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Unraveling Berkshire’s AGM Key Takeaways

Berkshire Hathaway (BRK), an American multinational conglomerate and diversified holding corporation, held its most anticipated Annual General Meeting in Omaha, Nebraska, Saturday (4/30), positioning itself as a string-puller of companies in various sectors, including insurance, confectionery, retail, railways, manufacturing, and energy. Since its first shareholder meeting in 1973, the company has expanded in size, capitalization, and ownership. As of January 2022, Berkshire reportedly has 619,940 Class A shares and 1.3 billion Class B shares outstanding with roughly three million shareholders. Berkshire's first-quarter results for FY2022 surpassed the projections set by Visible Alpha analysts, declined by 51.5%, but exceeded predictions by 23.4%. Nevertheless, the company's net earnings attained US$5.46 billion, a descent of over 53% from US$11.71 billion year-on-year, while the operating earnings remained stable over a year at US$7.04 billion. Despite the fact that Berkshire began the period as a net seller of stocks, the corporation discovered several substantial and appealing possibilities this year. As a result, Berkshire outreached the S&P 500's -0.3% total return. In March 2022, Berkshire Hathaway agreed to purchase Alleghany, an insurance company, for US$11.6 billion, or US$848 per share, in cash. The transaction marks Berkshire's biggest acquisition in six years, while an industrial company, Precision Castparts, was bought for US$37 billion.

Throughout the meeting, the corporation's acting CEO, Warren Buffett, and Vice Chairman Charlie Munger pontificated their take on market conditions and answered queries regarding the company's future. Buffet stated that the stock market has behaved like a casino or gambling parlor in the last couple of years. Last quarter, Berkshire built a 14% stake in Occidental Petroleum in 11 days due to wild speculation and treating companies like poker chips, added Buffett. Similarly, Berkshire Vice Chairman Charlie Munger targeted online broker Robinhood Markets, Inc. (HOOD). Munger's accusations against Robinhood included short-term betting, hefty commissions, secret kickbacks, and many more. Along with dwindling user numbers and a substantial loss in the first quarter, Robinhood's stock has fallen roughly 88% since its peak in August 2021. In addition, Robinhood is laying off around 9% of its full-time staff. Further talking, Buffet mentioned Bitcoin and reiterated that it still lacks a fundamental value or a way for analysts to fit its valuation based on a stock with cash flows. Buffet appears to be skeptical regarding the fluctuation of Bitcoin prices in the future, but he assured that it certainly produces nothing. Instead, he stated that owning farmland, real estate, and even art had more tangible value than Bitcoin.

Complaining about the lack of quality stocks in the past few years, Warren Buffett has refrained from taking on new stocks as he has preferred just sitting on his pile of cash. Favorably, the only thing he bought (or rather bought back) were the shares of Berkshire Hathaway. When there are just not enough opportunities, Buffett believes that stock buybacks are the best way to reward shareholders as they receive a larger portion of the assets. However, things appear to be improving in the first quarter of 2022. Berkshire Hathaway’s holdings in Chevron went up from US$4.5 billion to US$26 billion, implying an increase of US$21.5 billion. In addition, Berkshire Hathaway bought US$7 billion of Occidental Petroleum shares and US$4 billion of Hewlett Packard shares and finalized a controlling stake in Alleghany Corporation for US$11.6 billion in under two weeks. In total, these shares accounted for US$44 billion overall, or most of the funds. Managing these hefty acquisitions is quite challenging for Warren Buffett. Although deteriorating, Berkshire’s bright future is securely handled despite his elderliness, and Buffet already appointed Greg Abel as his eventual successor while still officiating. In brief, with more stable market conditions and many things slowly starting to return to normal, Berkshire Hathaway is expected to expand its business and perform continuous improvements in the future.





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