Although Buffett gets a lot of airtime from active fund managers, I had not known that all the historical AGMs (back to '94) were available on Spotify. Since I have read a lot of the Annual Letters, I was surprised there was quite a lot of incrementally great content from these that do not make the letters. Below are some high-level takeaways
General observations
BRK Investors: Attendees are overwhelmingly American, however, the two non-American countries which have a disproportionate amount of attendees are China and Germany
The China representation is not a surprise given Munger’s affiliation with Li Lu
Buffett is actively visiting Germany to get access to private deals
Fear of cyber/nuclear attacks: Although this features somewhat in his annual letters, it is clear that long-tail events greatly concern Berkshire's execs and this has meant this has a tilt on how he underwrites certain insurance. For example - Buffett's preference is to provide as little cyber insurance
A formulaic approach to buybacks: Berkshire execs generally try to buy back BRK stock at 1.2x TNAV. The multiple of 1.2x may change over time but this reflects the fact that a number of the private businesses have a NAV below fair value
Buybacks are terrible ideas if poorly managed: Just as an active investor would not buy shares at ANY price it makes no sense that management is doing this
Exec's knowledge of granularity: Although most questions are generally about investing, however, when questions focus on BRK private's businesses and Buffett is willing to go into detail, his answers can be very detailed. These include
Understanding the drivers behind the Lubrizol business (e.g. their slow anticipated growth expectations for certain divisions)
Knowing the delays in delivery times for their holding in Nebraska Furniture Mart
Explaining his preference for West Coast rail businesses and comparing BNSF vs. Union Pacific (including rolling stock management styles)
Comparing expense and loss ratios for Progressive vs. GEICO
Why he did not invest in GE; explaining their leverage factor
Understanding Pacificorp operations in algae-ridden waterways
GEICO's great incentives structure: GEICO does not penalise/reward solely based on the profit of writing business, because that is impacted by the market, but instead uses unit performance. This ensures people feel motivated to work hard in bad times as well as good times
Berkshire's understanding of millennial trends: Berkshire does understand certain trends and does adjust its investment strategy when applicable
Green energy: Better adoption of green power in Berkshire energy means purposely adopting no dividend requirement for this company (so they can hype up investment in green energy when returns are good)
Payments: He understands that the payments business is being hugely disrupted and that whilst Visa/Mastercard hold a lot of the infrastructure - AMEX get a lot of the economics from payments. He acknowledges that GooglePay/ApplePay can actually be a good thing for Amex cards
Healthcare: Although not being an expert in this space, has tried to start a JV with Amazon on healthcare. Whilst this was disbanded he still intends to progress on some cost-reduction for generic drug companies
Capital light: The Alphabet model has almost no working capital requirement and yes the returns are better than BNSF but the decision at the time was Google's overall business valuation vs. its moat did not make a good enough deal
Investment styles etc
Erosion of returns: Buffett fully acknowledges that he cannot achieve the same returns he used to given a) size of their fund and b) general crowdedness of the marketplace
Valuation when investing: Whilst Buffett admits to ‘overpaying’ for certain companies like Heinz (public) or Precision (private), however, he says this in of itself has not led to him selling out of these companies
Missed opportunities: He will acknowledge certain companies would have made great investments (e.g. Google, Walmart) but does not invest in them meaningfully at the current higher levels
Evolution of investment style: His investment career has in a sense gone in three cycles
Buying “cigar butts” of public companies
Buying good public/private companies at reasonable prices
Funding ordinary(ish) companies on preference terms by deploying his huge insurance float
Technically he has funded internal startups (e.g. insurance) and to a certain extent his
The interplay between private/public mkts: When Berkshire missed a big potential buying opportunity at the end of 4Q'18, it was because they were trying to buy a large private business however Buffett admitted that PE buying power was too strong
Selecting a US state to operate a business: Unsurprisingly for US citizens but more surprising for Australians is the importance of selecting a state which does not have a materially underfunded pension scheme. The rationale being - if that state needs to raise taxes to fund the pension liability they will.
Conclusion: Even though the Berkshire Annual Letter has a lot of good content the AGM is still worth a listen. Overall - the most interesting categories of questions are when
The person asking the question genuinely knows the competitor (e.g. GEICO vs. Progressive, Union Pacific vs. BNSF)
Insurance questions; because genuinely these can be very detailed
Questions about previous decades - because Buffett and Munger have been in this game for a long times
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