Highlights of the Berkshire Hathaway annual meeting

The famed "Woodstock for Capitalists," the Berkshire Hathaway (BRK-B) annual meeting, took place over the weekend – hosted for the 60th year by CEO Warren Buffett.

For the first time since the late 1990s, I wasn't there in person due to a family event. But I watched the entire meeting via livestream on CNBC. (You can watch a replay on YouTube here and read the transcript here.)

Longtime readers know that other than my parents and my wife, Buffett and his lifelong business partner, Charlie Munger, who passed away in November 2023, have had the biggest impacts on my life.

In today's e-mail, I'll cover the highlights from the meeting. Tomorrow I'll cover Berkshire's first-quarter earnings, and on Wednesday I'll update my estimate of the stock's intrinsic value.

The bombshell news, of course, is that Buffett announced he would be stepping down as CEO at the end of the year and passing the reins to Greg Abel. While Buffett has long said Abel would be his successor, everyone (including Abel, who was on stage with Buffett) was surprised by the timing – Buffett had only shared his plans with his immediate family. Shareholders gave Buffett a long, emotional standing ovation, which you can watch here.

My friend and former business partner Glenn Tongue attended the meeting in person, and he wrote to me:

While the thought of Buffett stepping down saddens me, I am reminded of what Munger said in a 2023 interview with CNBC shortly before his passing: "We shouldn't complain that we only had Buffett for 50 years. We should be grateful." Buffett's influence on all of us is a blessing.

According to this post on social media platform X, from 1965 through 2024 (not even counting this year's strong performance so far), Berkshire's stock compounded at 19.9% annually versus 10.4% for the S&P 500 Index. And since 1964, the stock grew 5,502,284% versus 39,054% for the S&P 500. That's staggering...

I think the Wall Street Journal's Jason Zweig is right that this record will never be matched: Why There Will Never Be Another Warren Buffett. Excerpt:

There's only one Warren Buffett, and there will never be another.

On May 3, Buffett announced that he will step down as chief executive of Berkshire Hathaway, the conglomerate he has built into one of the most successful investments in history. There are three reasons why he has no equal and never will: the person, the period and the package.

Let's start with the person. Buffett is not only brilliant, but he has also spent nearly his entire long lifetime obsessed with the stock market. Especially in his early years as an investor, his unparalleled success depended on an unbearable sacrifice: forgoing a normal social and family life.

Once Abel takes over as CEO, he will be the final decision-maker for the entire company – something I clarified in my e-mail after last year's meeting:

I was glad to see Buffett clarify that Abel, his successor as CEO, will not only run the operating businesses, but make all final capital allocation decisions – including stock picks...

For years, there had been ambiguity about this... Would Ted Weschler and Todd Combs handle all stock picking? Who would make the final decisions about buying private businesses like Iscar or making negotiated investments like Goldman Sachs (GS) and Bank of America (BAC)?

I had also been unsure about Buffett's succession plan. You had [Ajit] Jain running insurance over here, Abel running the operating businesses over there, and Combs and Weschler picking stocks – it just seemed very muddy.

At the end of the day, there needs to be one final decisionmaker. I assume Abel will have the good sense to give Ajit, Todd, and Ted great autonomy to do what they're best at, but they will all report to him.

Buffett shared the stage with Abel and Jain, but it was, as always, the Warren Buffett Show... and he didn't disappoint.

From 8 a.m. to 1 p.m., with only a short break, Buffett deftly fielded dozens of questions – an extraordinary performance for a 94-year-old. If I had closed my eyes and listened to him yesterday versus, say, 25 years ago, I wouldn't have noticed any difference. While the years are catching up to Buffett physically, mentally he's still sharp as a tack.

Here are Glenn's highlights, which I've paraphrased:

Tariffs: Buffett is clearly pro-trade. "We should be looking to trade with the rest of the world... Trade should not be a weapon." Embedded in his comments seems to be the belief that the U.S. has a responsibility to the rest of the world to be a fair trade partner: "I don't think it's a great idea to design a world where a few countries say, 'Haha, we won.'" (Here's a CNBC article and video link: Warren Buffett knocks tariffs and protectionism: 'Trade should not be a weapon'.)

Capitalism: According to Buffett, "Capitalism in the United States has succeeded like nothing you've ever seen... It's a combination of this magnificent cathedral, which has produced an economy like nothing the world's ever seen, and then it's got this massive casino attached. In the casino, everybody's having a good time, and there's lots of money changing hands. But the cathedral is what you've got to make sure gets fed, too... It's very important that the United States, in the next 100 years, makes sure that the cathedral is not overtaken by the casino."

Recent market turmoil: Buffett said, "What has happened in the last 30 to 45 days... is really nothing... This is not a huge move." And he mentioned the three times in the past that Berkshire stock declined by 50%.

Artificial intelligence: Jain took this topic, saying "AI is going to be a real game changer" for insurance pricing. He added that Berkshire is going to "wait and see" before implementing AI into its pricing process (video here).

Currency risk: Berkshire is not doing anything on a quarterly basis specifically to manage currency risk, but there are things that could happen that would "make us want to own a lot of other currencies."

Holding cash: Berkshire's cash pile grew to $348 billion by the end of the first quarter. Share buybacks are now taxed, which makes them slightly less attractive. Berkshire will buy back shares if they are almost certainly underpriced. Buffett said, "We came pretty close to spending $10 billion not that long ago." Abel added, "The cash pile is an enormous and strategic asset. Berkshire is generating $50 billion a year."

U.S. deficit: Buffett said, "We're operating at a fiscal deficit now that is unsustainable over a very long period of time. We don't know whether that means two years or 20 years, because there's never been a country like the United States. But as Herbert Stein, the famous economist, said, 'If something can't go on forever, it will end.' We're doing something that is unsustainable."

For additional highlights, CNBC has two excellent summaries:

• 6 big things investors learned from Warren Buffett at this year's Berkshire shareholder meeting
• Berkshire meeting updates: Buffett proposes Abel become CEO, talks trade policy, market volatility

Best regards,

Whitney

P.S. Back in the December 2023 issue of our flagship Stansberry's Investment Advisory newsletter, my team and I officially recommended buying shares of Berkshire. Since then, subscribers who followed our advice are up 47% through Friday's close.

Subscribers can read our report here... And we just released a brand-new recommendation here.

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