Warren Buffett opened Berkshire Hathaway’s annual meeting on Saturday with an optimistic view of the US’s recovery from the pandemic and said business was “very good” in parts of the economy.
In his annual address to Berkshire shareholders, the doyen of the investing world, at the age of 90, said that US capitalism “worked incredibly well.”
“This was a very unusual recession,” said Buffett. “At the moment, business is doing really well in a great many areas of the economy. . . But there are still problems when you’re in some areas of the business that have really been decimated. “
Berkshire itself is one of the largest publicly traded companies today, valued at around USD 631 billion. Value was backed by growth in the dozens of companies it owns and an increase in the value of its equity portfolio, which was valued at $ 282 billion as of the end of the first quarter.
However, the company’s lack of business in recent years and the fact that it was a net seller of stocks in the first quarter led to several investor questions. One shareholder told Buffett that “you sat on your hands during the crisis”.
Buffett defended the company’s rulings, saying it could have gone out and closed a deal, but before the Federal Reserve intervened last March, Berkshire was mostly focused on maintaining and funding its own businesses.
Berkshire Vice Chairman Charlie Munger added it would have been “crazy” to expect the company to make an acquisition during the worst of the crisis.
Buffett added that the company sold off part of its airline stake last year because it didn’t believe the companies, which included American and Delta, would have got the same state funding if they had a wealthy shareholder like Berkshire would have included their shareholders’ register.
“Imagine Berkshire owned 10 percent of the airlines and this one [the government] said get it from Berkshire, ”he said. “Maybe you didn’t get the same result, and I would think you didn’t. You could see the headlines. “
Buffett warned that the company would struggle to compete on acquisitions, an ongoing topic at recent annual meetings, especially given the rise of special-purpose acquisition companies.
“Spacs typically have to spend their money in two years,” he said. “If you put a gun to my head and said you have to buy a business in two years, I would buy one, but it wouldn’t be much of one.”
He added: “To be honest, we are not competitive with it.”
The day marks a departure from the expectations of Berkshire shareholders before the pandemic forced the company to adopt a virtual format. Buffett and Munger were accompanied on stage by Greg Abel and Ajit Jain, the two men named as potential successors by shareholders.
Abel and Jain were given more time than ever at the event, which is generally the Warren Show. The two were asked if they had anything like the special relationship that shaped Buffett’s relationship with Munger. The answer was a categorical no.
“There is no question that Warren’s relationship with Charlie is unique and that it cannot be repeated by Greg and me,” Jain said, although he added that he had “a lot of respect” for Abel. “We don’t interact as much as Warren and Charlie, but we talk every quarter.”
Abel, along with Buffett, defended the board of directors’ advice that shareholders should reject two proposals from shareholders that would cause Berkshire to disclose its efforts to combat climate change, diversity and workforce inclusion.
Abel sat in front of a box of See’s Candies, a Berkshire subsidiary, and said the company’s large energy division had already gone to great lengths to decarbonise its business. He noted that the unit had planned to close all coal-fired power plants by 2050, including 16 between 2021 and 2030.
He was less insistent than the man he might one day replace.
“From our point of view, it’s stupid,” said Buffett. “So that BusinessWire or Dairy Queen employees in all these places fill out reports to create a joint report. . . We don’t do that in Berkshire. “
Several major investors disagree. The California Public Employees Retirement System and asset manager Neuberger Berman have announced that they will withhold several directors’ votes for re-election to the company’s board of directors on Saturday.
Others, including one of the company’s largest shareholders – Norges Bank – have endorsed the shareholders’ two proposals. Still, given the company’s dual-class structure and Buffett’s large stake in its stocks, the proposals face an uphill battle with high votes.
Ron Olson, 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 announced that it had posted profits of $ 11.7 billion, or $ 7,638 per Class A share, after posting a loss of $ 49.7 billion, or $ 30,653 per share, last year was.