Do what makes sense, Buffett says

At annual meeting, Berkshire chief upbeat about investing

Berkshire Hathaway Chairman and CEO Warren Buffett (center left) looks at Precision Castparts products Saturday before his company’s annual shareholders meeting in Omaha, Neb.
Berkshire Hathaway Chairman and CEO Warren Buffett (center left) looks at Precision Castparts products Saturday before his company’s annual shareholders meeting in Omaha, Neb.

OMAHA, Neb. -- Tens of thousands of people filled an arena this weekend to listen to Warren Buffett and Charlie Munger talk business for hours at Berkshire Hathaway's annual meeting.

photo

AP

Berkshire Hathaway Chairman and CEO Warren Buffett (center) views the BNSF booth as he tours the exhibit •oor before presiding over the annual shareholders meeting Saturday in Omaha, Neb.

The Omaha event features an adjoining 200,000-square-foot exhibit hall where Berkshire subsidiaries such as See's Candy, Fruit of the Loom and Geico insurance sell their products as executives chat with shareholders.

For the first time, Saturday's meeting was broadcast online on Yahoo Finance. The crowd was smaller than last year's 50th anniversary meeting but still dwarfs any other corporate meeting. Buffett, the chairman and chief executive officer of Berkshire, didn't give an attendance estimate Saturday morning as he offered optimism about business and advice on investing.

Buffett told shareholders that two of the keys to successful investing are avoiding envy and avoiding costly fees. The investor said it's important not to try to copy others who profited in a company's initial public offering or claimed a lottery jackpot.

"You don't want to get envious of somebody who bought an [initial public offering] or won a lottery. You have to do what makes sense to you," Buffett said.

That kind of advice and Buffett and Munger's willingness to take almost any question is part of what keeps people coming back to the annual meetings. Bob Shanahan returned for his second Berkshire meeting so his son, Tim, would have a chance to attend while the 85-year-old Buffett and 92-year-old Munger, Berkshire's vice chairman, are still leading the company.

"You never know how much longer they'll be around," said Bob Shanahan, who lives in Castle Rock, Colo.

It didn't take much convincing to get Tim Shanahan to make the trip. He has looked up to Buffett for several years and is now studying finance at the College of William and Mary in Williamsburg, Va.

"For someone my age, he's a good hero to have," Tim Shanahan said shortly after snapping a picture of Buffett touring the exhibit hall.

Shareholder David Parr said that eventually replacing Buffett has to be a concern for Berkshire shareholders because he is such a remarkable talent, but he's confident that Buffett has a plan in place and has a knack for choosing good people.

"His investing is not about a magic formula. It's about him," said Parr, who is from Superior, Wis. "If it was a formula, everyone would be doing it."

In presidential politics, Buffett has long supported Democrat Hillary Clinton, so one shareholder asked what might happen to Berkshire if Republican Donald Trump were elected.

"That won't be the main problem," Buffett said before reassuring shareholders that Berkshire would prosper regardless of who is elected. He said U.S. businesses will continue to adapt and thrive.

"No presidential candidate or president is going to end that," he said.

Buffett takes a hands-off approach to managing all the companies Berkshire owns. Unless he's aware of a problem that needs his attention, Buffett allows the chief executive officers of Berkshire companies to run the companies as if they owned them, and he encourages managers to focus on building the long-term strength of their brands.

Mike Searles, CEO of Benjamin Moore paints, said that running a Berkshire subsidiary has been a pleasant change after a career of working for public companies that focus heavily on each quarter's results. Berkshire encourages its companies to focus on building their long-term strength even if their quarterly performance may be uneven.

Berkshire's conglomerate of more than 90 companies and investments shields individual subsidiaries from that pressure.

"The way Berkshire runs its company, it's all about two things: the future and ethical performance," Searles said. "The culture is so long-range."

Jim Weber, CEO of Brooks Running, said his company has benefited from Berkshire's long-term approach. As long as Brooks is strengthening its brand, which is a favorite with serious runners, Weber says Buffett is happy.

"With Berkshire there are no questions about the right way to manage our business," Weber said.

A group of environmentalists had hoped to make an impression on Buffett and the audience when they urged shareholders to support drafting a report about the risks that climate change creates for Berkshire's insurance companies.

Shareholders instead overwhelmingly rejected a resolution calling for the company to write that report.

Tim Rinne with the Nebraskans for Peace group, which submitted the resolution, said before the vote that he knew the measure was likely to be defeated given that Buffett opposes it and he controls nearly one-third of the votes. Rinne hoped anyway that his group could persuade Buffett to speak out about climate change.

Buffett said in his shareholder letter that it's reasonable to worry about climate change's effect on the world, but it shouldn't hurt insurance companies because policy prices are set annually based on that year's risks.

Berkshire Hathaway Inc.'s profit rose 8.2 percent in the first quarter as gains at manufacturing units and the investment portfolio overseen by Buffett offset a slump at insurance units and the railroad.

Net income climbed to $5.59 billion from $5.16 billion a year earlier, the Omaha-based company said Saturday in a statement with preliminary results.

Information for this article was contributed by staff members of The Associated Press and by Noah Buhayar and Katherine Chiglinsky of Bloomberg News.

A Section on 05/01/2016

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