ECONOMIC SILUET: Buffett: 'We'll have a much bigger crowd this year'

FRI, MAY 05, 2023

WARREN BUFFETT WATCH

Buffett: 'We'll have a much bigger crowd this year'

Warren Buffett told WOWT, the NBC affiliate in Omaha, that he is expecting a "much bigger crowd this year" at the Berkshire Hathaway annual shareholders meeting tomorrow.

In 2020 and 2021, the events for solely made-for-television, with no audience present, due to the COVID pandemic.

Last year, shareholders were again allowed to attend but had to show proof of vaccination amid continuing COVID concerns, and the crowd wasn't the usual 40,000 or so.

Buffett on WOWT: 'We'll have a much bigger crowd this year'

In the interview, Buffett says he was especially struck by a request for tickets from the small European country of Andorra (population 79,877), which he had never heard of, despite being a stamp collector when he was younger.

He also explains why he's happy to pay taxes in the United States, complains that the letters he gets asking for money "never stop," and recounts how Bill Gates showed him ChatGPT.

It could "tell me every stock that meets a certain criteria ... in three seconds, or something" but "is not going to tell me what stocks to buy, or anything of the sort." He also thinks it is not good at coming up with jokes.

The primary impetus behind the interview was so Buffett could show support for Give Blue Hope, a non-profit organization set up by his driver and bodyguard, former police officer Curtis DeBerg, that assists the families of law enforcement officers and first responders who have been "feloniously assaulted and killed in the line of duty,"

Buffett joked that it is a "great service" to Omaha that he is no longer behind the wheel of a car. "I still have a driver's license, but you don't want me driving."

'Don't count on Greg to take it over tomorrow'

While Buffett may no longer be driving at the age of 92, a long-time Berkshire board member expects it will be "a good number of years" before Greg Abel, the Berkshire vice chairman who is designated to be the company's next CEO, takes control.

Reuters and AP report that Ron Olson, a director since 1997, told an investment conference in Omaha yesterday that Buffett and Charlie Munger are still going strong.

"Charlie at 99? That brain is as good as it ever was. Warren is the same way. His energy is amazing."

Olson says Abel has "made very, very savvy investment decisions" and has the board's full confidence.

"The bottom line is, not only is Warren satisfied, Charlie is satisfied that Greg ... will carry out [Berkshire's] culture. On top of that, he has had a lot of knowledge. Very close to Warren, less so than Charlie, but enough."

But CNBC.com notes that while Abel is "wooing shareholders, some questions remain."

Plenty of previews

As one Berkshire shareholder told Reuters, with Buffett and Munger in their 90s, you just don't know how many more chances you're going to have to see and hear them at an annual meeting.

That may explain where there seems to be some extra attention this year, with an abundance of preview pieces.

CNBC.com's Yun Li writes "Berkshire Hathaway is outperforming during turmoil, but Warren Buffett's favorite child Geico is in trouble," Sarah Min explains how Berkshire has been a "fortress stock during recessions and bear markets," and CNBC Pro lists stocks owned by Berkshire that analysts also "love."

On CNBC's Fast Money tonight, the traders talked about "how to pick winners like Warren."

Barron's Andrew Bary has "10 Tough Questions" for Buffett, including whether he wants to buy all of Occidental Petroleum and why he's "soured" on banks and hasn't bought more Bank of America as its stock has dropped.

Morningstar wants to know why GEICO's is lagging behind Progressive, whether there is "anything structural or behavioral keeping Berkshire's managers from pursuing acquisitions," and what's driving the price disparity between Berkshire's two classes of stock?

Warren Buffett in the exhibition hall ahead of this year's Berkshire Hathaway annual meeting. Photo CNBC | Dave Grogan

A Forbes contributor hopes to learn whether Buffett is selling shares of the Chinese electric carmaker BYD "because you've got a tremendous return and now feel BYD's valuation is rich, or do you have broader geopolitical concerns?"

The Wall Street Journal looks at how dividend stocks play a key role in Buffett's "Secret Sauce," why his "Formula for Success" is "One Good Decision Every Five Years," and thinks "It's Time to Find Out Why" Buffett "Has Been Betting Big on Oil."

Bloomberg quotes CFRA analyst Cathy Seifert as saying, "The markets are at such an odd inflection point and there's so much volatility, I think there's going to be a lot of interest in hearing what he has to say, particularly since we're heading into this meeting with the debt ceiling deadline looming."

Zacks looks ahead to Berkshire's quarterly earnings report, which will post Saturday morning before the meeting.

And TheStreet visited Gorat's, Buffett's "favorite steakhouse" in Omaha that is "intentionally frozen in time" and called the T-Bones "among the better steaks we have ever had."

No cameras for tomorrow's shareholder votes

For the first time since Berkshire Hathaway started allowing live video coverage of its annual shareholders meeting in 2016, the formal "business" session will not be shown.

The company did not explain why it is not being made available to CNBC, which will be broadcasting and livestreaming tomorrow's Q&A sessions with Buffett, Munger, Abel, and Ajit Jain, starting at 9:45 AM ET at https://www.cnbc.com/brklive/ and at 10 AM ET on CNBC television. CNBC's Becky Quick will be asking some questions submitted via email by shareholders.

The formal shareholders meeting is scheduled to begin at 5:30 PM ET, one hour after the listed time for the conclusion of the afternoon Q&A.

According to the company's proxy statement, votes will held to elect directors, to advise on executive compensation and the frequency of executive compensation advisory votes, and on six shareholder proposals.

2023 Berkshire Hathaway Annual Shareholders Meeting - Watch Live, Saturday, May 6 at 10AM ET only on CNBC and CNBC.com

They include three measures on how Berkshire is dealing with climate change, one on its diversity, equity, and inclusion efforts, one calling for the separation of the CEO and chairman roles put forward by a conservative advocacy group that objects to Buffett's ties to Bill Gates due to the progressive causes supported by the Gates Foundation, and one requesting the company avoid taking public stands on "controversial social and political issues."

Berkshire recommends that shareholders reject all six proposals, saying, generally, that the subsidiaries are doing a good job of dealing with climate change and diversity issues, that the chairman and CEO jobs will be split when Buffett steps down, and that it would be inconsistent with Berkshire's culture to dictate the "public communications" of the leaders of its operating unit.

At last year's formal meeting, as advocates made their cases, Buffett suggested that while he is "for shareholder democracy," some of the proposals are more performative than substantive.

CNBC's Becky Quick and Warren Buffett visit the exhibition hall today (Friday). Photo CNBC | Dave Grogan

"Essentially, you've got a group of people that write us letters and say, 'We want you to do things our way. And you've got 3 million other shareholders, but forget about them, and spend some money on this, and have a meeting with us' ...

"We can tell when two or three institutions have got huge amounts of shares, but they're one owner, and they vote a certain way, and then they feel pure. And they don't really -- what they care about is whether we check their boxes ...

"And their hearts are pure, but ours aren't impure."

In a guest essay in The New York Times this week, Roger Lowenstein explores how Buffett, a long-time liberal, has become "dismissive of social governance warriors seeking to hijack the corporate mission," especially big mutual fund groups and state pension plans that are advocating for "their opinions, not their purses."

Munger sees "trouble" for U.S. commercial property market

The recent bank failures in the United States will certainly be a topic at tomorrow's Berkshire annual meeting.

Charlie Munger got off to an early start in an interview with The Financial Times, saying banks are "full of" bad loans that will cause problems when "bad times come" and property prices decline.

While he thinks it won't be as bad as 2008, he says "a lot of real estate isn't so good anymore" with "a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There's a lot of agony out there."

BUFFETT AROUND THE INTERNET

Some links may require a subscription

Bloomberg (subscription): Buffett Will Beat the Market as Recession Looms, Investors Say

Morningstar: Is Berkshire Hathaway Stock a Buy Today?

Go Banking Rates on Yahoo Finance: How Big Is Warren Buffett's Social Security Check?

Yahoo Finance: Why Warren Buffett keeps buying Occidental Petroleum — 'Nothing but sense'

CNBC Make It: Warren Buffett gave Alex Rodriguez 2 pieces of investing advice when he signed his $252 million contract

HIGHLIGHTS FROM THE ARCHIVE

When to invest in a great company (1996)

Warren Buffett describes the criteria he uses to evaluate companies—and why price isn't always the most important factor.

BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - May 5, 2023

Berkshire's top holdings of disclosed publicly-traded U.S. stocks, and BYD, by market value, based on today's closing prices.

Holdings are as of December 31, 2022 as reported in Berkshire Hathaway's 13F filing on February 14, 2023, except for:

Apple, Bank of America, and Chevron , which also include shares held as of December 31, 2022 as disclosed in New England Asset Management's 13F filing on February 14, 2023
BYD, which is as of March 31, 2023
Occidental Petroleum, which is as of March 27, 2023

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

QUESTIONS OR COMMENTS

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)

If you aren't already subscribed to this newsletter, you can sign up here.

Also, Buffett's annual letters to shareholders are highly-recommended reading. There are collected here on Berkshire's website.

-- Alex Crippen, Editor, Warren Buffett Watch