Berkshire Hathaway (BRK.A, BRK.B) shareholders flocked to Omaha, Nebraska, on Saturday, looking to glean some insight from Warren Buffett at the company’s annual meeting.
Buffett touched on everything from Tesla’s (TSLA) self-driving technology to his thoughts on artificial intelligence and the state of the economy. Here are four key takeaways from the extensive question-and-answer portion of the annual shareholder event.
Charlie Munger’s Presence Was Missed
For about 60 years, shareholders have made the annual pilgrimage to Omaha, Nebraska to hear directly from the “odd couple” who built the company into the multi-billion-dollar conglomerate it is today.
This year’s shareholders meeting was markedly different without Charlie Munger, Buffett’s long-time business partner who died in November at age 99. Munger, who used to sit next to Warren on the stage, was always ready with a one-liner to solidify Buffett’s point, answer shareholder questions or dispense witty bits of wisdom.
The annual movie that kicked off the meeting focused on those quips this year, showing Munger throughout the years making jokes or snarking about business as Buffett laughed by his side.
Seated next to Buffett this year, vice chairs Ajit Jain, the head of Berkshire’s insurance businesses, and Greg Abel, who runs all non-insurance businesses, were loathe to upstage Buffett. The pair mostly focused on facts and figures behind their respective operations.
Buffett mentioned Munger extensively throughout the day and the crowd chuckled during a bittersweet moment when he handed a question off to Charlie Munger out of habit, meaning to give Abel a chance to speak.
Johannes Eisele / AFP / Getty Images
Buffett Confident in Succession Plans
In light of Munger’s passing, many investors asked questions about the company’s succession plans.
Buffett alluded several times throughout the meeting to Abel taking over the company after the CEO’s death. Abel became vice chairmen of the company in 2018 alongside Jain, and the pair have taken on a larger, more public role over the past few years.
“We’ve really got the problem solved for the next 20 years unless something untoward happens,” he said.
Succession is important to shareholders because Buffett and Munger were known for a particular brand of business savvy and partnership. Many are seemingly searching for signs the company can maintain its success after Buffett dies. Buffett, for his part, answered most questions about succession by saying executives and the board will decide on the details when the time comes.
That being said, Buffett touched on who he thinks will replace Jain (“We won’t find another Ajit, but we have an operation that he has created”), and who will pick stocks once he’s gone (“[Greg] understands businesses extremely well, and if you understand businesses, you understand common stocks.”)
Dan Brouillette / Bloomberg / Getty Images
Berkshire Comfortable Building Cash Position
In the hours before the meeting, Berkshire Hathaway released its first-quarter earnings report, showing a large cash hoard.
According to the first-quarter filing released this morning, the company holds $36 billion in cash and $153 billion in Treasurys, for a total cash hoard of $189 billion. That’s much higher than at the same time last year when the company had $130 billion in that stockpile.
Shareholders wanted to know how Buffett plans to deploy the capital and his response was frank.
“I don’t think anybody’s sitting at this table has any idea of how to use it effectively and therefore we don’t,” he said. “…We only swing at pitches we like.”
Buffett noted during his presentation of the company’s earnings that its cash position, excluding the amount held by the railroad, utility and energy businesses, stood at $182 billion at the end of the last quarter. He said it’s “a fair assumption” that the the number will rise to about $200 billion at the end of the second quarter.
“We’d love to spend it, but we won’t spend it unless we think we’re doing something that has very little risk and can make us a lot of money,” he said.
Apple To Remain Berkshire’s Biggest Holding
The earnings report also revealed Berkshire significantly cut its stock holdings in Apple (AAPL).
Based on the value of holdings cited in its quarterly report, Berkshire cut the amount of shares it is holding by about 13%. That’s a bigger reduction than in the previous quarter and equates to about 116 million fewer shares.
Berkshire Hathaway investors grabbed onto the decline, but Buffett dismissed the notion that it was because his views on the iPhone maker have changed.
“We will end up—unless something dramatically happens that really changes capital allocation strategy—we will have Apple as our largest investment, but I don’t mind at all under current conditions building the cash position,” Buffett said.
Even with the cut, Apple remains the conglomerate’s largest stock holding, and Berkshire is still the tech giant’s single largest shareholder.
Kara Greenberg, Caleb Silver and Stephen Wisnefski contributed to this report.