Difficult questions mingle with requests for life tips as Warren Buffett responds to shareholders | Money

Buffett had recently indicated his intention to buy up to $ 100 billion in outstanding shares of more than $ 500 billion from Berkshire if he thought the stock was sufficiently dumped, and he repeated that high figure several times Saturday.

"There is no blueprint in this area, other than buying aggressively when we appreciate the price," Buffett said at one point. "If the price is lower, we will benefit."

Buffett spent more than five hours on Saturday offering information on Berkshire, the economy and financial markets, as well as life tips. And although President Buffett is now 88 years old and Vice President Munger is registering at 95, it seems that neither one nor the other has missed a beat in the last year .

Buffett always seemed sharper, filling his answers with his wit and wisdom. And the right man, Munger, was often his usual personality.

The meeting also remained largely the Warren and Charlie Show. Although Buffett has appointed several senior lieutenants in recent years – and one of them will likely succeed him as the next CEO and chairman of the Berkshire board – Munett has taken the stage alone.

When asked at one point why shareholders did not intend to talk to other Berkshire leaders any more, Munger responded that it was largely a way of making simplified and unmanageable decisions. bureaucratic.

"You're just going to have to put up with us," Munger joked.

While Buffett once again reunited the shareholders of his hometown for the annual celebration of capitalism in Berkshire, it was not surprising that the first question he asked on Saturday related to the repurchase of shares. In addition to Buffett's recent comments, Berkshire released a report on first quarter results Saturday morning indicating that Buffett bought $ 1.7 billion worth of shares in the first three months of this year.

That exceeded the $ 1.3 billion of stock Buffett bought back last year. In the last five years, Berkshire has not bought any.

The share buybacks are sort of a function of Buffett struggling to utilize Berkshire's growing $ 112 billion at the end of 2018. For years, Buffett was looking for an "elephant-sized" acquisition, but he complained about the high prices demanded by the size companies that could move the needle to Berkshire.

There are many ways to spend Berkshire money, Buffett said Saturday, "the problem is to spend it smartly."

Buffett said there was no magic in the $ 100 billion he had written for redemptions, even though he was close to Berkshire's current account. He also does not say what price he would be willing to pay for Berkshire's shares, a secret he must keep to avoid signaling future redemptions or influencing share prices.

One commenter noted that recent redemptions by Berkshire had had higher prices than the stock had not been traded last December. Buffett acknowledged that – he has already suggested collecting cash at the time for a failed acquisition – but he added that he thought shareholders had always benefited from recent buybacks, so this Is spectacularly.

"We have no ambition (…) to spend a dime unless shareholders do better," Buffett said.

An obstacle to redemption would likely be the loyalty of many Berkshire shareholders to the stock and Buffett, as evidenced by the thousands who travel to Omaha each year.

Buffett acknowledged that the company's "A" shares, mostly owned by long-term investors like Berkshire, do not trade often. But the creation of B shares made shares available on the market several years ago.

"There is no doubt that if we are able to spend $ 100 billion in buyback shares, more of that money will certainly be spent on B than A," he said.

Buffett said that when Berkshire buys back shares, he should make sure that all selling shareholders, whom Buffett considers to be partners in the company, have all the information needed to make informed decisions.

James Shanahan, an analyst who oversees Berkshire for Edward Jones in St. Louis, said the redemptions revealed Saturday morning were unexpected, given the price negotiated by Berkshire early in the year. This fact means that there will probably be more in the future.

"This is a big number and a big surprise in that the title was not weak," Shanahan said. "I think we need to revisit our vision of what is possible in redemptions."

Several shareholders interviewed on Saturday said they accepted Berkshire's buyouts, particularly because of Buffett's inability to find other ways to deploy the capital.

"If they had to invest $ 10 billion in buybacks, I would not oppose it," said Bijan Dastmalchian of Scottsdale, Arizona.

Not that the 24-year-old is considering selling his own shares. He said he was "sort of in the lap forever". And he was not the only one to express such thoughts.

"Fuck, no," said Chris Tesari, of Los Angeles, of selling his shares. He has been going to Omaha for Berkshire meetings for 23 years.

Despite all the love shown to Buffett on Saturday, he sometimes had to face difficult questions.

One shareholder questioned Buffett's candid support for Democratic candidates, saying Berkshire would face higher taxes and increased regulation if "socialist" policies were put in place.

Buffett said he was separating his personal politics from Berkshire and said he had voted for a large number of Republicans over the years. He also said he was not a socialist.

"I am a capitalist with cards," he said.

A member of a San Francisco investment club composed of police officers also asked why Buffett had been so secretive about the series of scandals at the Wells Fargo bank regarding fictitious accounts, unauthorized charges and abuse related to mortgages and auto insurance.

Buffett acknowledged that Wells Fargo had "made mistakes in judgment", "encouraged crazy things" and said his leaders did not act quickly. And, he said, shareholders like Berkshire paid the price.

But he and Munger refused to criticize Sloan, Buffett said, "We have no proof that he did anything." Munger said he would like Sloan to still run the bank.

Buffett added that he wanted the CEOs do not go "so rich" after nonsense, to applause.

Shanahan, the analyst, said he was disappointed by the responses, which will surely not be very popular.

"I huddled a bit when I heard them defend Tim Sloan," Shanahan said. "It was so much more than judgmental mistakes."

One commenter asked why shareholders, Ajit Jain and Greg Abel, were no longer listening to shareholders, which could help prepare shareholders for the day Buffett is gone. Jain oversees Berkshire's insurance operations; Abel oversees Berkshire's other wholly owned businesses. One is believed to be – many analysts assume Abel – who will succeed Buffett one day.

Buffett replied that listening to the Jain and Abel was probably a good idea, stating that the format of the Q & A session was "not frozen at all". He then invited the shareholders to ask questions of the leaders.

A shareholder later questioned Buffett about it and asked Jain a question about how he assessed the risk of insurance. Buffett himself then asked Abel, who heads Berkshire's energy units, to answer some energy-related questions.

The shareholders will never be informed by Todd Combs and Ted Weschler, who were authorized several years ago to invest a portion of the Berkshire share portfolio. Any information on why they make the investment decisions that they make is exclusive. "We are not an investment advisory organization," Buffett said.

Several children called for questions, often asking Buffett for advice on how to lead their lives.

A boy asked Buffett if it was possible to learn to delay the gratuity.

Buffett, well known for his frugal manners, jokingly said that he was trying to "spend two or three cents of every dollar I make." But he then told the boy that it's important to live one's life and do what one's family and you can do. enjoyment.

"Do not exaggerate on delayed gratification," he said.