Buffett to face big crowd
as Berkshire grows bigger
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[May 03, 2017]
By Jonathan Stempel
the United States adapts to the presidency of Donald Trump and faces
rising tensions abroad, Berkshire Hathaway Inc <BRKa.N> shareholders
will descend on Omaha, Nebraska this weekend seeking reassurance, from
The weekend known as "Woodstock for Capitalists" is unique in corporate
America, a celebration of the billionaire's image and success at a
conglomerate whose businesses range from Geico insurance to the BNSF
railroad to See's candies to Ginsu knives.
Buffett, 86, and vice chairman Charlie Munger, 93, will answer five
hours of questions at Saturday's annual meeting.
Many say it reinforces their views about investing and Berkshire, even
if it remains unclear how much new they learn.
"Watching someone like (Buffett) with strong command on details of the
economy and Berkshire's operations is very impressive," said Meyer
Shields, a Keefe, Bruyette & Woods analyst who rates Berkshire "market
perform." "But you're not going to learn a lot about Berkshire Hathaway
Last year's attendance fell to about 37,000 from more than 40,000 a year
But there were also 1.1 million real-time sign-ons to Yahoo Finance,
which webcast the meeting for the first time. It will do so again, in
English and Mandarin.
LARGE, LARGE ORGANIZATION
Much of Berkshire's relative outperformance came decades ago when it was
much smaller, and even Buffett has called the company's huge size an
"anchor on investment performance."
Buffett has said Berkshire owns 10 businesses big enough to make the
Fortune 500 list of large U.S. companies on their own.
But details can be thin. For example, aircraft parts maker Precision
Castparts, acquired last year for $32.1 billion, merited about a page in
Berkshire's annual report.
Precision's final annual report, in 2015, ran 87 pages.
"It's a large, large organization," said Jeffrey Stacey, founder of
Stacey Muirhead Capital Management in Waterloo, Ontario, who is
attending his 26th straight meeting. "I am willing to give it the
benefit of the doubt because the track record has been so good for so
Buffett said in February that boosting disclosure could put many
Berkshire businesses at a disadvantage, and that "it's the growth of the
Berkshire forest that counts."
He also knows the perils of conglomerates, saying in 2015 that dubious
accounting, self-promotion and mediocre businesses make them "richly
deserve" their "terrible" reputation.
[to top of second column]
Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles
before speaking with Bill Gates (not pictured), at Columbia
University in New York, U.S., January 27, 2017. REUTERS/Shannon
Stapleton - RTSXPMW
Buffett says Berkshire is different, in part because he took Munger's advice to
buy wonderful businesses at fair prices.
Shareholders enjoy that focus less than they once did.
Berkshire's share price has slightly lagged the Standard & Poor's 500 including
dividends during the eight-year bull market, but has outperformed since the
global financial crisis mushroomed in September 2008.
Shields, who is not attending Saturday's meeting, wants Buffett to reveal more,
even if shareholders can "safely assume" his eventual successor as chief
executive is top-flight.
While Buffett and Munger do not know in advance the questions they will get from
shareholders, journalists and analysts at Saturday's meeting, they can
Buffett may need to review Berkshire's support of Wells Fargo & Co <WFC.N>, in
which it holds a roughly 10 percent stake, despite a sales scandal over bogus
He may also get questions about his support for 3G Capital, a Brazilian firm
known for ruthless cost-cutting. Berkshire controls Kraft Heinz Co with
3G, and recently tried to help 3G buy Unilever NV for $143 billion.
Trump is sure to come up. Buffett did not support his election but Berkshire's
book value could swell by $36 billion with his proposed corporate tax cuts,
Barclays Capital said.
Buffett may also get questions about his surprise bets on Apple Inc and the four
biggest U.S. airlines.
Having gone over a year since a big acquisition, Buffett may be asked how he can
better deploy the $86.4 billion of cash, equivalents and Treasury bills that
Berkshire recently held.
Succession may also come up. Indeed, Buffett has already delegated work to
lieutenants like Ajit Jain, Gregory Abel, Tracy Britt Cool and Todd Combs that
he once would do himself.
(Reporting by Jonathan Stempel in New York; Editing by Jennifer Ablan and Lisa
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