Back from the Berkshire Hathaway shareholder meeting aka “Woodstock for Capitalists” and once again, a good time was had by all.
Spent time at Buffalo Wild Wings with my sisters, we found ourselves in the background of a Fox News interview at the Hilton hotel lobby where Warren Buffett’s 3 kids were being interviewed live a few feet away on the couch – a stern look from the security team kept us moving along.
I checked the footage at the Fox News website but could not find us in the background anywhere – so much for our photo bomb attempts
I didn’t spot any celebrities this year – apparently Bono was in the first row but we were not close enough to have recognized him anyway – we did however, get our coveted spots in the first row of the upper deck – lots of leg room, easy in and out access – and all it took was getting in line @ 5:15 AM. But the leg room, comfort and view is worth it for the 6 hours of Q&A. We had a few hours before the meeting started to meet people from San Francisco, Atlanta, and Kansas City while standing in line – even a fellow software developer – he from Oracle. Its crazy how far people come from around the world to this event- while we are lucky this thing is practically in our back yard.
My sister had an All Access Pass which she had obtained from one of her friends involved with the planning but she was not about to loan it to me or Don for fear we would get her into trouble by wandering around the green rooms looking to talk with Bill Gates or Warren Buffett during lunch or something, she felt she would be able to handle such awesome power with more dignity than I – such lack of faith in her older brother is disturbing and yet probably the safe call. My sisters and nephew did get pictures taken with the Fruit of the Loom guys – I was able to avoid this temptation.
Things I learned
- Berkshires Investment guys earn base salary of $1 million + 10% of whatever percentage they beat the S&P 500 index by + 20% of whatever bonus their teammate makes as an incentive to share good ideas with their teammate….Warren also pointed out that their headquarters while modest does have free coke in their pop machine and believes that helps retention
- To avoid any conflict of interests, his best investment ideas are always traded on for Berkshire Hathaway, while for his personal portfolio (about 1.5% of his net worth) he must use his second best plans – so while he likes Wells Fargo the most and buys that for Berkshire, he buys JP Morgan for his personal portfolio
- He discussed how as a CEO, he cannot put passion into people, but as leader he can help to remove distractions from his managers lives so they can focus on keeping their passion.
- He and Charlie again expressed their disgust and contempt for “executive pay consultants” calling them a notch below prostitution
- They described the business world’s use of measurements such as EBITDA as “idiotic” – describing EBITDA as “Earnings before everything that matters to profits is ignored” and again dismissed most teachings of business schools, finally jokingly asking if there was anyone else they had forgotten to insult
- Continued to explain why paying dividends would be dumb as long as they continue to create more than a dollars worth of value for every dollar retained – but that some day they anticipate the need for this once they no longer can invest in effective ways with the mammoth pile of cash they keep on hand – they are currently looking for 20-30 billion dollar acquisitions (some are speculating this could be John Deere??)
- Charlie Munger “Learning from other people’s mistakes has been much easier than making more of our own mistakes”
and “Warren is getting old, I worry about him a lot” (Charlie is 89)
- Warren Buffett “St Augustine is a hero to many of us for his quote of wanting to give up sex but not just yet…”
And finally, Warren is in the 3rd year of his 10-year bet where he challenged any Hedge Fund that a simple low cost S&P 500 Index fund over any 10-year period could beat any hedge fund – and a hedge fund did take him up on his bet
So right now after 3 years the hedge fund has a tiny lead of only being down –5.89% versus the S&P 500 index being down –6.27% after the S&P did beat the hedge fund this year to close the gap – I am more convinced than ever that this will be an easy bet for Warren to win and that he is right that over-managed investments will always underperform solid holdings left alone for the long run.
So it was another interesting year, lots of good questions and more importantly, it keeps me motivated to learn more about investing and saving and learning about businesses in general. Highly recommend it for anyone who gets the chance to go to.
(PS – Little Brother Hammers – I was keeping an eye out for you)