Warren Buffett opened Berkshire Hathaway’s annual meeting on Saturday with an optimistic assessment of the US recovery from the pandemic, saying things were “very good” in parts of the economy.
In his annual address to Berkshire shareholders, the 90-year-old doyen of the investing world said that American capitalism “has worked incredibly well.”
“This has been a very unusual recession,” said Buffett. “At the moment things are going really well in many segments of the economy. . . but there are still problems when you are in a few types of businesses that have really been decimated. “
Berkshire itself – valued at approximately $ 631 billion – is one of the largest publicly traded companies today. Its value was supported by the growth of the dozens of companies it owns, as well as an increase in the value of its equity portfolio, which was worth $ 282 billion at the end of the first quarter.
But the company’s lack of deals in recent years, and the fact that it was a net stock seller in the first quarter, sparked several inquiries from investors, with a shareholder telling Buffett that “you were on your hands” during the crisis.
Buffett defended the company’s decisions, saying it could have gone out and made a deal, but that before the Federal Reserve intervened in March, Berkshire was primarily focused on maintaining and financing its own businesses.
Berkshire Vice President Charlie Munger added that it would have been ‘crazy’ to expect the company to make a takeover at the height of the crisis.
Buffett added that the company had partially sold its airline stakes last year because it did not believe the companies, including American and Delta, would have received the same government funding if they had a wealthy shareholder like Berkshire in their shareholder register.
“Imagine Berkshire was 10 percent a holder of the airlines and they [the government] said get it from Berkshire, ”he said. “You may not have gotten the same result and I would think they wouldn’t. You could see the headlines.”
Buffett warned the company would struggle to compete on acquisitions, a persistent theme at recent annual meetings, especially given the rise of specialty acquisition companies.
“Spacs generally have to spend their money within two years,” he said. “If you put a gun to my head and say you have to buy a business in two years, I would buy one, but it wouldn’t be many.”
He added, “To be honest, we’re not competing with that.”
The day deviates from what Berkshire shareholders could expect before the pandemic forced the company into a virtual format. Buffett and Munger were joined onstage by Greg Abel and Ajit Jain, the two men tipped by shareholders as potential successors.
Abel and Jain got more of the filming time at the event, which is generally “the Warren show,” than ever before. The two were asked if they had anything like the special relationship that characterized Buffett’s relationship with Munger. The answer was a categorical no.
“There’s no question that Warren’s relationship with Charlie is unique and cannot be replicated by Greg and me,” Jain said, adding that he had “a lot of respect” for Abel. “We don’t interact as much as Warren and Charlie, but we talk quarterly.”
Abel joined Buffett to defend the board’s advice that shareholders reject two shareholder proposals that would prompt Berkshire to disclose its efforts to address climate change and workforce diversity and inclusion.
Sitting in front of a box of See’s Candies, a Berkshire subsidiary, Abel said the company’s large energy division had already made a strong effort to decarbonise his company. He noted that the unit planned to shut down all of its coal-fired power plants by 2050, including 16 between 2021 and 2030.
He was less emphatic than the man he could ever replace.
“It’s strange in our opinion,” Buffett said. “To get the folks at BusinessWire or Dairy Queen, all these places, to fill out reports to make a common report. . . we don’t do that in Berkshire. “
Several major investors disagree. The California Public Employees retirement scheme and asset manager Neuberger Berman have said they will abstain from votes from several directors who will be elected for re-election to the company’s board on Saturday.
Others, including one of the company’s largest shareholders – Norges Bank – have endorsed the two shareholder proposals. The proposals nonetheless face an uphill battle, given the company’s dual structure and Buffett’s high-vote share of its stock.
Ron Olson, a Berkshire director and partner at law firm Munger Tolles & Olson, told Yahoo Finance on Saturday that he expected the two proposals to be rejected.
Earlier in the day, the company said it had risen to earnings of $ 11.7 billion, or $ 7,638 per Class A share, from a year-earlier loss of $ 49.7 billion, or $ 30,653 per share.