2019 Berkshire Hathaway Update

2019 Berkshire Hathaway Annual Shareholders’ Meeting

Hi all,

Luke and I are just back from our trip to Omaha, Nebraska where we attended the 2019 Berkshire Hathaway Annual Shareholders Meeting.

I know you’re all sick of hearing about Warren Buffett from Luke, so hopefully you’ll enjoy my short, sharp take on the experience.

You might be wondering why 40,000 crazy people all made the effort to go to Omaha this year (of which I’m one!)? From my perspective, I’d heard so much about Berkshire’s amazing long-term success from Luke and my studies and, despite their god like status, I had a sneaking suspicion that Warren and Charlie are only mere mortals like the rest of us (and might not be there forever!).

Being my first pilgrimage to Berkshire there was a lot to take in, but most of all, I was amazed by the terrific atmosphere of learning and sharing in Omaha. Everyone is extremely open to different ideas and tries to squeeze every last drop of knowledge out of the weekend.

We met many attendees and each had a fascinating story about how they discovered and became engaged with Berkshire. They varied from enthusiastic 22-year-olds (who got up at 3am to get great seats…the ones behind us!), to a former classmate of Ajit Jain (Berkshire’s Vice Chairman of Insurance Operations). This man had tremendous luck when he was told by Ajit in the late 80’s, “you should invest in my company, Berkshire Hathaway.”

The pilgrims lining up to get into the meeting, this photo taken at 6am, 1 hour before the open!!

Coinvesting with Greatness

I was impressed by the respect which Warren and Charlie have for Berkshire shareholders, or ‘partners’ as they call them. In the annual meeting’s Q&A they take the approach of educating their partners by not just providing answers, but giving insight into their manner of reasoning. We are extremely lucky to have the opportunity to coinvest with these great investors and learn from their combined 183 years of wisdom.

Repurchases of Stock

Berkshire has recently repurchased $1.7 billion worth of stock. Both Warren and Charlie said that they will likely be more aggressive in repurchasing in the future, and they have more than $110 billion of cash available to do so.

Looking back on the trip, one theme that remains front of mind is that investing is a marathon, not a sprint. Hoping that we’re fortunate enough to have Warren and Charlie’s longevity, we’re only just getting started!!!

For those with an appetite for more, the BKI management team have compiled a 7-pager with more in-depth detail. CLICK HERE to access their note.

Huw Smith, B. Econ, B. AppFin
Practice Manager, Fortitude Private Wealth Pty Ltd
AFSL No. 435732
T: +61 (02) 8215 1560

Warren and Charlie still on the track at 88 and 95!

Luke here .. I can’t help myself.  Yep, as mentioned by Huw, the Berkshire Shareholders’ Day and the trip overall was awesome. In addition to the big day, we had some really good investment meetings too, including with Senior Execs of Nebraska Furniture Mart and the 2 Co-CEO’s of Markel Corp.

Regarding Berkshire … they have $114b in cash (hence 2nd to none optionality wise in times of crisis), $525b market cap (now the 6th largest company in the world), earning $5-6b in operating earnings per quarter, so $20-$25b of new cash likely to be accumulated this year ..  and 390,000 employees across their 90 odd businesses they own.  An amazing 54 year ridiculously successful journey from a battling textile company bought by Warren in 1965, averaging 20% pa compound returns over that time.

Meeting with Nebraska Furniture Mart Team. From left: Andy Shefsky (Customer Engagement Analyst), Ron Blumkin (Chairman), Luke, Tony Boldt (President, COO, & future CEO), Huw

Quotes I loved:

CM (Charlie Munger): We know how to make money in a panic.  BRK is the safest way to make good money.

WB (Warren Buffett): We won’t destroy money, though will likely underperform if there are continued strong markets

CM: I finally figured out what Bitcoin investors do in their happy hour, they celebrate the life and work of Judas Iscariot

WB: When there’s bad behaviour internally, if you are in the top job, take action fast

WB: We will buy BRK stock aggressively if we like the price

CM: We paid a good price for Heinz and too much for Kraft .. that happens

WB: I’m an expert in delayed gratification .. although there’s a lot of sense in doing things that bring your family enjoyment .. don’t go overboard on delayed gratification

WB: If you’re not happy with $100K income, you’re not going to be happy with $50m of income.  Super rich are not happy coz they are super rich

CM: re Brexit ..  It sounds like a horrible problem .. I’m glad it’s theirs and not ours

WB: Amex – our share of the earnings this year equals the original cost of our Amex shares (BRK owns 18% and is the largest shareholder)

WB: See’s Candy, we paid $25m for the business (in 1971) and it has given back to BRK over $2b since (over 80 times the original investment)

WB on CM: We’ve never had an argument over the last 60 years.  I’m in sync with how he sees the world

WB: Having the right partners in life is tremendously important.. and makes life more fun.  It’s very important who you pick out as heroes and friends.  Look for someone better than you are and try and act better than them

CM: You should always expand your circle of competence .. if you can

CM: When you learn you are incompetent, that’s a plus…. you can then throw it away

For the select few that have made it this far, thanks for reading and we welcome your thoughts, calls or comments!

Luke Rathborne CA (FPS), CFP, BCom, F Fin, SSA, GAICD
Managing Director, Fortitude Private Wealth
AFSL No. 435732
T: +61 (02) 8215 1560

Beat the crowds, 7.30am on the big day, 6th row seats secured!
Brett Cairns (Magellan’s CEO) and Luke just before kick-off…
Talking with Warren’s doppelganger