Berkshire Weekend Reimagined

Its raining here today, just a gray, dreary day.  It feels appropriate, as today was when I had planned to head to Omaha.

I always look forward to this time of year, not only for the ‘Woodstock for Capitalists’ event, but in a way, it’s a return back to home.

If you would join me down this momentary stroll down memory lane…

Almost 22 years ago the Air Force asked me to fill out my dream sheet (places you wish to be assigned). I listed Germany or Hawaii.

They split the difference and gave me Omaha.

I remember seeing the sheet and saying “Omaha!” (before Peyton Manning made it trendy), and letting out a couple of expletives. That evening being I was in a funk as the realty of things settled in.

Little did I know how much that place would shape who I am today.  The first couple of years were admittedly not the smoothest there.  It was hard taking a kid who grew up outside of NYC and moving him to Nebraska, but eventually it grew on me.

So much so that I met my wife, got married, and went to grad school there (Creighton, not Nebraska).

So naturally, I had to be Warren Buffett’s biggest fan, right? Wrong!

In my younger years, I was unimpressed by Mr. Buffett’s Berkshire Hathaway.  My only prior knowledge of the company was my great-uncle sitting in my grandmother’s living room telling me to check out this stock for this company while watching Nightly Business Report on PBS.

I never attended a meeting while I lived in the Omaha area, and disliked all the hub-bub when the meeting came each year. 

Ahh, to be young and dumb!

That all changed when I read Jeremy Siegel’s Future for Investors.

Now this book is not specifically a Buffett book, but it is one that discusses the power of dividends and in the way Ben Graham’s The Intelligent Investor changed people’s lives, this book changed mine.

From then on, anytime I could hear Buffett speak or read about him, I was on it.

One of the things I came to appreciate about Mr. Buffett was his sense of calm and simplicity.

When asked why he stayed in Omaha, he gave this response:

“In some places it’s easy to lose perspective. But I think it’s very easy to keep perspective in a place like Omaha,” he said.

Buffett said being far from Wall Street actually helped him.

“It’s very easy to think clearly here. You’re undisturbed by irrelevant factors and the noise generally of business investments,” Buffett said. “If you can’t think clearly in Omaha, you’re not going to think clearly anyplace.”

Having just moved back to the East Coast, I could understand what he meant by that statement.

Then in 2008, I was captivated by the way he helped calm a nation through his powerful op-ed piece in the NY Times: Buy American. I Am

Shortly thereafter, I bought Berkshire Hathaway stock for the first time for a client. And the rest, as they say, is history.

Almost a decade later, I was due to graduate from Creighton the weekend after the annual meeting.  Naturally I figured, what’s a couple more days?  I will go to the meeting as well.

I should have known better…

I was hooked, and whereas I thought it was going to be a one-off experience, found myself standing in line to get into the meeting at 5:45 AM the very next year!

One of my favorite things though is hearing people’s hopes while in line as to what they are wanting to hear from Mr. Buffett and Mr. Munger that day. What pearls of wisdom will they offer up?

Since we are in essence standing in a virtual line (yes, 6 feet apart), here is what I would like to know and what I would like to ask if posed the chance:

Here are some of the things I will be listening for:

– Perceived impact on the insurance companies Berkshire holds in regards to class action suits against insurance companies not wanting to pay business interruption insurance;

– Impact of COVID-19 on businesses owned by Berkshire;

– How much is in the cash war chest? Have they made any new acquisitions?

– Unfortunately, more details on succession plans for him and Charlie;

– More detail on the GUARD Insurance Group addition to the Berkshire portfolio.

And some questions I would love to ask:

– Per his letter in the 2019,  about companies dividend payout ratios and how he would feel should one of the stocks in the Berkshire portfolio were to suspend their dividend (albeit temporarily to help keep their workforce paid), and their customer experience constant;

– Would he ever consider buying out all of Kraft Heinz so he could have 100% control of it? And if so, would he look to strengthen their product lineup?

– Concerns about individual defaults on credit card debt?

– Any concerns about the debt levels that the U.S. government is taking on?

– Age of the current board.  Five of the 14 directors are over 80 years old. Have they considered adding some younger executives to the board?

In preparing for this weekend’s meeting and to write this post, I went back and read a couple of previous annual letters. I found some commentary from Mr. Buffett’s 2018 letter particularly appropriate:

The American Tailwind

‘…leaves us starting in 1788, a year prior to George Washington’s installation as our first president. Could anyone then have imagined what their new country would accomplish in only three 77-year lifetimes?

During the two 77-year periods prior to 1942, the United States had grown from four million people – about 1⁄2 of 1% of the world’s population – into the most powerful country on earth. In that spring of 1942, though, it faced a crisis: The U.S. and its allies were suffering heavy losses in a war that we had entered only three months earlier. Bad news arrived daily.

Despite the alarming headlines, almost all Americans believed on that March 11th that the war would be won. Nor was their optimism limited to that victory. Leaving aside congenital pessimists, Americans believed that their children and generations beyond would live far better lives than they themselves had led.

The nation’s citizens understood, of course, that the road ahead would not be a smooth ride. It never had been. Early in its history our country was tested by a Civil War that killed 4% of all American males and led President Lincoln to openly ponder whether “a nation so conceived and so dedicated could long endure.” In the 1930s, America suffered through the Great Depression, a punishing period of massive unemployment.

Nevertheless, in 1942, when I made my purchase, the nation expected post-war growth, a belief that proved to be well-founded. In fact, the nation’s achievements can best be described as breathtaking.

And he was right.  Just in the short amount of time since the onset of this pandemic, just look at the progress made by scientists not only here, but around the world.  So while I will miss being at the meeting and sharing these in-person experiences, let us not forget to take in the experiences we are living right now, as the results from which may be the catalysts towards further breathtaking growth.

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