Forty thousand people are set to descend on downtown Omaha, Nebraska on Saturday, April 30th for Berkshire Hathaway’s annual shareholders meeting. The meeting is the first one to be live-streamed on the web as Yahoo! Finance covering the event. CEO Warren Buffet can look forward to the event with quiet optimism.
What’s It All About?
This year’s meeting marks the 51st anniversary of Warren Buffet taking control at Berkshire Hathaway. The 40,000 shareholders who are flooding Omaha this weekend. They are in exhilaration to hear Warren Buffet and his right-hand man, vice-president Charlie Munger speak in the now legendary Q and A. Here are few things that might come up:
Berkshire Hathaway’s Year
Berkshire Hathaway had a difficult 2014-15, with 13% losses on both its A and B shares. But 2015-16 has seen a turnaround in the holding company’s fortunes. This year, both classes of share, the A-grade for high-net-wealth investors and the B for those of more modest means, have risen in value by 11%. A single A share now stands at a value of $219,000, whilst a B-share will cost you $146.18.
Buffet Beats The Market Again
Berkshire Hathaway’s levels of growth comfortably outperform the S&P 500, which is showing 2% growth so far this year; a result which should lead to the 40,000 stockholders being happy visitors to downtown Omaha this Saturday.
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Buffet’s Big Performers
Stocks which have contributed to Berkshire Hathaway’s excellent year so far include
- Kraft Heinz, up 8.2% so far this year
- IBM, up 8.13%
- Coca-Cola, up 4%
But don’t expect too much self-congratulation from Buffet or Munger. Berkshire Hathaway’s approach has been characterized by an emphasis on long-term investing.
Berkshire Hathaway’s Great Year
S&P Analyst Cathy Seifert said recently that Berkshire Hathaway’s growth strategy was paying off.
In 2015, Berkshire Hathaway
- Grew net earnings by 21.2%
- Grew revenue by 8%
- Earnings on the Class B shares rose $2.22, well in excess of analyst’s estimates of 41.75
What About The Flops?
There’s been speculation over his continued investment in American Express. The company has struggled in recent years, losing a number of its credit partners, and there are fears that it’s looking a less attractive prospect should any others choose to follow Costco and JetBlue in jumping ship.
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Likewise, BNSF Railroad is acting as a negative factor in overall revenue, with its railcar units falling 21% year-on-year. Buffet can expect to have to answer some questions about these underperforming stocks.
What Can Investors Expect?
Buffet and Berkshire Hathaway have been busy shopping recently, snapping up companies ranging from food giant Kraft to railroad company Burlington Northern Santa Fe. Investors will be keeping an eye on news about more big deals. Berkshire Hathaway recently splashed $37.2 billion on aircraft components maker Precision Castparts, its biggest deal to date.
What’s On His Shopping List?
In February this year, it was announced that Berkshire Hathaway was buying the German manufacturer of motorcycling accessories Detlev Louis Motorrad. In describing the deal as a “door opener”, Buffet hinted heavily that a move into the German market could be on the cards as he looks to expand Berkshire Hathaway’s portfolio.
Any Problems Ahead?
Berkshire Hathaway’s dealings with Brazilian private equity firm 3G have caused some controversy, with 3G having a track record of being responsible for a slew of redundancies at its acquisitions. There have also been a number of layoffs at Heinz and Kraft, some shareholders might want to quiz him over this.
Buffet has made no secret of his Democrat leanings, and as the race for the Republican and Democratic presidential nominations nears its conclusion, it’s hard to imagine that politics will be far from people’s minds. Buffet has publically declared his support for Hillary Clinton, and Munger, whilst leaning a little further to the right, has publically described Donald Trump as not being “morally qualified” for the Presidency
Buffet is now the grand old age of 85, and there’s been speculation for years as to who might succeed him. The odds are against Munger, as he’s 91. Munger himself has spoken approvingly of two Berkshire employees: the utilities manager, Greg Abel and insurance head Ajit Jain. It’s likely that Buffet’s eventual successor as CEO will be someone with a track record of running companies, rather than a fund manager. Buffet has hinted that they know who the successor is, but it’s still a matter for speculation.
The Live Streaming
This is to be a hot topic at the conference, as this is the first year that as the whole event is being webcast by Yahoo! Finance. Likewise, not only will the delegates crammed into the conference center get to hear Buffet and Munger’s words of wisdom, but also shareholders and investors around the world will get to hear their advice. The coverage is set to start at 10 a.m. ET, half an hour before the event itself.
So as the “Woodstock of Capitalism” draws nearer, Buffet’s influence and reach is greater and continuing to rise than ever before.