At Berkshire Hathaway meeting, Warren Buffett to field questions on growth, dividend and succession  

[May 03, 2024]  By Jonathan Stempel and Koh Gui Qing

OMAHA, Nebraska (Reuters) - Warren Buffett will command center stage at Berkshire Hathaway's annual meeting on Saturday, but someone who won't be there -- his influential sidekick Charlie Munger -- will loom large.

The meeting is Buffett's 60th since he took over Berkshire in 1965 and the first since the death of his longtime friend, business partner and foil Munger at age 99 in November. His absence has renewed shareholders' focus on how the company will evolve when Buffett no longer runs it.

Buffett, 93, whose legendary investment acumen inspired the nickname Oracle of Omaha, has largely stopped appearing publicly to discuss the company. He told investors in November that he felt good but knew he was "playing in extra innings."

"It's going to be hard for Warren to not have Charlie there," said Paul Lountzis, president of Lountzis Asset Management. He is attending his 32nd Berkshire meeting, part of a weekend Buffett has dubbed "Woodstock for capitalists."

Anecdotes and repartee between Buffett and Munger have been highlights of past meetings. Munger was known for his laconic and acerbic comebacks to Buffett's often lengthy appraisals of Berkshire, the economy, Wall Street and life.

At a downtown Omaha arena, Buffett and Vice Chairman Greg Abel, 61, will answer about five hours of questions.

Vice Chairman Ajit Jain, 72, who runs Berkshire's insurance operations, will also join. Abel, who oversees Berkshire's non-insurance businesses, was designated Buffett's successor as chief executive in 2021.

Investors want to learn how Berkshire will meet challenges such as figuring out how to grow without overpaying for acquisitions, whether to pay a dividend and how to deploy $167.6 billion of cash.

"Buffett says it's hard to move the needle the way we used to," said Ted Bridges, chief executive at Bridges Trust in Omaha, who manages $10 billion in investments including Berkshire stock. "It would be interesting to hear how we're going to allocate capital and think about the next 10 years."

Buffett has acknowledged the limitations posed by Berkshire's size.

Valued at $867 billion, the conglomerate owns dozens of businesses including BNSF railroad, Geico car insurance, Dairy Queen and Fruit of the Loom. It also owns well over $300 billion of stocks, close to half of which is Apple.

"We have no possibility of eye-popping performance," Buffett said in his February shareholder letter.

SUCCESSION TOP OF MIND

Shareholders are looking for reassurance about Berkshire's future.

"I want to see Warren's energy," said Steven Check, president of Check Capital Management in Costa Mesa, California, attending his 27th meeting.

Berkshire Hathaway logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 10, 2023. REUTERS/Brendan McDermid/File Photo

When Buffett is no longer in charge, his oldest son, Howard, is expected to become non-executive chairman, to preserve the culture.

At that point, Todd Combs, 53, and Ted Weschler, 61, who are in charge of some of Berkshire's stock investments, may expand their roles.

"It's good that Greg and Ajit will be out front. It wouldn't hurt to have Todd or Ted out front too," Check said.

During Saturday's questioning, the executives may be asked how the Federal Reserve's struggle to lower inflation weighs on Berkshire's consumer-oriented operations.

Buffett may address investments in Apple, Occidental Petroleum and five Japanese trading houses, and whether lawsuits against PacifiCorp over liability for wildfires have permanently damaged prospects for the Oregon utility.

He may also discuss Berkshire's difficulty in making major acquisitions, though owning high-yielding U.S. Treasuries helps Berkshire deploy its cash.

"That those guys could make 5-1/2% risk-free on the short end of the curve would tell you there are a lot of unattractive things out there," said Cole Smead, chief executive of Smead Capital Management in Phoenix.

GOODIES FOR SALE

Berkshire will release first-quarter results early Saturday, with analysts expecting operating profit to exceed $9 billion.

Later, Berkshire will consider six shareholder proposals that Buffett opposes on topics such as climate, diversity and China.

The weekend features investing conferences, private get-togethers and shopping from Berkshire-owned companies for goodies including Berkshire T-shirts and Squishmallows toys.

Shareholders may notice another change.

For many years, The Bookworm, an Omaha bookstore, has sold some 25 to 30 Berkshire-approved titles about the company, Buffett and investing or titles that Buffett liked.

This year, one book will be sold: the Charlie Munger anthology "Poor Charlie's Almanack."

(Reporting by Jonathan Stempel and Koh Gui Qing in Omaha, Nebraska; editing by Megan Davies and Cynthia Osterman)

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