The Berkshire Beat #68: Woodstock for Capitalists
Previewing Berkshire Hathaway's annual shareholders meeting, other company news, and my must-reads of the week!
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The latest news and notes out of Omaha…
WOODSTOCK FOR CAPITALISTS: This weekend, tens of thousands of Berkshire Hathaway shareholders will descend on Omaha, Nebraska, for a three-day bash otherwise known as the company’s annual meeting. At most businesses, an annual meeting is a dreary affair that draws just a handful of guests — and even less interest from the wider world. With Berkshire, though, it’s a very different story…
CNBC will stream the entire Q&A session tomorrow at www.cnbc.com/brklive. And, to make the whole thing feel even more like the Super Bowl of Investing, there will also be a pre-show (starting at 9:30 a.m. ET), halftime show, and post-show — all anchored by Buffett whisperer Becky Quick.
For the first time ever, the meeting’s introductory movie will be broadcast publicly (at 9:45 a.m. ET) for those watching along at home. “In prior years, the Annual Meeting movie was only seen by those in attendance at the meeting in Omaha,” the press release says.
Berkshire vice chairmen Greg Abel and Ajit Jain will join Warren Buffett on stage for the morning session, which runs from 10:15 a.m. ET to 1:00 p.m. ET. After a one-hour break for lunch, Buffett and Abel will return to the stage for the afternoon session from 2:00 p.m. ET to 4:00 p.m. ET.
I am planning to live-tweet Buffett’s Q&A over on my Twitter/X account. So please feel free to follow along over there.
But, for those diehards who make the trek to Omaha, the Q&A session is only part of the fun. Berkshire turns the CHI Health Center Arena into a shopping mall of sorts — full of companies owned (either partially or fully) by the conglomerate. You can sip on a Coca-Cola, munch on some See’s Candies, or devour a Dairy Queen blizzard. (Or, if you’re anything like me, do all three.)
Shareholders can also try on a new pair of Brooks running shoes, tour a private plane owned by NetJets, snag a pair of Warren Buffett and Charlie Munger Squishmallows… You get the idea. The possibilities are endless.
Another staple of shareholder weekend is the Berkshire Hathaway “Invest in Yourself” 5K on Sunday morning. This year, the annual fun run will pay tribute to the late Charlie Munger with “The Munger Mile”. Between mile markers 2 and 3, “runners will be treated to a display of ‘Munger-isms’: some of Mr. Munger’s most iconic quotes sharing wisdom on business and life”.
BERKSHIRE DEEP DIVE: Adam J. Mead, author of The Complete Financial History of Berkshire Hathaway and
, has generously removed the paywall from his April 2024 Deep Dive on Berkshire. This comprehensive report provides a treasure trove of invaluable insight into how one noted Berkshire expert analyzes and values the company. Highly recommended.GROWING UP BUFFETT: Peter Buffett, the Oracle’s youngest son, spoke to KETV News in Omaha this week and shared a few memories of growing up with his famous father. “We were around the dinner table every single night,” he said. “My dad was home at the same time every night and we all had dinner together. Back then, there wasn’t the internet — but there wasn’t even a TV within earshot or anything like that. It was [just] us around the table.”
“There would be times when my dad would use my sister as a one-person focus group around various things she might like to drink or what she might read,” he laughed. “The Sun Newspaper, when that was part of my dad’s life, he was very interested in what she was interested [with] in the paper.”
“[My dad was] present and available. Yes, he was often in the office reading or talking to Charlie Munger, but we knew where he was and we knew he’d be there if we needed him.”
INSURANCE: Yesterday, the Financial Times wrote about “Buffett’s Prince of Risk” Ajit Jain and the future of Berkshire’s insurance operations. In the article, four names are mooted as potential successors to Jain in the (hopefully far off) future: Peter Eastwood of BH Specialty Insurance, Charlie Shamieh of Gen Re, Todd Combs of GEICO, and Joe Brandon of Alleghany.
CHRISTMAS IN MAY: “Almost 150 vendors bring their merchandise here [for the annual meeting],” Borsheim’s executive Adrienne Perry told KETV News. “We start the week before Berkshire and we go all the way to Mother’s Day. That two-week period for us is as significant as the whole Christmas season.” She credits the “loyalty” of Berkshire shareholders for expanding Borsheim’s reach worldwide. Approximately half of the jeweler’s business comes from outside Nebraska.
OTHER ODDS & ENDS…
Since April 24, Berkshire purchased 1.45 million more shares of Liberty Media Sirius XM tracking stock. 500,000 shares of LSXMA 0.00%↑ and 958,653 shares of LSXMK 0.00%↑ for a total price tag of $36.1 million.
Late last week, HomeServices of America — the real estate brokerage owned by Berkshire Hathaway Energy — settled its antitrust commission lawsuits for $250 million. (The National Association of Realtors previously settled for $418 million back in March.) BHE itself, though, is not off the hook just yet.
BHE was recently named in a separate commission-related lawsuit, which is not affected by this settlement. The lawyer for the victorious homeowners pledged to “continue to pursue our nationwide case” against BHE.
Bob Bakish stepped down as CEO of Paramount Global earlier this week. The media giant remains deep in talks with Skydance Media about a potential merger. The one-month exclusive negotiating window between the two parties ends today. Complicating the matter even further, Sony and Apollo have reportedly submitted a $26 billion all-cash offer for Paramount. So stay tuned, I guess.
On Wednesday, Nevena Srebreva was named CEO of Berkshire subsidiary Pampered Chef. “Nevena’s extensive experience in the direct sales industry and at Pampered Chef will position the company for continued success,” says Greg Abel.
A Slow Read of Poor Charlie’s Almanack
Talk 11: The Psychology of Human Misjudgment
It seems only fitting that we’ve reached the end of this slow read of Poor Charlie’s Almanack on the eve of Berkshire Hathaway’s annual shareholders meeting. It goes without saying that this year’s meeting won’t be quite the same without Charlie Munger sitting up on stage alongside Warren Buffett.
“There’s going to be a place in my heart missing when we don’t see Charlie up there,” one shareholder told the Wall Street Journal. “Of course we’ll adapt to it — but, this first year especially, it’s going to be kind of like an empty-chair feeling.”
Poor Charlie’s Almanack wraps up with a bang: The Psychology of Human Misjudgment, one of Charlie’s most famous (and impactful) lectures. As editor Peter Kaufman says, this is “Charlie’s magnum opus on why we behave the way we do”.
There’s absolutely no way to distill this powerhouse of thought down into a short, digestible summary. So, in the interest of time and space, I’ve picked out a couple of my favorite points for special mention. And, sometime this summer, I will circle back and write a longer reflection on this remarkable speech.
From an early age, Charlie understood the power of role models. “A man who is so constructed that he loves admirable persons and ideas with a special intensity has a huge advantage in life,” he said. Charlie put this into action in his own life by surrounding himself with people of the highest intellect and integrity — and through the devoted study of the great men and women that came before him.
Social proof can be a double-edged sword. We know that people love to follow the crowd — for good or ill. It doesn’t take much to get the blundering herd stampeding off in the wrong direction. Similarly, a small gesture or kind word can inspire positive change in anyone. On the other hand, inaction can be contagious. Charlie notes that this inertia of inaction is particularly prevalent on corporate boards — where too many directors seem more worried about not rocking the boat rather than doing what is best for the company and shareholders.
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The Must List
Other awesome things that I read, watched, and listened to this week…
🎧 Mitch Rales — The Art of Compounding (Art of Investing)
“[CEOs today] are on a 90-day clock. They've got to report to investors every 90 days and you hear the same questions from the investment community — all dealing with what happened during this 90-day period and what's likely to happen in the next 90 days, rather than what are you doing today to preserve and protect and grow your investment for decades to come. Nobody focuses on that. Zero.”
How Much Is Your Neighborhood Store Worth?
“It’s tempting to see the market as a giant competitive casino where you and others can make ‘bets’ or ‘plays’. The dopamine release from quick victories and the short feedback loop from gamifying investing is quite addictive. On the other hand, real research is laborious. The feedback loop is long — you can do everything right and yet the market might choose to disagree with you for a long time. For most, it’s simply not fun, so they don’t do it.”
How To Determine If Your Dividends Are Safe (Dividend Growth Investor)
“We want to avoid situations where management is growing dividends per share faster than earnings per share. The dividend payout ratio will go up to a certain ceiling if dividends are raised without a corresponding growth in earnings per share. This action is unsustainable, and could lead to dividend cuts down the road (even if the dividend looks safe today).”
The Great Social Media Reset — We Scroll More Than We Post
“Long-form content is seemingly back in vogue on social media apps. This is also probably one of the reasons why the average global user has at least 5 social media accounts spread across different apps. Concepts like doomscrolling further support this theory, where we either scroll till our phone’s battery dies or switch over to another app to see if our thirst to consume can be quenched by rival social apps.”
“Clicking to add items to your virtual cart has replaced the careful consideration of purchases, ultimately eroding the barrier between your money and impulse buys. In essence, the modern era prioritizes convenience over conscientious spending, often resulting in inflated expenses. You can regain control over your finances in an age of unprecedented convenience by reverting to a mindset reminiscent of a time when each purchase required thought and deliberation.”