Berkshire Hathaway, the holding company of legendary investor Warren Buffett, has held its annual shareholder meeting. The event, dubbed “Woodstock for capitalists”, has been happening virtually because of the pandemic . It yielded the usual mixture of folksy commentary and gnomic wisdom. Buffett said that the US economy is “red hot” and Berkshire’s portfolio of businesses “is seeing substantial inflation”. He joked that Charlie Munger, his 97-year-old deputy, will be ageing at just “1% annually” once he hits his centenary. Munger dubbed bitcoin “a currency that’s so useful to kidnappers and extortionists”.
It hasn’t been quite the usual love-in, says Robert Cyran on Breakingviews. The “pew-sitters in the Church of Buffett” revolted, with one-quarter of shareholders voting to require more disclosure about efforts to “address climate change” and encourage “workforce diversity”. Management defeated the proposal, with Buffett arguing that imposing standardised box-ticking exercises on Berkshire’s portfolio of very different businesses was “asinine”. Still, the quarrel highlights a “generational divide” between the “nonagenarian” Buffett and many of his shareholders. It may also reflect growing discontent with Berkshire’s recent performance.
Has Warren Buffett lost his magic touch?
During his 56 years at Berkshire, Buffett has transformed it from a “troubled textile firm” into “a $630bn conglomerate”, says The Economist. Over that period its stock has delivered compound annual gains of 20%, double the average for the wider US market. Yet in the last decade Berkshire has beaten the S&P 500 just twice, and conspicuously underperformed it in four of those years. Questionable decisions include badly-timed bets on airlines and a $13.8bn punt on heavily-indebted foods giant Kraft Heinz that soon “soured”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Above all, highly inflated US stock prices make life difficult for a value investor like Buffett. When markets plunged last March it should have been a golden opportunity, says Tara Lachapelle on Bloomberg. Berkshire has $145bn in cash to deploy when it spots a bargain. Yet for all Buffett’s injunctions never to “bet against the US”, Berkshire has sold more than a net $12bn of stock since the start of 2020. That’s a poor choice given the S&P 500’s 26% return in that time.
Buffett has no plans to step aside any time soon, but he has finally put “one of the biggest succession questions in corporate America” to rest, say Geoffrey Rogow and Justin Baer in The Wall Street Journal. He has confirmed that “if something were to happen to me tonight”, then vice chairman Greg Abel would step in. The 58-year-old Canadian has overseen Berkshire’s sprawling energy investments since 2008. A company insider, he is described “as a level-headed presence” who will apply a similar investment approach to Buffett. Shareholders will be relieved, Cathy Seifert of CFRA Research told Eric Platt in the Financial Times, that the succession “parlour game” is finally resolved.
-
How inheritance tax trick is helping families save ‘six-figure sums’Happy to skip a generation to save thousands on inheritance tax? A deed of variation could be the estate planning tool you need.
-
Nationwide: House prices unexpectedly dropped in AugustHouse prices fell by 0.1% in August in a surprise drop, according to Nationwide, as “affordability remains stretched”
-
Are wealthy whisky enthusiasts leaving Britain?Collectables Wealthy whisky enthusiasts are heading to tax-friendly countries such as Dubai, where there is more disposable income to spend on collectable luxuries like rare whisky.
-
'The rise and fall of Kodak is a lesson for the tech giants'Opinion The long decline of Kodak – a once-dominant company – shows why no business is safe from disruption, says Matthew Lynn
-
8 of the best properties for sale with kitchen gardensThe best properties for sale with kitchen gardens – from a 17th-century timber-framed hall house in Norfolk, to an Arts & Crafts house in West Sussex designed by Charles Voysey with a garden by Gertrude Jekyll
-
Why investors can no longer trust traditional statistical indicatorsOpinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
Investors rediscover the virtue of value investing over growthGrowth investing, betting on rapidly expanding companies, has proved successful since 2008. But now the other main investment style seems to be coming back into fashion.
-
8 of the best properties for sale with shooting estatesThe best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
The most likely outcome of the AI boom is a big fallOpinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
What we can learn from Britain’s "Dashing Dozen" stocksStocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
