Saturday, April 30, 2011

UPDATED--(Bonus) Better than a Transcript: Three Live-blogs of the Berkshire Hathaway Annual Meeting Pt. IV (BRK.B; BRK.A)

UPDATE here.
Original post:
Okay, there were actually six live blogs. We've linked to four and may get to the other two on Monday.
From the Wall Street Journal's Deal Journal:

LIVE BLOG: The Berkshire Hathaway Annual Meeting

The Berkshire Hathaway annual meeting, known as the “Woodstock for capitalists,” convenes today just one month after the surprise resignation of David Sokol, one of Warren Buffett’s top lieutenants.
Nearly 40,000 people are expected to pack into the Omaha, Neb., Qwest Center to hear Buffett and investing partner Charlie Munger talk about Sokol, the economy, the health of Berkshire Hathaway and everything else under the sun. People have flown in from as far away as Australia to take in the words of the Oracle of Omaha.

The Sokol scandal hangs over what tends to be a raucous, light-hearted affair. Buffett hasn’t commented on the matter since announcing Sokol's resignation on March 30 but pledged he will answer any and all questions today. Your Deal Journal team will be live-blogging the day-long event in real time. You’ll almost be able to taste the See’s Candies....

...Time to Retire This Joke:
Buffett, in talking about Berkshire keeping its cash in very safe places, says he wants assurance just in case Ben Bernanke runs off to South America with Paris Hilton. Where have we heard this joke before? Oh, pretty much everywhere Buffett shows up. Also, Warren, you need a new celebrity ingenue reference. Megan Fox, maybe?

  • Berkshire Is Cash Conservative
    A shareholder wants to know what Berkshire does with its billions of dollars in cash, given the low yields for cash right now. "He's certainly right that all the choices are lousy for short term money right now," Buffett replies.

  • He says most of Berkshire's cash is parked in Treasurys. It's not a great return, Buffett concedes, but at least we know well get our car back.

  • In Berkshire's latest annual report, Buffett said he was glad Berkshire didn't invest in commercial paper when that typically safe market imploded during the financial crisis. He also relayed a story about his grandfather, who owned an Omaha grocery store and urged his children to keep at least $1,000 in cash in a safe deposit box just in case.

  • Berkshire's version of a $1,000 in a safe deposit box? The $34.8 billion in cash and cash equivalents the company had on its books, as of Dec. 31.

  • And now, for another dig at bankers.

  • Yes, Warren Buffett doesn't like Wall Street bankers. Buffett says he's never seen an investment bankerâs financial predictions for a company that didn't show earnings going higher. I don't pay attention, he says, and compares it to asking the barber if you need a haircut. This is a frequent Buffett trope.

  • Buffett says that he and Munger keep financial projections in their heads, rather than rely on the bankers' spreadsheets. Munger's advice for those in business school: At least until you're out of school you have to pretend to do it their way.

  • Treats!
    If we could find areas of growth for See's Candies, it would be very, very profitable, Buffett says. I've lost count how many times Buffett has mentioned See's and its profits today.
    Meanwhile, Buffett and Munger have picked up their pace of eating and drinking post-lunch. Munger has a box of treats right in front of him. The box is orange, like his fetching tie. These guys clearly didn't coordinate their wardrobes today. Buffett's cravat is bright pink, very clashing.

    Buffett on Nukes
    There have been question marks about the future of nuclear power since the crisis in Japan. "I think nuclear power is safe," Buffett said. "Nuclear power is an important part of the world's equation in dealing with problems of harmful emissions from traditional energy sources, he said.
    (Buffett does admit there is and will be public resistance to nuclear power after the Japan crisis.)
    Buffett has long feared nuclear war, and has lavished charitable contributions on anti-nuke programs. So it's interesting to hear him defend nuclear energy so firmly.

    Buffett: Don't Worry About the U.S. Debt
    "The United States is not going to have a debt crisis as long as the country issues notes in its own currency, Buffett says. He also proclaimed to have little patience for the bare-knuckle debates in Washington over whether to raise the ceiling on U.S. debt levels.

    It seems such a waste of time," Buffett said. In the end, he says, theres no chance that they don't increase the debt ceiling. And Buffett said he'd like to see Washington eliminate the ceiling altogether because it leads to periodic political showdowns that can cripple the federal government.

    Speed Isn't Everything:
    A shareholder asks Buffett for advice to young people on how to read quickly. (Buffett is a voracious reader. He has said he reads five newspapers a day and lots of the voluminous corporate annual reports.) Buffett does admit now that he doesn't read as quickly as he once did, a rare admission of age-related weakness from the Oracle of Omaha.

    It's a huge advantage to be able to read fast," Buffett says, but says he doesn't really believe in speed reading courses or techniques.

    Then the Oracle relays a joke from Woody Allen Buffett's second reference today to the film director  about how he speed read War and Peace," leading to a not-great recall of the book. It's about Russia," Allen jokes.

    Does Buffett Have an Unfair Advantage?
    Berkshire Hathaway doesn't muck about fighting over nickels and dimes with companies Buffett wants to buy. If an acquisition target wants to open itself up to multiple possible buyers, Buffett says no thanks. That's why Berkshire was the only suitor for Lubrizol before Berkshire reached a $9 billion acquisition agreement. Typically, to ensure shareholders the best price possible, a company will offer itself for sale to multiple bidders.

    Does this mean Lubrizol abdicated its duties to get the best deal for its shareholders?
    Buffett and Munger say an emphatic NO.

    Buffett said Lubrizol got a rich sale price, and Berkshire simply would have walked away from the acquisition if the company sought to auction itself. Munger is clearly annoyed at this question.
    "Anybody else have an easy question?" Munger snapped.
    Say Goodbye to $100k
    Warren Buffett makes a salary of $100,000 a year. Whoever takes over for him as Berkshire’s CEO is going to make a whole lot more, he says.
    I think the next CEO will make a lot of money."

    Is Buffett Getting Impatient?
    Munger was giving a lengthy answer in response to a request for a case study of a company that did something right, and a cautionary corporate tale of imprudent action. Munger, as Buffett predicted, begins with praise of Costco. After a few more examples, Buffett interrupts with a dark joke about a recent hijacking attempt of him and Munger.

    Buffett digs in: When asked for last requests before they are executed, Munger says;Â "Id like to give one more speech on the virtues of Costo, with illustrations."And what's your last request, Mr. Buffett? "I said, 'Shoot Me First.'"

    Sorry, AOL
    Oh, Warren way to kick a company when it's already dead. In response to a question about the accounting treatment of goodwill, he takes a potshot at AOL Time Warner, perhaps the worst acquisition in corporate America....

    ...MUCH MORE

    Motley Fool
    Better than a Transcript: Three Live-blogs of the Berkshire Hathaway Annual Meeting Pt. III (BRK.B; BRK.A)

    Better than a Transcript: Three Live-blogs of the Berkshire Hathaway Annual Meeting Pt. II (BRK.B; BRK.A)

    Better than a Transcript: Three Live-blogs of the Berkshire Hathaway Annual Meeting Pt. I (BRK.B; BRK.A)