Warren Buffett Turns Berkshire Hathaway’s Board of Directors into a Tribute to Charlie Munger | Economy

The most successful couple in business history split last November with the death at age 99 of Charlie Munger, friend, partner and staunchest ally of Warren Buffett, 93. The world’s most famous investor has turned the board of directors into annual shareholders. Meeting this Saturday in Omaha, Nebraska, to pay tribute to the man he considers the architect of the business conglomerate they have run together for six decades. Thousands of shareholders came, as they do every year, to hear from the Oracle of Omaha. Buffett talked about renewable energy, artificial intelligence, his investments in companies like Apple, American Express and Coca-Cola, but most of all about Munger.

Much of the magic of these shareholder meetings was Munger’s wry humor, who never bit his tongue even to make a mistake (like when he disdained artificial intelligence). The meeting began with a video looking back at the late man’s career, which Buffett himself said helped him change his investment philosophy from buying smart businesses at great prices to investing in great businesses at reasonable prices.

Those present noted Munger’s unforgettable tablets. “If people didn’t make mistakes so often, we wouldn’t be so rich,” he once said. “If I can be optimistic when I’m almost dead, the rest of you can certainly handle a little inflation,” he remarked most recently.

The film has haunting images and melancholy music, but there is also room for humor. One of the virtues of Buffett and Munger was the ability to laugh at themselves. The funny cameo roles they played in the series were shown on screen. Desperate women or in Office, and a little bit sketches filmed with Jamie Lee Curtis or the main characters Breaking Bad. At the end of the video, the nearly 18,000 people who attended the meeting call Woodstock of capitalism, They gave a long ovation.

During the question period, which lasted several hours, Ajit Jain, 70, sat alongside insurance executives while Gregory Abel, 61, was named as Buffett’s successor as the group’s first chief executive. When he first walked up to give the floor to Abel, he said, “Charl…” and quickly realized that it wasn’t Charlie there. “I’m so used to it…” he apologized. “It’s an honor,” responded Abel, an equally staid but uncharismatic executive, at least compared to the founders of Berkshire Hathaway.

Buffett often mentioned his former partner. He said that in both his personal life and business he was “unfailingly honest.” “When you have that in your life, you appreciate those people and forget about everything else,” he said. They asked him who he trusted now. “I completely trust my children and my wife. But that doesn’t mean I ask them what stocks to buy,” he replied. “When it comes to money management, for many, many decades there was no one better to talk to in the world than Charlie,” he added. Now, he admitted, he is, in a sense, talking to himself about investing.

Capon for Biden and Trump

The meeting took place not far from where they both grew up and met. As a teenager, Munger worked at Buffett & Son, a grocery store owned by Warren Buffett’s grandfather. The investor also briefly mentioned his successor. “We’ll see how the next Berkshire management behaves, fortunately we won’t have to wait too long in this regard. “I feel good, but I don’t know much about actuarial tables,” he said. “I shouldn’t agree to some four-year employment contract like some people do in this world at an age where you can’t be so sure where you’ll be in four years,” he added, alluding to the president. from the USA Joe Biden, 81 years old, and his rival in the presidential election Donald Trump, 77 years old.

Buffett has traditionally demonstrated his Democratic leanings, but in a country as polarized as the United States, he has recently steered clear of political statements. Interestingly, Omaha’s electoral votes could prove decisive in the November presidential election. Shareholder meeting courtesy rules indicate that questions of any kind are permitted, but the only topics that are not discussed are future purchases and sales of shares and politics.

Apple sales

However, the first question of the morning was inevitably about Apple, the company’s largest investment. In its quarterly results released this Saturday, Berkshire Hathaway revealed that its position in Apple fell in the first quarter from $174.3 billion to $135.4 billion, a 22% decline, largely due to the sale of about 115 million shares of the company.

Apple CEO Tom Cook sits in the front row, while Berkshire Hathaway’s president reiterated his confidence in the company, saying it is “an even better business than Coca-Cola or American Express,” his other big companies. . but he did not explain very clearly why he reduced his positions. He hinted that financial reasons were partly behind the decision.

The company also said it was “highly likely” it would remain its top investment at the end of the year. The opposite would be an earthquake, since Berkshire Hathaway’s position in Apple is 135.4 billion, almost 100 billion more than the second: Bank of America (39.2 billion). He added that he would remain in the company’s portfolio when the time comes to make a decision, “unless something really extraordinary happens.”

In a statement to CNBC, Cook said Buffett told him about the company’s share sale on Friday and added that Berkshire remains “a privilege to have a shareholder.”

Write to the box

According to the company’s quarterly report, the sale of Apple shares contributed to the company’s liquidity reaching a record level of $188.993 million (about 175.500 million euros) at the end of the first quarter.

“Our cash and Treasury bills at the end of the quarter were $182 billion, and I think it’s fair to assume that by the end of this quarter it will probably be about $200 billion,” Buffett said, not including $7 billion in the calculation. . additional funds available to the industrial division. “We’d like to spend it, but we won’t unless we think it’s doing something that has very little risk and could make us a lot of money,” he added.

Over time, Buffett’s risk aversion appears to have increased. Perhaps that’s why, while bemoaning the lack of investment opportunities, he largely missed the wave of artificial intelligence that has bolstered companies like Nvidia and Microsoft that weren’t on his radar. It also failed to take advantage of a historic opportunity to strengthen its position when prices fell during the pandemic. “We have the utmost aversion to incurring ongoing losses on your funds,” this was justified in 2022 at the first post-pandemic meeting. “Psychologically, we would die if we lost a lot of your money. “We don’t know what the economy will do, but we do know that we wake up every morning and want to have a safe investment,” he added. In his latest letter to Berkshire Hathaway shareholders, Warren Buffett lamented the lack of attractive investment opportunities in the market.

“I don’t know anything about artificial intelligence,” he admitted, and said he had experience with the technology that made him very “nervous.” He said he saw a false portrayal of himself, his voice, his clothing and his message. “(AI) has enormous potential for harm, and I don’t know how it will evolve,” he added, going so far as to compare its risks to those of nuclear weapons. “I said that we let the genie out of the bottle when we developed nuclear weapons, and that this genie has been doing terrible things lately, and the power of this genie is what, you know, scares the hell out of me. And I don’t know how to put the genie back in the bottle, and AI is something like that,” he said.

He, in particular, warned about the danger of any kind of fraud, for example using fake images and messages of distress. “Fraud has always been part of the American landscape, but if you were interested in investing in fraud, it could be the fastest-growing industry of all time,” he said.

Invest in the United States

Berkshire Hathaway’s board of directors includes shareholders and investors from all over the world, but the vast majority of them are American. One of the loudest cheers of the morning came when, asked whether he would invest in China again, he responded: “Our primary investment will always be in the United States,” he said. Buffett noted that his position in Chinese electric car maker BYD, which has surpassed Tesla in the number of vehicles sold, was a tip from Munger.

He also defended his commitments to several Japanese conglomerates in which he had recently invested, but as an exception. “You won’t see us making a lot of investments outside the United States, although we participate in the global economy through these companies. I understand the rules, weaknesses and strengths of the US. I don’t have the same general feeling around the world. And the luck is that I don’t need it,” he said. “(It’s) unlikely we’ll make major commitments in other countries,” he added, although he later acknowledged the company was “looking at something” in Canada.

Buffett provided video of students at Albert Einstein College of Medicine in the Bronx, New York, excitedly celebrating the announcement that tuition would be free thanks to Ruth Gottesman, who attended the meeting and used Berkshire stock to donate $1 billion. dollars. “They suggested naming it after him,” Buffett said. “She said, ‘Albert Einstein is a pretty good name. There is no ego involved here. She was happy to do it and did it without even asking her,” she added as the audience applauded her.

Regarding renewable energy sources, he assured that this is an interesting sector, but it takes time to develop and implement it. “My daughter hates it when I use this example, but it’s really true: You can’t have a baby in a month if you get nine women pregnant.” This phrase could easily have come from the mouth of Charlie Munger.

Follow all the information Economy And Business V Facebook And Xor in our weekly newsletter