Last night and this morning, Beijing time, Berkshire Hathaway (hereinafter referred to as “Berkshire”) 2022 annual general meeting of shareholders once again became a grand festival for global investors. After two years, Berkshire’s shareholders’ meeting was held offline again.
According to the prediction of the conference, the number of participants is likely to exceed 40000 this year, setting a new record. A number of well-known entrepreneurs, including Bill Gates, JPMorgan CEO Jamie Dimon, and Apple CEO Tim Cook, all appeared at the scene.
“The best way to fight inflation is to invest in yourself”, “we found something more attractive than bonds”, “always have a lot of cash on hand”, “you can buy better companies at lower prices in China”, “the stock market is like a casino, especially in the past two years”… Buffett and his old partner Charlie Munger made frequent comments in the five-and-a-half-hour Q & a session.
Now, let Xiaobian draw a point.
the best way to fight inflation is to invest in yourself
At this shareholders’ meeting, how to deal with the current inflation problem faced by the US and even the world economy was repeatedly mentioned.
Buffett said that many people will talk about inflation, but in fact, they do not understand how inflation will develop in the future. He warned against those who claim to be able to predict the path of inflation: “no one knows what inflation will be like in 10 or 20 years. Frankly, we don’t know. I can only say that the best way to fight inflation is your own talent. Your money will feel the pressure of inflation, but your talent won’t.”
In response to shareholders’ concerns about the impact of inflation on Berkshire’s business, Buffett said that in their view, many companies performed “very well”. Buffett further elaborated that this round of inflation is very different from previous experience. In the company’s furniture store, although the price of furniture rises rapidly, rich people are still willing to pay. In the early years, sometimes people had no money in their hands and couldn’t even afford candy.
While saying that the government has released a lot of money to people, which can not be worth so much at some time, Buffett stressed that the Fed’s monetary easing policy during the epidemic in the past two years was the right choice. Before the question session of the shareholders’ meeting, Buffett praised the decisive and rapid measures of Federal Reserve Chairman Powell and said that he should “take off his hat”. Buffett believes that if the Fed did not stimulate the economy in the spring of 2020, everyone would be worse off.
Munger always opposes bitcoin’s anti inflation: “when you have your own retirement account and your financial manager asks you to invest all your money in bitcoin, say ‘no’.”
Buffett also reiterated his skepticism about bitcoin, saying he was unwilling to buy bitcoin at a very low price because it would not produce any value.
why did you increase your position significantly in the first quarter
In a letter to shareholders in February, Berkshire’s cash reserves were about $146.72 billion. Buffett explained at the time that he had found little to “stimulate” their interest. But soon after, in March, when US stocks once fell sharply, Berkshire made frequent moves. As of the end of the first quarter, its cash reserves quickly fell to $106.3 billion, a new low since the third quarter of 2018.
specifically, Berkshire increased its positions in energy stocks in the first quarter, with chevron and Western oil listed. In addition, it also bought Alleghany, an insurance company, for $11.6 billion and 121 million HP shares
When investors asked about the timing and reasons for the trading decision, Munger said that he found something more attractive than bonds. Buffett revealed the process of acquiring Alleghany, an insurance company, and said he had paid attention to each other for nearly 60 years. The CEO of the company and a friend who worked for Berkshire sent him an email to introduce the company’s performance. After the meeting, the two sides soon reached an acquisition intention.
in China can be cheaper
buy a better company
In response to questions about investing in China, Munger acknowledged that it is indeed more difficult to invest in China than in the United States. However, he also stressed that his reason for investing in China is that he is willing to take risks for a good investment because he can buy a better company there at a lower price
Earlier, Charlie Munger also mentioned in his speech at the annual meeting of daily journal, his newspaper company, that he was more willing to invest in China than Buffett and did not mind holding some margin bonds of Alibaba, a Chinese Internet and e-commerce giant. However, Munger’s daily journal previously announced its position in the first quarter, which significantly reduced its holdings of more than 300000 shares of Alibaba in the first quarter, valued at about $32.6 million, and its position ratio decreased from 27.65% to 15.35%.
When talking about game stocks, Buffett said that they were still buying Blizzard stocks after Microsoft officially announced the acquisition. As of yesterday, Berkshire owned 9.5% of Blizzard shares and would submit a report if it reached 10%. (Note: Berkshire disclosed that it bought 14.7 million shares of Blizzard at 13F in the fourth quarter of last year, accounting for 1.88% of the outstanding shares)
always have a lot of cash on hand
Buffett recalled the 2008 financial crisis at the beginning of the conference and said: “always have a lot of cash on hand”. Buffett revealed that Berkshire’s cash reserves are always abundant and can be “better than banks” in providing credit lines to companies in need.
The insurance business needs to be prepared for huge claims, which is one of the important reasons why Berkshire always retains a large amount of cash. In addition, Buffett said he hoped Berkshire “could continue to operate when the economy stopped running, and that would always happen”. Previously, Buffett played an important role during the 20072009 U.S. economic recession, providing funds for Bank of America and Goldman Sachs at a critical moment.
In the past two years, Buffett held a lot of cash in 2020 and 2021. By 2022, Berkshire began to “clean up”: in the first quarter of this year, Berkshire’s cash reserves fell to $106.3 billion, the lowest level since the third quarter of 2018.
Buffett said at the shareholders’ meeting that the company bought a total of $51.8 billion of shares in the first quarter and sold $10.3 billion of shares at the same time. Among them, from the end of February to mid March, he bought $41 billion in stocks at one go. Despite the sharp decline in cash levels, Buffett still said that the company would keep enough safe cash, and the company has not launched a stock repurchase since April.
stock market is like a casino, especially in the past two years
Buffett said, over the past two years, the stock market has been volatile and unpredictable. Like a casino, everyone gambles in it. This phenomenon has been particularly obvious in the past two years. It may also be that the stock market has been too bull in the past two years
Munger also commented that the current U.S. stock market is “almost a speculative frenzy”, and mentioned that high-frequency algorithm trading and the increasing openness to new investors during the epidemic: “I think we have never been so crazy as now. We gambled wildly, bought and sold quickly, and a bunch of people sat there and threw dice.”
Buffett continued his consistent criticism of investment banks and financial advisers, saying that Wall Street is turning the stock market into a “casino”, allowing people to “spend all their money on stocks”, and still bet on options to speculate, not a real long-term investor.
He said that bankers made money by “bread crumbs falling from the capitalist table” and that people made a lot more money by gambling (speculation) than by advising people to invest seriously, which gave Wall Street the motivation to encourage more retail investors to invest irrationally.
Munger said of Robin Hood, a well-known retail brokerage and known as the “base of retail investors”, that it allowed everyone to join in short-term gambling and speculation. Buffett also agreed.
“You see, they made a lot of money by selling stocks through speculation last year. You see, they have retribution now. Many insider traders are traders on their platform, and we are watching them get retribution.” “I don’t think we should criticize, but we really can’t help it,” Munger said
Robin Hood has just released its first quarterly report. The number of monthly active users in March 2022 decreased by 10% year-on-year to 15.9 million.
I don’t think
is overburdened to serve as chairman and CEO
Buffett’s proposal to remove him from the post of chairman of the public pension fund in California last week triggered a vote by shareholders of the largest pension fund in the United States The proposal said that if a person served as CEO and chairman at the same time, the roles of these two positions would be “greatly weakened”.
At this shareholders’ meeting, Buffett expressed dissatisfaction with the shareholders’ proposal that Berkshire’s chairman and CEO should be held by different people. Munger also supported Buffett at the shareholders’ meeting and fiercely attacked the voice of separating Berkshire’s chairman from its CEO.
“It’s the most absurd criticism I’ve ever heard,” Munger said. “It’s like when Odysseus came back from winning the Trojan War and someone said I didn’t like the way you won the battle with a spear. Some people have never run any business company and don’t know anything. I don’t think it’s too heavy to be chairman and CEO.”
Earlier, Berkshire’s board of directors made it clear that it opposed the proposal to remove Buffett from the post of chairman, saying that “as long as Buffett serves as CEO, he should continue to serve as chairman”. It is widely believed that the proposal will be overwhelmingly rejected because, in addition to the support of the board of directors, Buffett holds about 16% of Berkshire Hathaway shares and controls 32% of the voting rights.
However, with Buffett’s 92nd birthday in August, people are also looking for clues about his retirement. At this shareholders’ meeting, when someone asked what would happen to Berkshire without Buffett in the future, Buffett replied that as long as Berkshire retains the corporate culture of putting shareholders first, it will exist for a hundred years.
Berkshire’s first quarter net profit halved year-on-year
On the eve of the shareholders’ meeting, Berkshire routinely released the first quarterly report of 2022. The company’s revenue in the first quarter was US $7.04 billion, and the market is expected to be US $7.02 billion; The net profit was US $5.46 billion, down 53% from US $11.71 billion in the same period last year.
In 2020, affected by the epidemic, Berkshire’s net profit once halved, and the stock continuously lost the market. In 2021, with the recovery of the global economy from the epidemic, the stock market rotated from growth stocks to value stocks, and Buffett’s “return of the king”, his company’s share price soared by nearly 30%, outperforming the S & P 500 index, and its net profit soared more than doubled. Buffett’s own value also soared, returning to the top five richest people in the world.
Specifically, the position loss in the first quarter of this year was the main reason for the decline in net profit. Berkshire had a net loss of $1.58 billion in investment and derivatives in the first quarter, compared with a net profit of $4.69 billion in the same period last year.
substantial increase in chevron shares in the first quarter
According to the financial report, about 66% of Berkshire’s stock positions in the first quarter of this year were concentrated in four companies: apple, Bank of America, American Express and Chevron. In the first quarter, the company significantly increased its holdings of Chevron. Based on the closing price of Chevron on March 31, it is equivalent to holding about 159 million shares in the first quarter, much higher than the approximately 38 million shares held at the end of the fourth quarter of 2021. At the end of last year, Chevron was Berkshire’s ninth largest position stock, and now it has become the fourth largest position stock.
It is worth noting that Chevron is not Buffett’s only preferred resource stocks. Last month, Buffett also bought $7 billion worth of common stock in Western oil companies.
In addition, in the first quarter, Berkshire spent $3.2 billion on repurchasing the company’s class A and class B shares. This is the lowest level since the same period in 2020 and is also lower than the $6.9 billion in the fourth quarter of 2021
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