as CEO, spoke about BNSF. He said there was “more work to be done” on making the railroad more efficient and productive and that he was aware of most competitors moving to precision-scheduled railroading.

2022 was a “reset” year for the business, Abel said, that will set it up for better long-term growth.

May 6, 2023 at 10:47 am ET

Buffett Agrees With Regulators’ Decision to Protect Failing Bank Deposits

By Nicholas Jasinski

The 2023 Berkshire Hathaway shareholders’ meeting’s first question had to do with the past few months’ banking-industry turmoil.

CEO Warren Buffett said that regulators made the right decision to intervene to protect depositors at banks including Silicon Valley Bank, which failed in March.

Had they not, “it would have been catastrophic,” Buffett said.

May 6, 2023 at 10:45 am ET

Buffett Talks First-Quarter Results, Berkshire’s Balance Sheet, and Buybacks

By Nicholas Jasinski

Berkshire Hathaway CEO Warren Buffett ran through the company’s first-quarter results, which were released on Saturday morning. The conglomerate’s operating profit after taxes was up almost 13% year over year, to $8.1 billion.

Buffett attributed the gain to a higher return on the company’s stock portfolio, better interest income on its cash holdings, and a higher insurance underwriting profit.

He continued with an overview of Berkshire’s balance sheet, noting that the company’s $504.5 billion in shareholders’ equity is more than any other American company. Berkshire’s insurance float—the difference between an insurance company’s cash collected from premiums and the claims it must pay out—stood at $165.1 billion at the end of the first quarter, while cash and Treasury bills were $127.7 billion. That’s a lot of ammo for potential acquisitions or interest income.

Berkshire bought back about 9,600 class A shares in the first quarter, worth about $4.4 billion. That was faster than the first-quarter pace of buybacks, but slower than Berkshire’s repurchases in 2020 and 2021.

May 6, 2023 at 10:24 am ET

Buffett and His Vice Chairmen Are On Stage

By Nicholas Jasinski

Berkshire Hathaway CEO Warren Buffett and vice chairman Charlie Munger came to the stage to a standing ovation, accompanied by Ajit Jain and Greg Abel, who oversee the conglomerate’s insurance and non-insurance businesses, respectively.

Buffett opened the company’s 2023 shareholders’ meeting with a joke about “a competing broadcast” going on in the United Kingdom on Saturday morning. “We’ve got our own King Charles here today,” he cracked, gesturing toward Munger.

Buffett proceeded to introduce Abel and Jain, then all of Berkshire’s board of directors who were in attendance.


May 6, 2023 at 10:06 am ET

Berkshire Shareholders’ Meeting Begins With Annual Movie

By Nicholas Jasinski

OMAHA, Neb.—The 2023 Berkshire Hathaway annual shareholder meeting kicked off on Saturday morning with the annual movie showcasing many of the conglomerate’s subsidiaries and equity investments, plus a recorded message from CEO Warren Buffett. It included advertisements from Apple (ticker: AAPL), Dairy Queen, Geico, Coca-Cola (KO), Oriental Trading, Precision Castparts, and more.

The movie also featured a montage of past meetings’ shareholder questions regarding Berkshire’s succession plans and what happens after Buffett, now 92, is no longer CEO—as long ago as at the 1994 meeting. “Incidentally I think I’m in pretty good health,” Buffett said in response. Greg Abel, one of Berkshire’s vice chairmen, is the firm’s anointed successor.

The movie also included several skits with Buffett and his partner Charlie Munger, 99, acting out situations.

One began with the investors debating whether to invest in “internet stocks.” Buffett famously preaches against buying businesses that one doesn’t understand inside and out.

In the bit, a lounging Jamie Lee Curtis receives a call from a bashful Buffett—“Warren ‘All-You-Can-Eat’ Buffet?” she asks, picking up the phone. Buffett asks her to convince Munger to buy internet stocks. In a seductive voice, she calls Munger and asks “Is this Charlie Hunger?” before successfully cajoling him to invest.

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