At the "Dialogue with Omaha · 11th U.S.-China Investors Reception" held on May 2nd in Omaha, Nebraska, Yang Delong, Executive General Manager of Frontsea Open-End Fund, shared his insights. He recalled that during last year's shareholder meeting, he predicted two changes following Warren Buffett's official announcement of his retirement at year-end, with Greg Abel succeeding him as CEO. First, the stock price of Berkshire Hathaway would peak and decline. Second, attendance at the annual meeting would drop year by year, potentially dwindling to just a few shareholders.
Yang attributed these anticipated changes to Buffett's unique personal appeal. He noted that the market's sharp drop the Monday after Buffett's retirement announcement actually reflected recognition of Buffett's investment prowess. Buffett once humorously remarked that a stock price surge upon false reports of his death would be awkward, while a decline would be a true tribute.
Since the retirement announcement, Berkshire's stock has fallen over 20%, even as the S&P 500 hit record highs. Yang believes the primary reason for this decline is the gradual erosion of the "Buffett premium," though it hasn't completely vanished yet. Buffett remains chairman and continues daily office work. While Abel may have his own ideas about adjusting the investment portfolio, he currently adheres to established practices and would likely consult Buffett on major decisions. Thus, the Buffett era isn't entirely over, and about half of the Buffett premium remains.
Yang expressed a wish for Buffett to live to 200, enabling continued annual meeting attendance. However, he stated that once Buffett completely steps away, the full disappearance of the Buffett premium would inevitably lead to a further significant drop in Berkshire's stock price.
In Yang's view, Abel is an ordinary professional, not an investment legend. Comparing them, Buffett has achieved mythical status, while Abel resembles more of a sector-focused fund manager. Expecting a fund manager to elaborate on investment philosophy is challenging, he suggested.
Yang interpreted Buffett's opening remarks praising Abel as the perfect successor as partly meant to reassure shareholders and bolster Abel's position—a point he thinks was clear to attendees. This year's meeting felt authentically focused on Berkshire's various business operations, resembling a company roadshow.
He acknowledged the somber mood among attendees, which matched his own feelings. Yet, he affirmed his commitment to attending as long as Buffett appears next year, and hoped the reception would continue accordingly. His interest would wane if Buffett were absent, underscoring Buffett's irreplaceability.
Yang emphasized that Buffett's greatest legacy is a shift in investment mindset, not specific stock-picking techniques. Discussing value investing, he referenced a question from Lin Yuan about the practicality of traveling such a long distance to Omaha—23 hours of flight time with a layover—especially when there's no direct profit involved.
Yang explained that his annual pilgrimage isn't about seeing Buffett in person but about reaffirming belief in value investing through this global investor gathering. In the A-share market, value investing faces significant skepticism, particularly after several years of poor performance by many self-proclaimed value investors, including numerous mutual fund managers who suffered heavy losses.
He noted that even in the U.S., Buffett faces质疑 every five years. Over the past 10 to 20 years, Berkshire's stock has underperformed the S&P 500. However, during bear markets, people recognize Buffett's wisdom as speculative traders and "Wall Street boys" eventually crash, while in bull markets, some dismiss his sub-20% annual returns as mediocre.
In recent years, value investing in the A-share market has been severely challenged. Yang mentioned that the term "value investor" has even become an insult, synonymous with poor performance. Last year, those speculating in tech stocks saw their investments double, and quantitative funds dominated the top ranks of billion-dollar private funds, with seven out of the top ten being quant funds—value investing couldn't even compete with quant strategies.
Yang stated that his purpose in attending the Berkshire meeting was to convey that value investing doesn't guarantee short-term profits or overnight wealth, but it truly makes time your ally, enabling long-term wealth accumulation through patience.
Buffett's 61-year track record demonstrates that even with a 19.9% annualized return—difficult to achieve—consistent long-term growth can lead to astounding 60,000-fold gains. Many retail investors chase tech stocks during bull markets, achieving double or triple returns in a year, but when bear markets arrive, those self-proclaimed stock gods often suffer devastating losses or even blow up their accounts.
Yang concluded that as long as Buffett is involved, Abel is unlikely to make major mistakes, as he would follow Buffett's guidance. However, once Buffett is completely out of the picture, whether Abel can overcome human greed and fear and achieve Buffett-like investment results remains uncertain. This uncertainty is why Berkshire's stock has been declining—shareholders are selling to wait and see if Abel will be the next Buffett or just an average investment manager. If the latter, the Buffett premium embedded in Berkshire's stock price could see a substantial further decline.
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