The Berkshire Hathaway (BRK-A, BRK-B) annual shareholders meeting on Saturday will be the first of a new era for the conglomerate.
For the first time in decades, Warren Buffett Buffett is not joined by vice chairman Charlie Munger while taking several hours worth of questions from Berkshire shareholders. Munger passed away late last year at the age of 99.
In his annual letter to Berkshire shareholders, Buffett called Munger the "architect" of the modern Berkshire Hathaway, which takes its name from a now-defunct textile company in New England and has grown to be the largest conglomerate in the S&P 500.
Buffett, along with Berkshire vice chairs Greg Abel and Ajit Jain, began taking several hours of questions from shareholders at around 10:15 a.m. ET.
For the first time, non-shareholders were also be able to watch the annual shareholders' movie, which featured a montage of some of Munger's best punchy quotes through the years, as well as some of the celebrity cameos that have been featured in these movies through the years.
In the early going of the Q&A, Buffett discussed the company's decision to pare its holdings of Apple (AAPL) during the first quarter, saying that while the company did sell shares it is, in his view, "extremely likely" the company remains its largest equity investment at the end of the year.
As for the company's growing pile of cash and Treasury holdings, Buffett said it is likely the value of these holdings exceeds $200 billion during the current quarter, noting he's "quite satisfied" with the position.
Asked about Berkshire's appetite for increasing investments overseas, and in China specifically, Buffett said, "Our primary investments will always be in the United States."
With Apple (AAPL) CEO Tim Cook and Microsoft (MSFT) co-founder Bill Gates in the room, Warren Buffett strikes a cautious tone on AI.
He said he had an experience with AI that made him very "nervous."
He saw an image "in front of his eyes", of him and his voice and wearing his clothes and delivering a message "no way from him."
"If I was interested in investing in scamming, [AI] is going to be the growth industry of all time. ... Obviously, AI has potential for good things too. ... As someone who doesn't understand a damn thing about it, it has enormous potential for good and an enormous potential for harm," Buffett said.
BYD (BYDDY) and Costco (COST).
Those are the two stocks Warren Buffett told Berkshire Hathaway shareholders on Saturday that Charlie Munger argued hardest for in their years together.
"Charlie twice pounded the table with me and said, 'Buy, buy, buy.' BYD was one of them and Costco was the other," Buffett told shareholders. "I should've been more aggressive in Costco."
"It wasn't fatal that we weren't, Buffett added. "But [Charlie] was right, big time, in both companies."
Buffett's answer came in response to a question from a shareholder about what it would take for the company to increase its investments in China. Currently, EV maker BYD is the company's only investment in the country.
Buffett said: "Our primary investments will always be in the United States."
Warren Buffett is sitting on gobs of cash at Berkshire (BRK.A BRK.B), but don't expect any large deal to come from overseas.
Buffett reiterated his love for investing in America:
"You won't find us making a lot of investments outside of the United States, though we're participating through these companies in the world economy. I understand the United States rules, weaknesses [and] strengths.... I don't have the same feeling generally around the world. And the lucky thing this is that I don't have to."
Buffett did reaffirm his commitment to investing in Japan, however.
As Myles Udland points out above, Berkshire (BRK.A BRK.B) sold some Apple (AAPL) shares in the first quarter.
Buffett moved quickly to quiet concerns on the tech giant, saying this on if his views on Apple have changed:
"No but we have sold shares. ... At the end of the year, I would think it extremely likely that Apple is the largest common stock holding we have now. ... Charlie and I looked at common stocks ... as being businesses, so when we own a Dairy Queen or whaetever it may be, we look at that as a business. ... We always look at every stock as a business."
Buffett later compared Apple to long-time holdings American Express (AXP) and Coca-Cola (KO), noting Apple will be a holding when Greg Abel takes over.
Yahoo Finance's Michael Kelley contributed to this post.
It doesn't show on Berkshire's (BRK.A BRK.B) cash and Treasury bill line on the balance sheet.
Berkshire disclosed it holds cash and T-bills of $182 billion at first quarter end. Buffett told shareholders the number could reach $200 billion at the end of the second quarter.
Concerns about the country's debt has started to pick up on Wall Street.
Below is what Bank of America (BAC) CEO Brian Moynihan told Yahoo Finance about our country's debt.
In case you ever need this fodder at a cocktail party...
"The goal of Berkshire — the economic goal — is to increase the operating earnings and decrease the shares outstanding." - Buffett
— Sam Ro 📈 (SamRo) May 4, 2024
A major driver of Berkshire's $11.22 billion in operating profit in the first quarter came from the company's insurance operations, which totaled $5.2 billion in the first quarter.
In a discussion of the company's first quarter results, Buffett said Ajit Jain, who leads Berkshire's insurance operations, "wants me to point out to everyone that you cannot take the insurance earnings of the first quarter and multiply by four. It just doesn't work that way in insurance."
The company's insurance risks are spread across geographies and disaster types, but Buffett noted that a major storm along the East Coast of the US would probably be the biggest risk for the firm. Hurricane season in the Atlantic runs from June through November.
For the first time, Berkshire Hathaway made its annual shareholder video — which precedes the Q&A session at the annual meeting — on Saturday, which featured a compilation of Charlie Munger and some of his best one-liners, a fixture at annual meetings and in other public appearances.
Munger died in Nov. 2023 at the age of 99.
One the Mungerisms featured in the movie included Munger telling an earlier shareholder meeting: "If I can be optimistic when I'm nearly dead, surely the rest of you can handle a little inflation."
Elsewhere, Munger added: "The right way to make decisions in practical life is based on your opportunity costs. When you get married, you have to choose the best that will have you. And the rest of your life is the same damn way."
Ahead of Saturday's annual shareholder meeting, Berkshire Hathaway reported first quarter earnings that showed a record operating profit of $11.22 billion.
In the first quarter last year, operating profits at Berkshire tallied $8.1 billion.
The company's investment gains, however, were down sharply from the prior year period, tallying just $1.48 billion against some $24.75 billion last year.
Apple's (AAPL) roughly 10% decline in the first quarter weighed on results here, with the tech giant accounting for around 40% of Berkshire equity holdings.
In its first quarter report, Berkshire also disclosed it lightened up its Apple holdings during the first quarter. At the end of 2023, the value of Berkshire's Apple position stood at $174.3 billion; at the end of Q1, this position's value stood at $135.4 billion.
At last year's annual meeting, Buffett took time, however, to emphasize to investors that this stock does not actually comprise this percentage of Berkshire's overall portfolio, which includes its other fully-owned subsidiaries.
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