Berkshire Hathaway: Live Coverage of the Annual Shareholders Meeting

The meeting began with a movie featuring highlights and advertisements from Berkshire’s numerous subsidiaries and equity investments—including Berkshire Hathaway Energy, Borsheims,

Apple

(AAPL), and

American Express

(AXP). It also included humorous skits starring Buffett and his longtime friend and advisor Charlie Munger, and Berkshire-themed parodies of “Uptown Funk” and “Empire State of Mind.”

Flanked by Berkshire’s three vice chairmen—Munger, Greg Abel, and Ajit Jain—a jovial Buffett received a standing ovation and immediately began cracking jokes: “You don’t hear that kind of welcome for the index funds,” he quipped. “The two of us are 190 years old,” Buffett added, referring to himself, 91, and Munger, 98.

Holding up a box of See’s Candies peanut brittle, Buffett spoke about Mary See, whose black-and-white image adorns See’s merchandise. She passed away in 1939. “A lot of people think this is me in drag, but that’s not true,” Buffett said. “There’s a resemblance, but these rumors are started by our competitors.”

Buffett continued with an overview of Berkshire’s first-quarter financial results, which were released on Saturday morning. Operating earnings after taxes rose less than 1% from the year-earlier period, to about $7 billion. The company reduced the pace of its stock buybacks, but Berkshire was active in purchasing other companies’ shares.

Berkshire spent $3.2 billion on share repurchases in the first quarter, and bought $51.9 billion in other equities. The company also sold $10.3 billion worth of non-Berkshire shares. Berkshire ended the period with $102.7 billion in cash and U.S. Treasury bills.

“We will always have a lot of cash on hand,” Buffett said. 

Buffett and Munger addressed what they called “gambling” in the stock market, including high-frequency trading, options strategies, and other speculative behavior. That can lead to short-term swings in prices that are buying opportunities for Berkshire, the

Oracle

of Omaha said. “Sometimes markets do crazy things,” Buffett said. “That’s good for Berkshire, not because we’re smart…but because we’re sane.”

The first question of the meeting was about Berkshire quickly becoming more active in the stock market. In Buffett’s 2021 annual shareholder letter, dated Feb. 26, he wrote that there were few attractive opportunities out there. Since then, Berkshire struck a deal to acquire insurer

Alleghany

for $11.6 billion, and scooped up billions of dollars of shares of

Chevron

(CVX),

Occidental Petroleum

(OXY), and

HP

(HPQ).

Asked what changed, Munger said: “We found some things we preferred owning to Treasury bills.” Buffett added, “As usual, Charlie has given the full answer, but I’ll still talk more and say less.”

Buffett explained that Occidental’s capital-return plans and higher oil prices in the wake of Russia’s invasion of Ukraine made the stock a buy, and that Alleghany was a natural fit for Berkshire’s insurance operations.

Buffett also said that Berkshire bought additional

Apple

stock in the first quarter. The company owned about 911 million shares of the iPhone maker at the end of March, versus 907.6 million at the end of 2021.

Buffett extolled the virtues of stock buybacks for shareholders, pointing out that Berkshire’s stake in

American Express

had grown to about 20%, from 11%, over the years—without Berkshire buying any additional stock.

“Imagine you owned a farm and had 640 acres, farmed it every year, made a little money on it, enjoyed farming, and somehow 20 years later it turned into 1,100 or 1,200 acres,” Buffett said. “If you do it at the right price, there’s nothing better than buying back part of your own business.”

Another question addressed the performance of Berkshire’s Geico and BNSF Railway subsidiaries relative to competitors. Buffett kicked it over to Jain, who oversees Berkshire’s insurance operations, and Abel, who oversees non-insurance operations.

Jain admitted that lately

Progressive

(PGR) has done better than Geico in terms of its profit margin and growth rate. He attributed that to the Berkshire subsidiary’s later entry into telematics, or usage-based insurance, which adjusts customers’ rates based on how they drive.

Progressive

has years of additional data and experience in the business, but Jain said that Geico was seeing promising early results from its telematics policies, branded as DriveEasy. 

Abel defended the approach of BNSF, which hasn’t been able to embrace precision-scheduled railroading as much of the railroad industry has. 

Berkshire stock has climbed about 7% so far this year, versus a 13% decline for the

S&P 500.

This is a developing story. Check back for updates.

Write to Nicholas Jasinski at [email protected]