Warren Buffett.
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OMAHA, Neb.—The 2022 Berkshire Hathaway annual shareholders meeting took place in person on Saturday, with tens of thousands of Warren Buffett fans traveling to hear from the so-called “ Oracle of Omaha.” The Berkshire CEO was joined by the company’s three vice chairmen to present to shareholders and answer questions over the course of some five hours.
Berkshire’s stock (ticker: BRK.A, BRK.B) is up about 7% in 2022, versus a 13% decline for the S&P 500. Here are four takeaways from the annual shareholders meeting and the release of the company’s first-quarter results Saturday morning.
Buffett likes buybacks, but Berkshire stock is getting more expensive. Berkshire’s pace of stock buybacks declined in the first quarter, to $3.2 billion, from $6.9 billion in the fourth quarter and $27 billion in all of 2021. Buffett and his longtime friend and partner, Charlie Munger, repurchase shares when they determine that their price is below Berkshire’s intrinsic value. Buffett is still a fan of buybacks: “If you do it at the right price, there’s nothing better than buying back part of your own business,” he said.
Berkshire made some massive stock purchases in the past two months. While Berkshire started the pandemic as a net seller of equities, the company found some large and attractive enough opportunities this year. Berkshire struck a deal to acquire insurer Alleghany (Y) for $11.6 billion in March, and has also scooped up several billions of dollars of shares of Chevron
(CVX), Occidental Petroleum (OXY), and HP (HPQ)—and adding to stakes in Apple
(AAPL) and Activision Blizzard (ATVI). Berkshire bought a total of $51.9 billion of equities and sold $10.3 billion in the quarter. The company ended the period with $102.7 billion in cash and U.S. Treasury bills.
Buffett isn’t trying to predict future inflation. “It’s extraordinary how much [inflation] we’ve seen,” Buffett said, referring to increasing prices at Nebraska Furniture Mart and other Berkshire subsidiaries. He added that predicting future inflation is a fool’s game, and that no one can really know how much inflation there will be over the next 10 years, or 12 months, or four weeks. He said that the best defense against inflation is to be skilled at what you do, and to produce a good or service that will remain in demand which people will be willing to pay for. “The best protection against inflation is your own personal earning power…No one can take your talent away from you,” Buffett said. “If you do something valuable and good for society, it doesn’t matter what the U.S. dollar does.”
Buffett and Munger see market volatility and speculative behavior as an opportunity. The nonagenarian investors derided what they called “gambling” in the stock market in recent years. Buffett said that short-term swings in prices can be buying opportunities for Berkshire: “Sometimes markets do crazy things. That’s good for Berkshire, not because we’re smart…but because we’re sane.” Buffett and Munger also took several swipes at investment bankers, active investment managers whose portfolios closely resemble broad market indexes, and other Wall Street businesses.
Write to Nicholas Jasinski at [email protected]
