Buffett to mark 60 years leading Berkshire Hathaway
Berkshire Hathaway has held up well in a rocky year for stocks, and shareholders this weekend will be seeking reassurance from Warren Buffett that they remain in good hands as tariff turmoil disrupts corporate America.
At Saturday's annual meeting in Omaha, Nebraska, the 94-year-old billionaire will mark 60 years in charge of what he built into a $US1.15 trillion conglomerate.
Buffett will spend four-and-a-half hours fielding shareholder questions, which typically focus on Berkshire's operating businesses, markets, the economy, life lessons, and the company's future after the Oracle of Omaha departs.
Berkshire's businesses are disparate, and include Geico insurance, the BNSF railroad, Berkshire Hathaway Energy, Dairy Queen, Fruit of the Loom, and retro brands such as Ginsu knives and the World Book Encyclopedia.
For many, they serve as a proxy for the American economy.
Yet through April 30, Berkshire shares have trounced the Standard & Poor's 500, rising 18 per cent while the index was down five per cent. That gulf, however, is more likely reflective of whipsaw from US President Donald Trump's policies than new attitudes about Berkshire itself.
Some observers view Berkshire's $US334.2 billion year-end cash stake, which at current yields could generate more than $US14 billion of income, as a buffer.
"People have so much conviction in Warren Buffett and his ability to deploy capital well in market downturns," said Brett Gardner, author of Buffett's Early Investments.
"Berkshire also has a lot of stable cash flowing businesses that may not be as impacted as other companies," he added.
The early outperformance fuelled much of Berkshire's stock price gain of more than 6,400,000 per cent since 1965. Over multi year periods, Berkshire now performs more like the S&P, but with better downside protection.
Buffett readily acknowledges the folly of expecting stellar outperformance over the long haul.
"We cannot do as well as we did in the past," Buffett said at Berkshire's 2013 annual shareholder meeting. "It's tougher as we get bigger."
At the 2021 meeting, Buffett said a person who knows nothing about stocks and had no "special feelings" for Berkshire should buy the index.
And in his February 2024 shareholder letter, Buffett said Berkshire "should do a bit better" than average American companies, with materially less risk of losing capital, but that anything beyond "slightly better" was "wishful thinking."
A large driver of Berkshire's profit is insurance, which accounted for 48 per cent of its $US47.4 billion of operating profit last year. Still, earnings in 53 per cent of Berkshire's 189 operating businesses fell last year, and Trump's tariffs could pressure some of the businesses.
Berkshire's value also derives from its huge cache of stocks, including Apple and American Express, though that portfolio suffered during April's market selloff.
Buffett took over Berkshire in a fit of anger in 1965, when management of the then-flailing textile company short-changed him when he offered to sell back his shares.
He later called Berkshire "the dumbest stock I ever bought," saying he missed out on $US200 billion over 45 years by making it his vehicle to invest in insurance instead of starting a new entity.
But by adopting the mantra of the company's late vice chairman, Charlie Munger, to buy wonderful businesses at fair prices, rather than fair businesses at wonderful prices, Buffett made Berkshire what it is today.
Gardner called Berkshire's size its "biggest handicap, being unable to move the needle," but said Buffett's record as perhaps the greatest investor ever outweighed it for many.
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