Berkshire Beat: Warren Buffett Just Keeps Going and Going and Going
All of the latest Warren Buffett and Berkshire Hathaway news! Including updates on Chevron, BNSF, Apple, Kraft Heinz, NFM, and more...
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We’re squarely in the post-AGM lull of Berkshire Hathaway news — but, thankfully, this little slowdown affords us the chance to catch up on all of the interviews and reports that came out earlier this month at the annual shareholders meeting.
Today, Irv Blumkin takes his turn in the spotlight — telling CNBC’s Becky Quick how NFM is navigating a “challenging” year for consumers. As well as sharing any and all lessons learned from the late Charlie Munger.
But let’s start with the latest news and notes out of Omaha…
THE INDEFATIGABLE MR. BUFFETT: Earlier this week, best-selling author Morgan Housel joined The Knowledge Project podcast with Shane Parrish. For more than ninety minutes, Housel chatted about financial psychology, the dangers of FOMO, and some guy named Warren Buffett. In particular, he zeroed in on what we can — and cannot — take from his example.
How much of Buffett’s success can be repeated today? Housel astutely points out that the trading conditions of the 1950s — when Buffett could sift through the rubble left by the Great Depression and unearth blue chip stocks trading at just 3x earnings — are gone for good. “But,” he asked, “could I try to re-create his patience? Or some of his risk framework? Yes. So that’s something we should pay attention to. You want to find what is repeatable and what you can do again.”
Buffett has unusual wealth partly because he is an unusual person. “I used the stat in my book that 99% of Buffett’s net worth was accumulated after his 60th birthday,” said Housel. “The vast majority of people — including me — if we became a billionaire at age 60, [we] would be done. We’d move to Florida and buy a private island and live happily ever after. For him to be that successful and to keep going full blast for what’s now another 33 years and still going stronger than ever is a very unique characteristic that plays a massive role in his success. If Buffett had retired at age 60 or 50 like a normal person would have in that situation, you would have never heard of him.”
If you’ll permit me this small bit of sacrilege against Berkshire subsidiary Duracell, his endurance reminds me of the Energizer Bunny. Warren Buffett just keeps going and going and going…
THE VOTE IS IN: Earlier this week, Hess shareholders voted in favor of the O&G company’s $53 billion merger with Chevron. Some institutional investors had rattled their sabers about voting against the deal — leading CEO John Hess to pick up the phone and make a personal pitch to his biggest shareholders. And it seems that this eleventh-hour intervention did the trick. “We are very pleased that the majority of our stockholders recognize the compelling value of this strategic transaction and look forward to the successful completion of our merger with Chevron,” he said.
Don’t pop the champagne yet, though. Hess remains mired in an arbitration battle with Exxon Mobil over whether or not this deal violates XOM’s right-of-first-refusal to oil assets in Guyana. If Exxon wins, the deal is dead.
APPLE: Finally, some good news out of China for Tim Cook and co. According to the China Academy of Information and Communications Technology, iPhone sales soared 52% in April. (Actually, smartphone shipments from foreign brands increased by this amount, but “iPhone accounts for the vast majority of such devices”.) A nice follow-up to March’s 12% increase in sales. Long may this continue.
BNSF: Back in November, BNSF Railway and J.B. Hunt launched the Quantum intermodal service to increase speed (one day faster than standard intermodal) and reliability in this critical segment. And, happily, it looks like Quantum is living up to the hype. It’s still early, but the service has achieved an eye-popping 99% door-to-door on-time performance rating — well ahead of its 95% goal. “It’s one of the things that makes me optimistic about our intermodal future,” said BNSF VP Tom Williams.
What is intermodal? Basically, it involves the transportation of crates/trailers by rail, but with either water or truck movement at one or both ends. For example, a container is offloaded from a shipping vessel at the West Coast ports and then carried by BNSF to its final destination.
AND A COUPLE OF ODDS & ENDS…
Kraft Heinz is reportedly considering selling Oscar Meyer — with some estimates pegging the price tag at between $3-5 billion.
If you squint really hard, you might be able to see this week’s dividend checks. Berkshire collected $975,000 from Sirius XM Holdings and $130,000 from Jefferies Financial Group. Don’t spend it all in one place, guys.
NFM’s Irv Blumkin on “Very Challenging Year” for Consumers
NFM chairman Irv Blumkin did not mince words. “It’s been a very challenging year [for the consumer],” he told CNBC’s Becky Quick earlier this month. “Traffic, in general, is down [at our stores].”
And, despite a few bright spots in appliances and mattresses, the overall picture looks pretty grim. “In general terms,” said Blumkin, “there’s not any of our industries that we’re in [like flooring, furniture, and electronics] that are positive as an industry.”
Inflation has not hit NFM itself — “For the most part, our product pricing has come down” — but its steady march has battered consumer confidence as a whole. “We’re not really seeing the inflation in our industry,” said Blumkin, “but where we see it and hear a lot about it is in food and hospitality and many other categories.”
“People get worried with what’s going on with the geopolitical world,” he continued. “There’s just a lot of challenges and I think it puts in people’s mind [to be] not as confident as they typically are.”
Berkshire Hathaway’s AGM should provide a boost, though. “[Shareholder weekend] gives us the opportunity to really do great things and give the customers great value,” he said. “It’s like Christmastime and Black Friday. It’s a great week for us.”
And a few more quick hits from the NFM chairman…
Are iPhone customers waiting longer to upgrade to new devices? Yes, said Blumkin, “but it’s such a great product. Consumers love it so much. It’s very sticky — once you get it, you’re generally married to it. It’s still an unbelievably strong brand. If anything is going to make it through these kinds of times, Apple will be the one.”
With the fifth generation of Blumkins now working at NFM, what is it like to work so closely with family? “There’s just nothing better than having family in the business. They bring new ideas and new energy.”
What did you learn from the late Charlie Munger? Blumkin rattled off lessons like living within your circle of competence, surrounding yourself with people you admire, and soldiering on through the tough times. “What a mentor [and] hero to us,” he said. “We’re going to miss him a lot.”
Any plans to retire? “I’m having too much fun [to retire],” he laughed. “I get up every day, like Warren says, and tap dance to work. As long as I’m still having fun and still trying to take care of the customers and serve the customers, I’ll be here for a long time.”
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The Must List
Other awesome things that I read this week…
Omaha’s Oracle || History Investor
“Buffett also reminds us here that you should focus on doing what you enjoy. If Munger was alive, they would be doing the same thing they always did. To the greatest extent we can, we should all be trying to set up our lives in a way that allows that to be true for us, too.”
You’re Not as Dumb as You Feel ||
“Say what you will about investing, but the one thing all seasoned investors will agree on is how humbling the stock market can be. And that’s if you’re managing your own money. I can’t come close to imagining how magnified that feeling would be if you’re managing other people’s [money].”
23 Truths I Wish I Knew at 23 ||
“A lot of the time your feelings are invalid and you should feel differently.”
Lazy Work, Good Work || Morgan Housel
“If you anchor to the old world where good work meant physical action, it’s hard to wrap your head around the idea that the most productive use of a knowledge worker’s time could be sitting on a couch thinking. But it’s so clear that it is. Good ideas rarely come in meetings, or even at your desk. They come to you in the shower. On a walk. On your commute, or hanging out on the weekend.”
Daily Journal: The Canary in the Coal Mine? ||
“I feel uneasy about how Daily Journal’s transition is progressing so far. The fact that the new CEO did not build an ownership interest on his own is disappointing and the new director compensation plan, while not egregious, is not a step in the right direction … As a Berkshire Hathaway shareholder, I am concerned about how long the company’s culture can last. If Daily Journal’s culture fails to last, that is not a great sign for Berkshire’s culture despite the acknowledged differences between the two companies.”
My 14 Favorite Investing Books (And Why) ||
“[Common Stocks and Uncommon Profits] teaches how few people do actual deep research and why one can have an edge by doing it. The book was written a long time ago and many have argued that the market has gotten more efficient since then, but I’ll take the under on that statement.”
I missed that NFM interview, thanks! It's amazing how well the economy seems to be doing despite the ongoing weakness not only at places life NFM but across other retailing businesses. You can see why Warren struck such a cautious tone at the annual meeting.