Tens of thousands of shareholders flock to Omaha to attend 'Woodstock for Capitalists'
London and Louisville have nothing on Omaha this weekend.
Sandwiched in between the coronation of King Charles III and the Kentucky Derby, stock-market investors on Saturday can tune in for a few hours of commentary from legendary investor Warren Buffett as Berkshire Hathaway Inc. holds its annual meeting.
Berkshire's (BRKA) annual meeting in Omaha attracts plenty of adoring investors. But Buffett, the chairman and CEO, and his straight-talking sidekick and vice chairman Charlie Munger tend to get their share of hardball queries when they host their annual question-and-answer session. Greg Abel, a Berkshire vice chairman who has been designated as Buffett's eventual successor, and Ajit Jain, who runs Berkshire's insurance operations will also be on hand.
Buffett, 92, and Munger, 99, aren't letting up when it comes to the Q&A session that's typically the highlight of a weekend that's been dubbed "Woodstock for Capitalists." It's scheduled to run from 10:15 a.m. to around 4:30 p.m. Eastern.
Buffett, in a message to shareholders, said he expects to field around 60 questions Saturday, lamenting that last year he spent too much time on a handful of topics.
There's certainly plenty to talk about. Investors will be listening for what Buffett and Munger have to say about the following topics:
Bank troubles
Worries over U.S. regional banks aren't going away. Buffett famously weighed in during the 2008 financial crisis with a $500 billion investment in Goldman Sachs Group Inc., providing a vote of confidence in the financial sector after the collapse of Lehman Brothers, on terms that proved quite favorable to Berkshire Hathaway.
Asked in an interview with CNBC last month if he had talked to anybody in the Biden administration about the banking woes, he said he had "spoken with people," but not recently. Buffett said that he doesn't talk about his discussions with government officials around such topics, but it wouldn't be surprise if he gets asked for his take on the situation on Saturday.
Recession worries
Buffett tends to shy away from macroeconomic forecasts, arguing they're of little use in his value-driven stock-buying strategy. But Berkshire Hathaway has a number of subsidiaries that are sensitive to the economic cycle, including railroad Burlington Northern Santa Fe. Fears of a "transportation recession" are swirling amid falling prices for diesel fuel and a slide in shares of transportation companies.
And there are subsidiaries -- Dairy Queen, Borsheim's, Brooks Sports, for example, vulnerable to slowdowns in consumer spending.
"The argument could...be made to consolidate some of those subsidiaries and get some economies of scale," said Cathy Seifert, an analyst at CFRA Research, in a phone interview. "It's a question worth asking," along with what actions Berkshire is taking to prepare those firms for a downturn.
Big in Japan
Buffett in April told Japan's Nikkei newspaper that he had boosted Berkshire's stakes in five major Japan trading houses to 7.4% each. He first invested in the companies in 2020 and in November had increased his stakes further.
Buffett has said that he's been favorably inclined to Japanese investments for some time, but investors may be hungry for more detail on the thought process behind these particular stakes.
Loading up on oil
Buffett is quick to own up to past mistakes, and those have included previous investments in big oil companies. But Berkshire has jumped back into the sector in a big way, quickly amassing stakes in Occidental Petroleum Corp. $(OXY)$ and Chevron Corp. $(CVX)$ in the past year, becoming the biggest stakeholder in both. The Wall Street Journal noted that energy companies made up 14% of Berkshire's portfolio as of the end of 2022, the highest percentage going back to at least 2000.
It stands to reason that Buffett and company will get some questions about Berkshire's newfound love for the oil producers.
ESG
A package of ESG (environmental, social and governance) and climate-related shareholder proposals are expected to be easily voted down by shareholders on Saturday. Similar proposals have been easily defeated in the past.
Seifert noted that Berkshire has regularly pushed back by arguing that the conglomerate's operating subsidiaries should be responsible for implementing ESG measures. That's left Berkshire lagging behind its large-cap peers when it comes to disclosure of climate-change and other ESG initiatives, she said, which could lead to questions about whether Berkshire's needs to change its approach in order to catch up, she said.
Separately, Berkshire's earnings report is due around 8 a.m. Eastern on Saturday.
Berkshire Class A shares were trading near $490,430 at midday Friday, up 4.9% so far in 2023, while Class B shares have rallied around 4.7%., versus a 7.2% gain for the S&P 500 . Over the past 12 months, Berkshire Class A shares were up 1.9% versus a 0.7% decline for the S&P 500.
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