Key takeaways from Berkshire Hathaway’s annual shareholder meeting

Berkshire Hathaway’s annual meeting is currently underway in Omaha. Here are the key takeaways from the event that’s known as “Woodstock for Capitalists” and attracts thousands of investors across the globe.

To begin with, it is the first Berkshire Hathaway meeting where Charlie Munger won’t be present. Munger who was Buffett’s trusted aide for years and Berkshire Hathaway’s vice chairman passed away last year.

Buffett paid rich tributes to Munger and said, “In terms of managing money, there wasn’t anybody better in the world to talk to for many, many decades than Charlie.”

Berkshire Hathaway has trimmed its stake in Apple

One of the key takeaways from Berkshire’s annual meeting is that Buffett has trimmed the conglomerate’s stake in Apple by around 13%. It was the second consecutive quarter when the company lowered its stake in the iPhone maker which still remains its biggest holding by a wide margin.

However, according to Buffett, the decision to sell Apple shares was based on tax considerations, especially on hopes that taxes might need to rise to fund the burgeoning US fiscal deficit.

“It doesn’t bother me in the least to write that check and I would really hope with all that America’s done for all of you, it shouldn’t bother you that we do it and if I’m doing it at 21% this year and we’re doing it a little higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little Apple this year,” said Buffett.

The “Oracle of Omaha” sold Apple shares previously also but admitted that it was a “mistake.” At last year’s annual meeting, he said that selling Apple shares was a “dumb decision.”

Notably, while markets see Apple as a tech company, Buffett sees it as a consumer company and has praised the company’s products as well as the leadership team – especially Tim Cook who was also in attendance at the meeting.

Incidentally, Apple shares rose almost 6% on Friday after the company reported better-than-expected earnings and also announced a record $110 billion share buyback.

Berkshire Hathaway’s cash pile has soared

Meanwhile, thanks to the Apple stake sale and strong operating income, Berkshire’s cash pile spared to a new record high of $188.99 billion, surpassing the previous record high of $167.6 at the end of 2023.

Buffett hasn’t been able to find attractive investment opportunities and said it is likely that the company’s cash pile might rise to above $200 billion by the end of the current quarter.

“Unless something dramatic happens that really changes capital allocation, we will have Apple as our largest investment. But I don’t mind at all under current conditions, building the cash position,” said Buffett at the meeting.

Buffett talked about investing in Canada

Berkshire has invested in overseas companies also, including in Chinese electric vehicle giant BYD which Munger had termed his best investment. The conglomerate also invested in Indian fintech company Paytm and Buffett has been buying stakes in Japanese trading houses.

During the meeting, Buffett said, “We will be American oriented. If we do something really big it’s extremely likely it will be in the United States.”

He, however, teased the possibility of investing in Canada and said, “We do not feel uncomfortable in any way shape or form putting our money into Canada. In fact, we’re actually looking at one thing now.”

Warren Buffett compared AI to “nuclear weapons”

While Buffett admitted that he does not “know anything” about artificial intelligence (AI), he compared it to a “nuclear bomb.”

He added, “When you think about the potential for scamming people, if you can reproduce images that I can’t even tell, that say, ‘I need money,’ as your daughter, ‘I just had a car crash, I need $50,000 wired.’ I mean, scamming has always been part of the American scene, but this would make me, if I was interested in investing in scamming, it’s going to be the growth industry of all time.”

According to Buffett, “I said we let the genie out of the bottle when we developed nuclear weapons and that genie has been doing some terrible things lately, and the power of that genie is what, you know, scares the hell out of me.”

The nonagenarian had made similar comments at last year’s meeting also while Munger pointed to “hype” in AI.

Buffett highlights Berkshire Hathaway’s goal

Buffett summed up Berkshire Hathaway’s goal and said it was simply to increase the operating earnings and reduce the number of outstanding shares. In the past also, Buffett has defended buybacks even as some have been critical of companies using cash buy share repurchases rather than investing in growth.

Previously, Berkshire used to repurchase shares only as long as they traded upto 120% of the book value. However, the company changed the policy to give Buffett more discretion in buybacks.

Between 2020 and 2021 Berkshire spent over $50 billion on share repurchases as Buffett capitalized on the fall in its share price. Since then, the company has gone relatively quiet and repurchased shares worth around $8 billion and $9 billion in 2022 and 2023 respectively.

In Q1, the company repurchased $2.6 billion worth of its shares. However, Buffett continued to be a net seller of shares and while it bought shares worth $2.7 billion, it sold around $20 billion.