Warren Buffett is headed west for this year’s annual Berkshire Hathaway meeting.
His company bought back record shares of its stock last year and continues to buy.
And Berkshire’s chairman had few words to say about the pandemic or the nation’s volatile state of political affairs.
Those were the big takeaways Saturday from the much-anticipated release of the Omaha investment guru’s annual letter to shareholders.
For Omaha, the missive’s most notable revelation was that Buffett will be livestreaming the 2021 annual meeting May 1 from Los Angeles so his top lieutenant, Charlie Munger, can join the pandemic-altered proceedings.
In last year’s meeting, Buffett appeared on stage alone in front of 18,000 empty seats in Omaha’s CHI Health Center after he decided the usual shareholder activities surrounding the annual “Woodstock for Capitalists” needed to be scrapped because of COVID-19. The proceedings were viewable online, and vice chairman Munger stayed safely home in California.
Now, for the first time in more than half a century, the meeting will be held somewhere other than Omaha so that the 97-year-old Munger can take part in the Q-and-A session that highlights the meeting.
“I missed him last year and, more important, you clearly missed him,” the 90-year-old Buffett wrote in his letter.
The letter revealed that during 2020, Berkshire repurchased nearly $25 billion of its own shares, dwarfing the previous high of $5 billion in 2019.
But if Buffett’s readers were hoping for pearls of wisdom related to the pandemic, the assault on the U.S. Capitol, last summer’s national reckoning over race or the political state of the country, he didn’t offer any — at least directly. He simply offered a statement of his general bullishness on America’s future prospects.
In an apparent allusion to the pandemic, he said the country’s economy has survived “severe interruptions” before. And he noted that the nation’s progress toward a more perfect union “has been slow, uneven and often discouraging.”
“We have, however, moved forward and will continue to do so,” he said. “Our unwavering conclusion: Never bet against America.”
To Cathy Seifert, who analyzes Berkshire stock for CFRA Research, Buffett’s failure to directly address the nation’s most consequential issues made the letter come off as tone-deaf.
“The big takeaway from the letter was quite frankly what it omitted,” she said. “I was a little shocked and stunned and disappointed that given the nature of what’s going on in this country over the last year, from the pandemic, all the social issues and the existential threat to our democracy, that nothing of that filtered into the letter.”
She said the void will be particularly notable for the new generation of young investors who are looking for firms with a commitment to environmental, social and corporate governance standards — known as ESG investors.
Edward Jones analyst James Shanahan said it seems in recent years Buffett has shied away from the political arena. His silence on the pandemic, even with vaccines now ramping up, may relate to COVID-19’s unpredictability — something Buffett talked about during the 2020 annual meeting.
“Maybe he’s reluctant to say mission accomplished and give the all clear when he recognizes the unpredictable nature of this pandemic,” Shanahan said.
Berkshire reported $21.9 billion in earnings in 2020 from its operating companies, which was down 9%. But Shanahan said he thought the performance was impressive given business disruptions due to the pandemic.
A big drag on financial results was what Buffett described as an “ugly $11 billion writedown” on the value of Precision Castparts, a Berkshire subsidiary that serves the aerospace industry. Buffett said the writedown had nothing to do with the company’s operations. Instead, he said, it reflected his error in paying too much when he acquired the company in 2016.
“No one misled me in any way — I was simply too optimistic about PCC’s normalized profit potential,” he said. “PCC is far from my first error of that sort. But it’s a big one.”
Buffett disclosed that Berkshire’s biggest new investment in the past year was essentially in itself, through the record stock repurchases. He also said Berkshire has repurchased more shares in early 2021 and is likely to further reduce its share count in the future.
“That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet,” Buffett wrote of the 2020 repurchases.
Buffett didn’t dwell on it in this year’s letter, but the stock repurchases relate to his inability in recent years to find an “elephant-sized” company to add to Berkshire’s portfolio of companies it owns, which includes firms such as BNSF Railway Co., Geico, Fruit of the Loom and Duracell.
Even after the stock repurchases, Berkshire’s cash pile grew another $10 billion over the past year and stands at $138 billion.
Berkshire also buys stocks in other companies it doesn’t own outright, and it was notable that Buffett referred to its holdings in tech giant Apple on Saturday as one of Berkshire’s four “jewels” — right along with BNSF and Berkshire’s insurance and energy subsidiaries.
Buffett said Saturday that he looks forward to when he can once again bring 30,000-plus shareholders back to Omaha to meet face-to-face.
“I hope and expect that will be in 2022,” he wrote. “The citizens of Omaha, our exhibiting subsidiaries and all of us at the home office can’t wait to get you back for an honest-to-God annual meeting, Berkshire-style.”