Berkshire Hathaway’s AGM
I feel fortunate to be a part of Berkshire Hathaway’s AGM back in 2016. I am grateful beyond measure to my former organization, Motilal Oswal for introducing me to this incredible opportunity. This opportune occasion has geared me and since then, I have been following it.
It is no less than an delight euphonious moment to hear both the legends, Warren Buffet and Charlie Munger at the same time. Looking up the luminary’s speak, the AGM continued following up some considerable questions of the investors.
Let us have a bird’s eye view on the key takeaways of the meeting!
-Vikas Agrawal
Key Takeaways:
Berkshire Hathaway’s annual meeting was held on 1st May, 2021 virtually. Warren Buffet was joined by Charlie Munger to answer shareholder’s questions.
Warren Buffett has been seen articulating about few of his blunt admissions at the annual meeting of Berkshire Hathaway Inc. shareholders.
Admission – Selling Apple stocks a Blunder
Berkshire owns 5.3% of Apple. Buffett says, apple is an ‘extraordinary’ business with ‘indispensable’ products. He also admitted that Tim Cook did a remarkable job and has been able to achieve what even Steve jobs couldn’t.
What made Berkshire Hathaway’s sell its stocks when the pandemic hit?
The expectation of a severe and prolonged market dislocation. He came to this decision due to his guided long experience in the markets, where Berkshire’s ability to be the lender/buyer of last resort has paid off well in another crisis. He waited for extraordinary opportunities to come up and in that hope, he lost good opportunities that came knocking down the door. But things took the other way round, when Federal Reserve took a quick action, which resulted in awe of liquidity. This prevented Buffett from getting the distressed bargains at scale that he has been used to and was anticipated this time.
Selling of Airline stocks
Berkshire sold airline stocks at their lows as the anticipated future for the industry was looking dark. Berkshire’s sales of the airlines represented only 1% of its total assets of $700 billion. With Berkshire’s 10% stake in each of the four major airlines, the government may have expected Berkshire to bail them out.
- Berkshire also cut back its stakes in banks. It currently owns 19% of American Express.
- Even though US banks had a consistent growth over the years, Berkshire sold its share as they thought they had too much exposure.
- Buffett believed that speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.
- Due to lack of experience and knowledge of a regular investor, he recommends an S&P 500 index fund.
- Buffett also believes that large tech stocks are not overvalued because of interest rates. Buffett’s Comment – “Interest rates are to asset prices as gravity is to matter”
- Berkshire wants to make an investment worth around $70 -80 billion I the near future.
- Buffett and Munger defended stock buybacks
- Berkshire’s joint venture with JP Morgan and Amazon on healthcare failed, as providers don’t want to receive less, Buffett refereed to this particular situation as “Tapeworm”.
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Also Read – Decoding the Message of BERKSHIRE HATHAWAY AGM 2021