For this blog post I thought I’d cover Warren Buffett’s Berkshire Hathaway Shareholder meeting which was Saturday, May 2nd. As a Buffett nerd I was saddened to miss this year’s shareholder meeting due to the Coronavirus but it was great to see Buffett hasn’t lost a step even at age 89. Here are my 5 key takeaways from the virtual event.
Buffett is now sitting on $137 billion of Berkshire’s money and he remains bullish but cautious. It isn’t like he hasn’t been trying to buy, Berkshire recently lost out on a bidding war to buy Tech Data. He also said better days lie ahead.
Buffett has seen his fair share of recessions and a depression. He believes nothing can stop America. Whether it was WW II, 9/11, or the Great Recession he believes that it’s best to bet on America and America will make it through the Coronavirus. He also noted that for every $1 invested in the stock market since he graduated college in the 1950s has produced $100.
Buffett was questioned on stock buybacks. Recently buybacks have become a political piñata since Mark Cuban and others said no company that has been buying its own stock back should get assistance from the government. At the end of 2019 Buffett had Berkshire buy back $1.8 billion of Berkshire stock. Buffett defended buy backs and noted it was like a dividend. When a company buys its own shares back it tends to drive the price up. I personally see both sides of the coin on this issue. I believe a company like Berkshire that is well run and not in debt should buy its own stock, its smart. However, a company that is in debt shouldn’t in effect borrow to buy its own stock.
On oil Buffett said “If you own oil you should only own oil if you expect prices to go up significantly. I don’t know if they will go up significantly or not.” In a nutshell Buffett is worried that there’s too much supply and not much demand and it will take a while for this to be worked out.
When Buffett was asked about negative interest rates he noted that you better be in stocks and not holding bonds. He doesn’t believe it makes sense to hold an investment where in theory you’d have to pay the borrower.
This event was very different but still the same Warren. Despite the change in format the meeting hit on the major issues that threaten Berkshire’s competitive advantages and opportunities Berkshire and Buffett see for the future. Buffett has indicated that he has a succession plan and we were able to hear from a couple of the people that might take over after Buffett. It’s always a pleasure to hear from the greatest investor and hear his insights on business and investing.
Matt Maciel, MA, MBA