Warren Buffett Retains Sense of Optimism at Berkshire’s Annual Meeting
The legendary investor confirms he won’t bid for Occidental, praises Apple
OMAHA, Neb.—It has been a tumultuous year since Warren Buffett last took the stage to talk to his company’s shareholders.
Markets swooned. Tensions between the U.S. and China rose to new heights. And three U.S. banks toppled in quick succession, raising fears about the potential for wider fallout in the financial system.
Through it all, Mr. Buffett retained his sense of optimism.
Sure, society has changed significantly since he bought his first stock at age 11 in 1942. But the basic rules of investing have stayed the same, he said.
“What gives you opportunities is other people doing dumb things,” he said at Berkshire Hathaway’s BRK.B 1.21%increase; green up pointing triangle annual shareholder meeting Saturday. “In the 58 years we’ve been running Berkshire, I’d say there has been a great increase in the number of people doing dumb things.”
Mr. Buffett, chairman and chief executive of Berkshire, addressed a crowd of thousands who gathered in an arena to hear him and his lieutenants speak. The famed investor has used his company’s annual meeting as an opportunity to muse on everything from share buybacks to activist investors to corporate taxes, as well as more philosophical topics, like the meaning of a good life.
This year, he addressed Berkshire’s big bet on oil stocks, which have made it the biggest shareholder of both Occidental Petroleum and Chevron and stoked speculation that it might ultimately try to acquire Occidental.
“We’re not going to buy control,” he said of Occidental. “We’ve got the right management running it, and we wouldn’t know what to do with it.”
Mr. Buffett also praised Apple, Berkshire’s biggest stock investment. As in previous years, the iPhone maker’s chief executive, Tim Cook, was in the audience attending the meeting.
“It just happens to be a better business than any we own,” Mr. Buffett said, adding that he believed consumers would sooner give up a second car than let go of their iPhone.
Mr. Buffett also expressed his faith in the U.S., a common theme of his letters to shareholders over the past few decades. The country isn’t perfect, he said. It faces huge challenges, including a government that appears to have become increasingly tribalistic, he said. Problems in the banking sector have also illustrated that there is a serious lack of understanding among both Congress and the broader public about lenders, he added.
Charlie Munger, Mr. Buffett’s right-hand man, went one step further. The industry itself needs to reckon with its morality, he said.
“Bankers should be more like engineers…avoiding trouble instead of trying to get rich,” Mr. Munger said.
Mr. Buffett maintained, however, that if he had the chance to start life all over and pick when and where he would be born, he would without a doubt pick the U.S. today, he said.
“The world is overwhelmingly short-term focused,” Mr. Buffett said. “I’d love to be born today and go out with not too much money and hopefully turn it into a lot of money.”
Audience members also asked the men what they thought of the rise of artificial intelligence. Programs such as OpenAI’s ChatGPT, which are able to generate humanlike responses to questions, have become increasingly popular—as well as controversial—in recent months.
Artificial intelligence will no doubt disrupt many industries in the years to come, Berkshire Vice Chairman Mr. Munger said. But Mr. Munger expressed skepticism of what he called the hype surrounding the field.
“I think old-fashioned intelligence works pretty well,” he said.
At age 92 and 99, respectively, Messrs. Buffett and Munger remain as sharp as ever, said Chris Bloomstran, president of Semper Augustus Investments Group, at a conference on value investing held by Gabelli Funds on Friday.
“We just take each of these years that we still get as a victory, because it’s been one of the greatest pleasures” in life to get to come to Omaha every year and hear them speak, he added.
The tone was less celebratory outside the convention center early Saturday, where pilots for Berkshire-owned NetJets held up signs in protest of company executives, who they say have failed to meaningfully address conditions leading to a shortage of workers.
“SLOPPY SCHEDULING = FATIGUED PILOTS,” one sign read.
Shareholders present for the meeting mostly strode past, seeming to have other things on their mind. This year, like in previous years, many lined up well before sunrise in the hopes of being able to secure the best seats inside the convention center.
Hotels closest to the convention center where the meeting takes place are frequently booked up months in advance. Last year, 90% of hotel rooms in the county were filled on the Friday and Saturday nights during the weekend of Berkshire’s meeting, according to Jasmyn Goodwin, vice president of marketing and communications for Visit Omaha.
Car rentals are scarce, too. At a Hertz counter in Omaha’s airport on Thursday, one couple was stunned when they were told the last remaining cars available for the weekend would cost them about $500 a day.
To many, the voyage is worth it.
“I’ve been coming since 2012, and I hope I’ll continue coming when I’m Charlie’s age,” Adam Mead, author of a book on the history of Berkshire, said at the value investing conference Friday.
Berkshire kicked off Saturday’s proceedings by releasing its results for the first quarter. The company reported net income of $35.5 billion, or $24,377 a class A share equivalent. That was up from $5.58 billion, or $3,784 a class A share equivalent, a year earlier.
Operating earnings, which exclude some investment results, rose to $8.07 billion from $7.04 billion last year, boosted by big gains in Berkshire’s insurance underwriting business. Mr. Buffett cautioned that the majority of Berkshire businesses would likely report lower earnings this year, due to an “incredible period” for the economy coming to an end.
Mr. Buffett has long told the company’s shareholders that they should ignore net income and focus instead on Berkshire’s operating earnings, which he feels are a better reflection of how Berkshire is doing.
Meanwhile, Berkshire ended the quarter with $130.6 billion in cash and cash equivalents, up slightly from around $128.6 billion at the end of 2022.
Berkshire tapped into that cash pile to go on a buying spree in the first half of 2022, but it has slowed down its pace of stock purchases since then. For the second straight quarter, the company was a net seller of stock, unloading $13.3 billion in shares while buying $2.9 billion.