So It happened last night. One of the big events for many investors. many news reporters, and many bloggers already writing about it. I am also writing. I don’t know how long it can go but I am trying.
Generally, When this AGM takes place there are at least 40k shareholders many of them including big names. It is like an event in capitalism. People buy Coke, candy, and other products from Berkshire Hathaway companies.
This time, due to COVID 19, the only entry was with online sources. Charlie Munger was not there. Ajit Jain was not there. Only a few employees doing their job. So no picture of the famous MOB. But anyway, We can always see Warren Buffett. He mentions that Charli is meeting people with the help of technology. It sounds fun as we all know Warren Buffett is not the one to known as a Techno-savvy person. But Yes it was the same warren Buffett who increased its stake in Apple computers, IBM, and Amazon, and maybe talked good about google.
Berkshire Hathaway stock was down for the day. around 2.74%. Their results were a little different. operating earnings were $5.82 billion against $5.52 billion estimates. The company accepts that the response of the government to coronavirus affects their profit. Many of their business is essential but till it is big. So we can understand what will be happening in India.
About coronavirus, he mentions in a joke that I was a disaster in biology. Listening to Dr. Fauci’s name from Warren Buffett is one blessing as the president advises injecting many different chemicals, there is a Dr. Fauci who keeps correcting the president. He also mentions how much it affects the lifestyle of US people as when having a habit to see the packed place, not even one person is showing but the reality is the same. I like the way he accepts that I don’t know anything you don’t know when it comes to health. But he mentions that it will affect the economy. as many know he doesn’t say any special number, but he said it is hard to evaluate. We know that we don’t know. very smart people are on it. He mentions the Spanish flu and told some of his memories. There came one question about Geico, the Major motor insurance subsidiary of Berkshire Hathway and its profitability. He mentions that there will be more uninsured motorists driving after the coronavirus. Geico is planning to give free insurance if people failed to pay a premium. He declares some other plans which said that companies controlled by Berkshire Hathaway are prepared for corona. In answer to Bill Murray, Actor and shareholder of Berkshire Hathaway, asking how America can take care of their new war Veteran ( peoples fighting against corona include health workers, food supply, and deliveries) he showed his gratitude by saying that their service is something we cant payback. he even slightly mentions that Berkshire may do something about the people. One sentence he mentions maybe show the income inequality that anyone working 40 hours a week should have a decent life.
Warren Buffett generally doesn’t like to talk about macroeconomics but he mentions that there is no risk despite the coronavirus that the US government defaults on its debt repayment. he said don’t worry about it. Don’t bet against America.
In One part of the talk, warren Buffett mentions that Big elephant size acquisition is now not insight. Many analysts think that the cash on the balance sheet of Berkshire Hathaway is waiting for some big acquisition. many of them forget that Berkshire is an insurance company, not only an Insurance but a Reinsurance business. They need to keep some cash in the proportion of the business.
Here I need to talk about the stake sale from Berkshire Hathaway. There was even one question why does Berkshire Hathaway sell shares in underperforming companies. He said in one way or another we will not continue. We may sell it to someone else. Selling airline stock was in line with that.
Berkshire Hathaway is being an insurance company, many questions came about the business. After all the answers given by Warren Buffett, It is clear that their insurance business is not going to be hit as hard as others. Other insurance companies report losses, the majority for raising reserves and paying increased claims. Future expected losses as they said are very much low in the Berkshire Hathaway report. The reason may be that Auto insurance which is a sufficiently large part of the insurance business is hardly affected by corona. Because it is all about the damage to property, corona effect to peoples.
One big highlight is Berkshire Hathaway sold its whole stake in all airlines and he answers it. American Airlines, Delta Airlines, Southwest Airlines, and United Airlines. He said he is not disappointed with the performance. But he also mentions that the world is changing for airlines and changing. it is a question of how much Americans will change their habits and that will change their profile. He also said when he changed their mind they changed completely.
I think many people must be shocked when He said that Capitalism is marvelous and brutal if left entirely to itself, but it needs government. Very much like the Keynesian system. His views are a must-watch so I am not going to spoil it.
While answering one of the questions, we saw him as a finance teacher, when he was explaining Buybacks. It was questions from David’s case, professor of finance at the University of Merline. Buybacks are always questioned as the system is difficult to explain and as there are many assumptions. But warren Explains it with ease like its simplicity. Here We need to understand the difference in the mechanism of buybacks in the Indian system and the US system. It is the subject of a different post. Warren Buffett In fact extended his role as a Finance teacher and become a Financial advisor when he mentions that people should avoid using a credit card as a piggy bank to be raided. We need to take this with a pinch of salt as Berkshire Hathaway is part owner of American Express and some banks in the US. I mean how does anyone feel safe with an 18% plus inflation payment?
On the commodity prices, especially oil, Warren Buffett was spot on when he said that it doesn’t pay to drill. yes. The questionnaire uses some harsh words about the recent deal of one company Berkshire Hathaway did. Oil prices get affected by many factors. the Amdocs deal was beyond doubt expensive but when it took place, the profile was different.
this and so many other issues were talked about in AGM you can check youtube for it.
