I first read about Warren Buffet when I was about ten years old, and his work ethic, values, and ability to take the long view captured my admiration.
The Berkshire Hathaway Annual Shareholders Meeting, A.K.A. “The Woodstock of Capitalism” has been on my bucket list for years, and last Christmas my gift to my Dad was a father/son trip to the 2014 meeting in Omaha.
The event was last weekend, and it certainly lived up to my high expectations. On Saturday, we were treated to over five hours of Q&A with Warren and Charlie Munger, his partner of four decades. Over thirty thousand faithful Buffett devotees descended on the CenturyLink center in Omaha to listen to Warren and Charlie share their thoughts on everything from corporate governance to fed policy to Berkshire’s future growth prospects. There was an electric atmosphere in the stadium, and the two geriatric executives (Warren is 83, Munger is 90), had incredible energy and sharp insights, with ample humor sprinkled in.
Perhaps the most lasting impression that I have of the meeting is of the type of people that Berkshire brings together. I had expected tons of professional investors, analysts, and hedge fund advisors to descend upon Omaha from the coasts. While there was a small subset of attendees that conformed to my expectations, the group was overwhelmingly Midwestern, with a nice mix of professionals, students, and retirees. We met farmers, doctors, accountants, lawyers, and small business owners from across the country (and even from abroad) who admire Buffet & Berkshire and shared similar values.
In the last few years, I’ve spent far more time focused on the tech sector and technology companies than on industrials, energy firms, or consumer brands. In 2014, unprofitable tech companies are raising money at huge multiples to their forward revenue projections, firms with little or no revenue are selling for hundreds of millions (and in a few cases, billions) of dollars, and public companies trading at astronomical revenue multiples.
The weekend in Omaha was a great opportunity to get out of the “bubble” (of both valuations and tech-centric thinking) and to think about long-term, sustainable value creation. I’d highly recommend making the trip, and I’ll certainly be back.
A few of my favorite kernels of wisdom and quotes from the weekend:
On corporate governance:
“Corporate boards – are both social and business institutions. They are not truly independent, as directors often earn $200,000 year, which is a hell of an incentive to stick around.”
On asking the right questions:
When Warren was young and he found an industry that fascinated him, he would show up at offices of dozens of companies in that industry and ask to meet the CEO. Often, they would meet with him. He would ask two questions:
1) If the CEO had to invest in any company in their industry for 10 years other than their own, what would they invest in?
2) If the CEO had to short any company in their industry other than their own, which company would they short?
On recovering from mistakes:
Charlie noted that Berkshire Hathaway had to “scramble out of a lot of mistakes” in the early days (including the original purchase of the Berkshire Hathaway textile firm itself). “Imagine where we’d be today I’d we’d had a better start!”
On achieving success:
“Competence is a relative measure. When I wanted to get ahead, I realized that I just needed to compete against idiots. Luckily, there is quite a supply” – Charlie Munger