Highlights of the 2015 Berkshire Hathaway Annual MeetingSubmitted by Trott Brook Financial on May 20th, 2015
On May 2nd we were in Omaha with several clients attending the Berkshire Hathaway annual shareholders meeting. The meeting marked a significant milestone. Over fifty years have passed since Warren Buffett took control of Berkshire Hathaway, then a struggling New England textile company.
Buffett bought his first shares in 1964 for $7.50 each. Since then, he has turned the dying textile mill into a sprawling conglomerate. As of this writing, shares trade on the New York Stock Exchange for approximately $218,000 a piece. That’s a nearly three million percent increase!
In my view, what’s even more significant about the Berkshire Hathaway story is it proves you can be extremely successful and ethical.
Though Warren Buffett is one of the richest people in the world, he easily could be number one, and the share price of Berkshire Hathaway would have been little-affected. Over the years, it would not have been hard for him to demand a huge salary, bonus and piles of stock options. But Buffett never saw it that way. He has written in the annual report for years that he views Berkshire shareholders as his partners. He’s also said that he wants to run the company in a way, that if the roles were reversed, he would still be happy. Incidentally, he’s taken a $100,000 base salary for over thirty years with no bonus (Although Berkshire does pay for some security and transportation expenses).
I’ve attended the annual meeting for nine years running. There is no question that this year set the record for attendance. It was packed!
The highlight of the meeting every year is hearing Warren Buffett and vice-chairman Charlie Munger take questions from shareholders for nearly six hours. Essentially nothing is off-limits.
One exchange that struck this year was when Buffett noted that he has been dead wrong on the direction of interest rates in recent years. Both Buffett and Munger agreed that they would never have predicted interest rates could stay near zero for over six years with very little inflation. And that is exactly what’s happened.
Buffett and Munger also repeated the fact that they have never made an investment decision based on macro-economic forecasts (such as interest rates or GDP growth). In their view, those types of things are far too complicated to predict with any precision. Buffett went on to say that any company employing an economist is overstaffed by at least one person. That got a laugh out of the audience.
Buffett repeated, as he has done many times before, his focus is on buying good businesses with earnings streams that he feels are predictable over 5-10 years. Further, he will only buy if management seems trust worthy and perhaps most important, the price is reasonable or cheap. It’s that simple!
If you haven’t attended a shareholder meeting in the past, I would highly recommend you do so next year. Buffett and Munger aren’t getting any younger at age 84 and 91 currently. It’s highly probable that one or both won’t be around in a few years. The good news is you wouldn’t have guessed their ages were you just listening to the recent annual meeting. Both men seemed full of energy and as quick – witted as ever.
If you have any questions about attending in the future, please let me know. The event is always held the first weekend in May.
Disclosure: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.