Mark, I can't believe Warren Buffett has never heard of William Harmond. Tell me its not so! Billy always new the companies who were superbly managed, or so he told us!
>Published: April 29 2001 09:45GMT | Last Updated: April 29 2001 10:18GMT
Warren Buffett received plenty of applause from his shareholders on Saturday. But perhaps the loudest ovation came after one investor had thanked the 70-year old chairman and chief executive of Berkshire Hathaway for not investing in technology companies.
Not that the 12,000 faithful who flock to Omaha every year for Berkshire's annual general meeting have anything but praise for the legendary investor. The meeting sometimes seems more like a religious gathering than a scheduled corporate event. "We call it a pilgrimage," says Pasupati Sadhukhan, an investment manager from Houston who has owned Berkshire stock for 15 years.
Nonetheless, Mr Buffett has reason to feel vindicated. For several years he argued that the US stock market was overvalued and that the internet would create relatively little in the way of new profits. In the past year, the Nasdaq stock market has slumped, and suddenly Mr Buffett's style of value investing is generating renewed interest. Since the last meeting, Berkshire's "A" shares have risen from around $55,000 to $67,000.
Yet if Mr Buffett and his long-serving vice-chairman Charlie Munger are feeling smug they are hiding it well. Just a few minutes into Saturday's meeting Mr Munger was describing how he had missed investment opportunities which had cost Berkshire billions of dollars in possible value. Later, when asked how he stops managers from making rash decisions, Mr Buffett weighed in with some more self-criticism: "The history Charlie and I have had of preventing decent intelligent people from doing unintelligent things is poor," he said. "Worse than poor," Mr Munger added.
Tradition dictates that much of the event, which takes the whole weekend, is lighthearted. The meeting started with an hour-long corporate video in which Mr Buffett poked fun at himself, Mr Munger, and famous friends such as Tiger Woods and Bill Gates. On Saturday evening, Mr Buffett threw the first pitch for the Omaha Golden Spikes, the local minor league baseball team. Other events include dinner at Mr Buffett's favourite steakhouse and a visit to Borsheim's, the jeweller owned by Berkshire.
However, the packed Civic Auditorium shows that shareholders are interested in more than a good time: they are enjoying a free investment tutorial. For seven hours, Mr Buffett and Mr Munger field detailed, well thought-out questions on topics such as business school courses and the merits of the capital asset pricing model. And, unless they are asked to comment on a specific stock, they try to give full answers."When Charlie talks he doesn't say much but what he does say has a punch like Joe Lewis," says Charles Hartley, a retired bicycle salesman from Illinois who endured a nine-hour drive to Omaha because it is cheaper than flying.
Yet Mr Buffett also attracts professional investment managers who come to catch up with colleagues and stock up on ideas. "After the first year of being here we got home and sold about 25 per cent of our portfolio," says Ian Darling, a fund manager from Sydney. Mr Darling and his partner, Mark Nelson, are members of the Omaha Lounge Suits Society, a club of investment managers who meet in Nebraska once a year.
As Mr Buffett and Mr Munger keep telling shareholders, Berkshire's sheer size means the returns on its investments in the coming years are unlikely to be as good as they have been in the past. Yet as long as the two men keep dispensing their particular brand of investment advice, it seems unlikely that shareholders will mind. And, for the time being at least, they have the satisfaction of knowing they were proved right. |
