Berkshire AGM Debrief + Valuation Update
"We move forward with great intent and purpose."
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Annual Meeting Debrief
My 13th trip to Omaha for the Berkshire AGM is in the books. What a weekend!
The day before the meeting was filled to the brim: I participated on the Gabelli Value Investing Conference BRK panel, then headed over to Guy Spier’s VALUExBRK to listen to some amazing speakers and give a short talk myself.
I received a handful of comments afterward about how I don’t seem like the introvert Guy described. My introverted-extroversion comes out when I get the chance to talk about something I love (Berkshire) in a welcoming environment among friends. Guy literally and figuratively set the stage for me to come out of my shell, and I can’t thank him enough!
I also had the good fortune to meet Greg for the second time, and I ran into former AMEX CEO, Ken Chenault. And having my book for sale at the meeting with a giant mockup right next to Poor Charlie’s was an incredible feeling.
BRK Annual Meeting Notes
On a high level, Greg met my high expectations. And the lower attendance made it easier to get around Omaha and the exhibition hall. I’d estimate that attendance was down by a third. It may be much smaller than peak Warren/Charlie, but still the largest and best-attended AGM in the world by far.
I thought Greg was confident and put on a great show. It incorporated Warren, showed deference to him and Charlie, and included new touches from Greg, plus a healthy dose of humor. Pound for pound this was the most substance of almost any Berkshire AGM I’ve attended.
Berkshire will be a builder of tech, not just a buyer. Building tech in GEICO > BNSF > BHE.
Using AI with a clear outcome not just for its own sake.
“All around operational excellence” - Greg
Data centers will bear the full cost of buildout (to applause)
15% of all gas is touched by Berkshire
Precision Castparts has a ten-year backlog (you read that right)
Clayton has a home that, with $40K of land, will cost $249K. It has a $35K traditional “box” mobile home not including land/park fees. Pretty incredible when you think of it.
Just $235 million of buybacks in Q1
Ajit said Tokio Marine did first class business in a first class way. Berkshire’s arrangement includes the purchase of 2.49% of its common stock, a whole account quota share agreement, and a handshake deal to participate in M&A together in the future.
The ABC’s of business decay: Arrogance, Bureaucracy, Complacency
Discussion about cyber risk and deep fake risk (“Warren from Omaha” who asked the first question was entirely AI generated)
Greg on the stock portfolio: It’s a lower lift (my words) because of the size of the main positions. Ted is managing around $20 billion.
Ajit and Greg had some great exchanges, and even some Warren/Charlie vibes going on. Ajit I’ts difficult to recruit people to say “no”. He tells new hires they should say no unless it hits you over the head with a 2x4.
Ajit’s insurance lessons: 1. Small and decisive teams; 2. Fixed compensation to avoid misincentives; 3. Insulate people from the ups and downs of the market
Katie Farmer (BNSF) and Adam Johnson (NetJets + 31 other consumer/service/retailing) did a great job on stage. They were informative and confident. I also thought Greg and Katie had a good chemistry.
Greg said Berkshire would divest if there were labor issues, reputational risks to BRK, or if the business became unsustainable. Berkshire would “absolutely not” be broken up.
Greg called Berkshire an efficient conglomerate. I loved his story about telling Adam Johnson he had to manage 31 additional businesses with no help from Omaha. Classic Berkshire.
At the same time, Greg noted that they had frameworks to share best practices across subsidiaries.
Greg was also very clear that he was in charge, noting that there was one leader at Berkshire, but they operated as a team.
Valuation Update
I’ll touch on valuation below, including a few important updates from the latest 10Q.
Subscribers have access to the valuation model on Google Sheets, which includes a per-share valuation and earnings calculator.
