OMAHA–Yesterday morning when I woke, I heard an owl hooting it up outside my window. I can’t help but see the significance, as I was rising to attend my first Berkshire Hathaway shareholder’s meeting, along with 35,000 others seeking the sage advice of Warren Buffett, 78, and Berkshire Vice Chairman, Charlie Munger, 85.
My mom and I arrived at the Qwest Center well in advance of the 8:30 a.m. start, yet there were few empty seats to be found in the 24,000 seat arena. After looking high and low, we finally found two seats together in the nosebleed section behind the stage (the other 11,000 in attendance had to settle for a seat in the designated overflow rooms). I wondered aloud if Bono was in the house, but no one seemed to think that was funny.
The proceedings began with a video prepared for the occasion. The video segments were offset by commercials from Coca-Cola, Fruit of the Loom, Helzberg Diamonds, Spalding, Geico and DQ. The Helzberg spots got the biggest reaction from the crowd, thanks to the humorous nature of their pitch.
Coming in to the meeting, I thought much of the discussion might be over my head and when the topic did turn to things like derivatives, I was in fact, totally clueless. Yet, the majority of the day’s proceedings were not about balance sheets and higher math. Instead the day was about people and the companies they run. Berkshire Hathaway employs 246,000 people and owns upwards of 50 companies, including Justin Brands, NetJets, The Pampered Chef, See’s Candies, Benjamin Moore & Co., Nebraska Furniture Mart, General Re, Clayton Homes, Ben Bridge Jeweler, Borsheim’s, The Buffalo News and many more.
Buffett and Munger sat at a table on stage eating fudge and drinking Coke (Diet Coke for Munger) for five hours, while patiently considering questions from journalists and shareholders alike. I took notes on Twitter, and would like to share a few of the key points here.
Warrenisms:
- “The Berkshire culture is our key asset.”
- “Your own earning power is the best protection against inflation.”
- “When making an investment decision, price versus value is the only consideration.”
- “If you’re in the investment biz and have a 150 IQ, sell 30 points to someone else.”
- “If you own a farm you don’t get a price everday. Look at the asset not the price.”
- “We would not buy a newspaper at any price.”
- “We love spending money on advertising at Geico.”
- “Not every CEO wants a rational compensation system; not when irrationality pays so well.”
- “The best businesses are the ones that don’t require much capital, but still make money.”
- “The cheaper things get the more I like buying them.”
- “We don’t tiptoe into anything.”
- “Picking bottoms is not our game. Pricing is our game.”
Mungerisms:
- “A brand is a promise.” (and Geico’s promise is to save you money)
- “If accountants aren’t ashamed they should be.”
- “We are finally going to harness the electrical power of the sun. If you have enough energy you can solve a lot of other problems.”
- “We don’t want the Hollywood system where everyone has a contract but no one has any trust.”
Throughout the proceedings, the one thing that became crystal clear to me is how important it is to be a great manager–other than “price versus value,” it’s exceptional management that interests Buffett and Munger.
When speaking about the importance of corporate culture at Berkshire, Buffett mentioned that he buys companies for the long haul. In other words, he doesn’t buy them so he can sell them later for a higher price. He buys them so they can continue to be the great companies that they already are, albeit with significantly more assets at their disposal.
After the Q+A we visited several of the showroom booths. I scored a sweet pair of Justin cowboy boots for one third off retail and toured a modern Clayton home that is a far stretch from the typical manufactured home. My mom and I then went over to Eppley Airfield to see the NetJets’ planes. While approaching the hangar, I couldn’t help notice the long line of private jets waiting to take off. I mention this because Omaha (my hometown) is a humble, off the radar place for 364 days of the year. It was nice to see the city in a different light yesterday and to know how good the annual Berkshire meeting is for the city, both economically and for its reputation.
