Warren Buffett Defends Berkshire Hathaway’s Decisions

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Buffett said the economy has been “resurrected in an extraordinarily effective way” by monetary and fiscal stimulus from the Federal Reserve and the US Congress at Berkshire’s annual meeting.

Buffett stated, “It did the job.” He added, “This economy is currently in super high gear for 85 % of the time.”

Buffett regretted that an influx of so-called particular purpose acquisition companies and inexperienced investors looking for quick profits had turned markets into a casino, making it difficult for Berkshire to deploy more of its $145.4 billion cash hoard.

But the 90-year-old remained upbeat about the future of the company he has led since 1965, even after he passed away.

Buffett stated, “We’ve seen some strange things happen in the world in the last year, 15 months.” He also added, “It has reinforced our desire to do everything possible to ensure that Berkshire Hathaway is every bit the organisation and then some in 50 or 100 years.”

ADDITIONAL SUPPORT

Buffett joined Berkshire’s 97-year-old vice chairman Charlie Munger to answer more than three hours of shareholder questions at the annual meeting in Los Angeles.

Several questions were also directed at Greg Abel and Ajit Jain, Berkshire’s other vice chairmen and potential successors to Buffett as CEO.

When asked about their relationship, Jain said they don’t interact with Munger and Buffett, but they talk about the businesses they oversee every quarter.

Berkshire Hathaway has cancelled its annual shareholder weekend in Omaha, Nebraska, for the second year in a row. The event usually draws around 40,000 shareholders.

However, Steve Haberstroh, a partner at CastleKeep Investment Advisors in Westport, Connecticut, said Saturday’s meeting, which was broadcast live on Yahoo Finance, was “kind of what you come to love about Berkshire.” 

“It’s more about being reminded of the old things than it is about learning new things.”

Many of Berkshire Hathaway’s dozens of operating units, including Geico car insurance and the BNSF railroad, have been on the mend as fears about COVID-19 fade. More people get vaccinated, stimulus checks are spent. Business restrictions are loosened, and economic confidence grows.

According to an advanced government estimate, the economy grew at an annualised rate of 6.4% from January to March. 

According to some economists, the economy will grow at its fastest pace in nearly four decades in 2021.

Buffett admitted that the recovery made his decision to sell stakes in the four major U.S. airlines — American, Delta, Southwest, and United — last year seem ill-advised.

Meanwhile, Munger downplayed concerns that Congress and the White House might raise the corporate tax rate to 25% or 28%, saying it wouldn’t be the “end of the world” for Berkshire Hathaway.

Berkshire Hathaway shareholders voted down proposals requiring the company to disclose more information about its efforts to combat climate change and promote diversity and inclusion in the workplace.

However, both proposals received about a quarter of the vote. They are indicating greater dissatisfaction than Berkshire shareholders have shown in the past. 

Both proposals were opposed by Buffett, who owns nearly a third of Berkshire Hathaway’s voting power.

Berkshire’s shareholders met on Saturday after the company reported a 20 % increase in first-quarter operating profit to about $7 billion, with net income including investments totalling $11.7 billion.

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