2023-05-27 18:16:10
BarcelonaThe American press calls the meeting “The Woodstock of capitalism”, referring to the crowded Woodstock music festival of 1969. But instead of the stages in green meadows, the shareholders’ meeting of Berkshire Hathaway takes place in a center of conventions in the unglamorous city of Omaha, Nebraska.And instead of idolizing some of the biggest rock stars, the participants worship Warren Buffett, chairman of the multinational.
Buffett needs few introductions. At 92, he is currently the fifth richest person in the world, but above all it is his long career and the successes of Berkshire Hathaway – a single share is worth $484,000 – that have made him the Oracle of Omaha.
Berkshire Hathaway produces nothing. It is a financial conglomerate dedicated solely to investing in other companies. The company’s list of holdings is long, with well-known companies. Coca-Cola or Duracell batteries are some of its best-known brands, but, among many other companies, the holding also has 8.5% of the oil company Chevron, nearly 20% of the credit card company American Express or 5.6% of Apple, which in terms of value is its main investment. “I don’t understand the product, but I understand consumer behavior,” said Buffett to justify his bet on the iPhone maker.
The shareholders’ meeting on the 5th attracted around 30,000 people. It’s essentially a three-day convention where all of the conglomerate’s businesses exhibit their wares, but the annual pilgrimage to Omaha is rewarded with hearing the Oracle’s views on the economy and markets firsthand. Beyond asking him questions, the event also allows his acolytes to venerate Buffett. The billionaire’s image is ubiquitous on posters, cardboard figures and caricatures. You can even buy stuffed animals with his figure, which competes with Martin, the Geico dragon, mascot of the group’s main insurer.
Buffett’s success is not understood without his right-hand man and vice president of the company, Charlie Munger. At 99 years old and (at least from the outside) in good health, Munger sat next to his partner between two boxes of Peanut Brittle, a high-calorie candy made with crunchy sugar and peanuts that is the star product of the chocolate company See’s Candies, acquired by Berkshire Hathaway in 1972. “I hate to advertise my own products, but that’s the key to longevity,” Munger had said about the candy in an interview in February. During the presentation of results, it only took ten minutes to eat it.
Praise and criticism of Elon Musk
If Buffett is the oracle, Munger could be described as a genius and a figurehead. On this occasion he had words for another billionaire, the founder of Tesla and owner of Twitter, Elon Musk. Berkshire has always refused to invest in Tesla and is currently one of the main shareholders of China’s BYD, a direct competitor, but this did not spare Buffett praises for Musk’s abilities – “he is a brilliant person”, he said – , which Munger took it upon himself to nuance with a passive-aggressive tone.
“We don’t want to compete with Elon on a lot of things,” Buffett said, and Munger quickly added, “We don’t want so many failures.” Afterward, the Berkshire chairman tried to praise Musk’s stubbornness with business: “Fanatical wouldn’t be the word,” Buffett said aloud. The vice president cut him off with a short “Yes, it would be.”
Jokes with the banking crisis
The recent banking crisis in the US – with the bankruptcy of Silicon Valley Bank (SVB) and Signature, two banks with businesses in the technology sector – was one of the hot spots of the session. Berkshire has recently sold stakes in two entities – Bank of New York Mellon and US Bankcorp – but retains a 13% stake in Bank of America, which according to Bloomberg received about $15 billion in deposits from former SVB customers.
“Since we were anticipating questions about banks, we’ll have to start using banking language,” Buffett said, as he rotated two posters on the table with the phrases “available for purchase” (available for salein English) in front of him and, in front of his partner, “preserved until ripe” (held-to-maturity, in English), the two ways the bank rates its assets. The joke drew big laughs as, unfazed, Munger continued to gobble up Peanut Brittle.
“If people think that deposits don’t move, they live in another era. You no longer have to stand in line at the bank and wait for days to be served by a teller, you can have a bank panic in a matter of seconds,” Buffett warned. Asked what would have happened if the American authorities had not guaranteed the deposits of all customers, the tycoon was clear: “It would simply have been catastrophic.”
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