Warren Buffett returned to the stage in Omaha last weekend for the Berkshire Hathaway annual meeting after a two-year hiatus. Christopher Rossbach (pictured), chief investment officer, J. Stern & Co, has made the annual pilgrimage for over a decade and, was one of the thousands to attend. He found the legendary investor in great form.
It was great to be back in Omaha, Nebraska for the first in-person Berkshire Hathaway annual meeting since 2019. I had wondered - would it be the same and would the crowds return?
After all, every year, the Woodstock of capitalism is attended by tens of thousands of people from all over the world.
They come to hear from Warren Buffett and Charlie Munger, who have built Berkshire Hathaway into one of the most valuable companies in the world. It is an annual trip I have taken in my role at J. Stern & Co until the pandemic stopped it two years ago.
The Stern family has been invested in Berkshire Hathaway for decades and it is the only ‘industry convention' I attend.
"Buffett and Munger munch their way through a box of See's peanut brittle as they sit on stage"
It is a spectacularly unique event. Nobody gets a reserved seat. The person next to you in line at 6 o'clock in the morning can be a retired teacher who has invested in Berkshire all their life, a fund manager or the CEO of a major business.
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Many are long-term investors like me, who come to meet like-minded people from all over the world and participate in the many investment conferences and side-line discussions. It is also the only shareholder meeting that pays for itself because shareholders get nothing for free.
The shareholder pass on a lanyard entitles you to 20% discounts to buy products from the many companies Berkshire owns whether it be Brooks shoes, Fruit of the Loom t-shirts or See's Candies iconic sweets. Buffett and Munger munch their way through a box of See's peanut brittle as they sit on stage for hours, so it must be good for your investments.
The crowds did indeed return. Some 40,000 people came this year and the auditorium was packed. Buffett, who is 91 and Charlie Munger, 98 were in great form. Berkshire, its companies and its business model are thriving. Much of their success is because they keep on adapting what they do to the opportunities and circumstances they encounter while staying true to their principles of long-term value-based investing.
Berkshire continues to generate huge value for shareholders by continually generating cash to reinvest and to acquire businesses such as Allegheny, the insurance company it bought earlier this year in an $11.6bn deal.
"It is remarkable that at his age, Buffett cannot resist a risk arbitrage play"
That deal was part of the $51bn of Berkshire's cash pile that Buffett has deployed so far this year. Other investments have included oil producer Occidental Petroleum, and as he told the annual meeting, a personal decision to increase Berkshire's position in gaming company Activision Blizzard after the Microsoft deal to 9.5%. It's remarkable that at his age, Buffett cannot resist a risk arbitrage play, telling us that "occasionally I'll see an arbitrage deal and do it".
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It is striking that Buffett has put so much money to work this year given that he hesitated in March 2020 at the height of the uncertainty about the pandemic. He and his Berkshire colleagues recognise the opportunities for the long-term value thrown up by the current market turmoil.
"There was almost no discussion during the annual meeting about macroeconomics"
It is just as striking how little discussion there was during the annual meeting about macroeconomics. Charlie Munger has famously said that "micro is what we do, macro is what we put up with".
Buffett made a couple of comments about inflation but the closest he came to saying what to do about it was when a young person in the audience asked a broad question about how to find opportunities in the current environment. The response was that "companies will be fine if they are the best at what they do".
Buffett does not time markets but bases his decisions on fundamentals, and on value. Berkshire's many businesses mean that he does not need economists or investment analysts to tell him what is going on. He knows the strength of the US economy because he can see how well the many businesses which Berkshire owns are actually doing and if he has a question he can ask one of his managers.
Buffett's decision to deploy significant amounts of capital in March, despite the challenges, is based on what he sees. It is not just a significant vote of confidence in the prospects for Berkshire Hathaway and its businesses but also the strength and resilience of the US economy, and its markets.
It certainly reaffirmed our long-held view that investment decisions should be formed from the bottom up, and that you should look at what companies are doing and what opportunities they're seeing. You should not worry or be swayed by macroeconomic conditions and short-term market concerns.
In Omaha, it is not just hearing Buffett and Munger first hand that you get a sense of perspective. Talking to many investors and business leaders at the meeting and fringe events, I got a real sense of the strength of the recovery and people's demand for goods and services.
I was struck by how much of what is going on relates to bottlenecks caused by the pandemic, the Russia/Ukraine conflict and other issues. They are serious but their impacts on the global economy and on companies will get resolved as companies adapt, supply increases and global supply chains are realigned.
China's travel restrictions prevented many thousands of Warren Buffett's biggest fans from attending, but it was still an astonishing global gathering. It was a coming together of people from all walks of life to share investment ideas, while the Buffett and Munger took to the floor to interact with shareholders just as they always have. It was great to see Berkshire is back. See you next year in Omaha!
Christopher Rossbach, chief investment officer, J. Stern & Co
