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My Adventure with Warren and Charlie

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I went to Omaha for the Berkshire Hathaway annual meeting.  I have wanted to go for several years. I’m a BRK.b shareholder with aspirations to own an A share or two in the next several years. (Will I get better seats at the annual meeting if I hold an A share?) I enjoyed myself immensely. After the meeting was over, I felt like my money was in good hands with Warren and Charlie.  They are a national treasure - much like seeing Mark Twain and Will Rogers answering all comers for five+ hours.  The shareholders laughed aloud and often.

 

I got to Omaha in time for the cocktail party at Borsheim’s on Friday night. Parking was tight, but I was able to walk in with an old Omaha hand who told me how to negotiate the drink and food lines. The mall was packed. The credential around my neck made me a part of the brotherhood of Berkshire shareholders. A young couple in the food line with me told me how they owned shares just to take advantage of the Berkshire discounts for shareholders in Omaha all weekend. Others at the cocktail party had the same plan. I didn’t see any obvious Masters of the Universe, but saw a hoard of regular Omaha folks ready to take advantage of the bounties of the Berkshire Hathaway weekend. Sharp elbows for Swedish meatballs indeed. Here is a picture of me with Warren and Charlie:

b2ap3_thumbnail_me-and-the-boys.jpg

 

The next morning, I foolishly thought that if I were at the meeting at 6:30am when the gates opened at 7 am, I would get a good seat. I was wrong by about 2 hours. I got in line at 6:40 with the temperature at 38 degrees in a drizzling rain. They had mercy and let us in early. I was in my seat by 7am and 12,000 people were ahead of me. But again I was in line with the brotherhood of shareholders who told me how to find a seat and to make lunch arrangements. I talked with a young financial analyst from Boise, Idaho, there on his own dime, until the movie started at 8:30. The upbeat collection of cartoons, Coke commercials and the Geico lizard got us in a feel-good mood for the Warren and Charlie show that began at 9:30.

 

Much has been written about the meeting. Many quips come to mind.  But those thoughts all blend into the description Warren and Charlie gave about their investment philosophies that were at the core of every answer.  In homage to Ben Graham, they said again that they analyze businesses to see if they want to own them.  As value investors, they look for strong fundamentals and but also need to believe that the business has a lasting competitive advantage.  In response to several questions, they gave examples of businesses they couldn’t understand and, thus wouldn’t buy, airlines were one example. They said that they needed to understand where the business is going and why it will continue to excel.  And they need something more. They want to be able to treat their business partners and customers the way they want to be treated themselves - fairly and honestly.  And they want to own businesses where they believe management is effective and shares their old fashioned values. No, we are not short sellers Charlie said because we don't want to trade agony for money.  

 

That philosophy is the succession plan. Buffet and Munger believe that the Berkshire culture is so imbued with those timeless values that it will persist after they are gone.  And Warren said that the board has found someone to replace him when he goes.  The Berkshire CEO after Buffett needs to be someone who will listen to good advice from a partner like Charlie, too.  The question not being asked is who will replace Munger, the rock solid adviser to the chief.  In a fundamental way, the Berkshire miracle is a 50-year partnership.  One man, without a strong partner to challenge him, cannot replace this invaluable team.

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