Berkshire Hathaway Annual Shareholders Meeting Marks a New Era for the Conglomerate
The annual shareholders meeting of Berkshire Hathaway, the largest conglomerate in the S&P 500, held on Saturday, signaled the beginning of a new era for the company. The absence of vice chairman Charlie Munger, who passed away at the age of 99 late last year, was noted during the meeting where chairman Warren Buffett fielded questions for several hours.
In his annual letter to Berkshire shareholders, Buffett paid tribute to Munger, referring to him as the “architect” of the modern Berkshire Hathaway. The conglomerate takes its name from a now-defunct textile company in New England and has grown to become a leading player in the market. Munger had played an instrumental role in shaping the company’s growth over the years.
The meeting brought together Buffett, vice chairs Greg Abel and Ajit Jain, and shareholders who gathered to discuss various topics related to Berkshire Hathaway’s operations. A significant change this year was that non-shareholders were also able to witness the meeting by watching the annual shareholders’ movie, which showcased Munger’s memorable quotes and celebrity cameos from previous years.
Berkshire Hathaway’s Holdings and Investments
Buffett addressed several key topics during the question and answer session. He revealed that Berkshire Hathaway had decided to pare its holdings of Apple during the first quarter. However, Buffett expressed confidence in the company, asserting that it is “extremely likely” Apple will remain its largest equity investment at the end of the year.
Buffett also touched upon the company’s growing cash and Treasury holdings. He estimated that the value of these holdings could exceed $200 billion by the end of the current quarter, stating that he is satisfied with the current position.
Focus on US Investments
When questioned about Berkshire Hathaway’s plans for investments overseas, particularly in China, Buffett emphasized that their primary investments will always be in the United States. While international investments are a part of Berkshire Hathaway’s portfolio, Buffett emphasized his understanding of the US markets and his belief in the strength of American investments.
Insights on the Insurance Market
Ajit Jain, vice chairman of Berkshire Hathaway and head of its insurance operations, shed light on the challenges faced by the Florida insurance market. Jain explained that the state’s legal system, coupled with the considerable damage caused by storms, has made it difficult for insurance providers to turn a profit in Florida. Despite this, Jain expressed optimism about the market’s future, stating that Florida’s belief in the free market gives it an advantage over states such as California and New York that are facing insurance crises.
Record Operating Profit for Berkshire Hathaway; Apple Impacts Investment Gains
Berkshire Hathaway posted a record operating profit of $11.22 billion in the first quarter, up from $8.1 billion in the same period last year. The impressive performance was driven largely by the company’s insurance operations, which generated $5.2 billion in operating profit for the quarter.
However, Berkshire’s investment gains registered a significant decline, totaling just $1.48 billion compared to $24.75 billion in the first quarter of the previous year. The decline was largely attributed to Apple’s roughly 10% decline in the first quarter, as the technology giant accounts for a considerable portion of Berkshire’s equity holdings.
Buffett reassured investors that Apple does not comprise the reported 40% of Berkshire’s overall portfolio, as that figure includes the company’s fully-owned subsidiaries. While Berkshire lightened its Apple holdings during the first quarter, Buffett remains confident in the long-term potential of Apple, comparing it to other long-time holdings of Berkshire, such as American Express and Coca-Cola.
Berkshire’s Strong Insurance Operations
Berkshire’s insurance operations, led by Ajit Jain, delivered exceptional results. Jain underscored that the operating earnings from the first quarter cannot be multiplied by four, cautioning against such projections in insurance business due to the nature of the industry. Nonetheless, a major storm along the East Coast of the US was identified as one of the biggest risks for the company.
In conclusion, Berkshire Hathaway’s annual shareholders meeting signified a new era for the company, as the absence of Charlie Munger was felt. The meeting showcased Buffett’s views on various topics, including investments, insurance, and Berkshire’s commitment to American investments. The company reported a record operating profit for the quarter, helped by its strong insurance operations. While investment gains were impacted by Apple’s decline, Buffett expressed confidence in the company’s long-term prospects.
