Warren Buffett talks succession and Berkshire’s future at annual meeting

 Warren Buffett took the stage at Berkshire Hathaway’s annual meeting on Saturday, paying tribute to his longtime business partner Charlie Munger, outlining the expanded roles of the executives who are designated to eventually succeed him and discussing Berkshire’s opportunities.

Here are some remarks during the meeting on various topics from Buffett and Abel:

Warren Buffett on succession

Greg Abel, 61, designated Buffett’s successor as chief executive in 2021, sat on stage with Buffett.

Buffett said, “I don’t really do much and I don’t operate at the same level of efficiency that I would have thirty years ago or forty years ago … when you’ve got somebody like Greg (Abel) and Ajit (Jain), why settle for me? It has worked out extremely well.”

“The number of calls I get from managers is essentially awfully close to zero and Greg is handling those. I don’t know quite how he does it, but we’ve got the right person, I can tell you that.”

“We will own Apple and American Express and Coca-Cola when Greg takes over this place.”

Abel said “as we go through any transition, it’s important to know that the capital allocation principles that Berkshire lives by today will continue to survive.”

“We’ll always look at equities as if we’re investing in a business, 1 per cent or 100 per cent.”

Capital allocation

(On capital allocation in the future) “If I were on that board and making that decision, I would probably, knowing Greg, I would leave the capital allocation to Greg. He understands businesses extremely well, and if you understand businesses you understand common stocks.”

Buffett on life lessons

“You don’t know where the paths of life go, you can’t beat yourself up, you try and do the things important to you. I enjoy managing money for the people who trust me. I like the feeling of being trusted. I am not looking to change much. I believe in trying to find what you’re good at and what you enjoy. I think the one thing you can aspire to be is be kind. And then the world is better off… I’m not sure the world is better off if I’m richer.”

Tribute to Charlie Munger

Buffett gave tribute to his late partner Charlie Munger. He called him the “architect of today’s Berkshire. The architect is the person who dreams of and designs, and finally supervises the construction of great structures. The carpenters and the beavers, that’s me, are needed, but the architect is the genius of Berkshire.”

“Charlie, in all the years we worked together, not only never once lied to me, ever, but he didn’t even shape things so that he told half lies or quarter lies to sort of stack the deck in the direction he wanted to go.”

Future opportunities

“We made the commitment in Japan … five years ago and that was just … extraordinarily compelling … but you won’t find us making a lot of investments outside the US.”

“I understand the United States rules, weaknesses, strengths … I don’t have the same feeling for economies around the world, I don’t pick up on other cultures extremely well.”

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

“The goal of Berkshire … is to increase the operating earnings and decrease the shares outstanding. It’s that simple to describe, it’s not quite so simple to pull off necessarily, but that’s what we’re attempting to do.”

Cash

“We have a lot of fixed, short-term investments that are very responsive to changes in interest rates, so that figure is up substantially and I can’t predict that one will be up for the year.”

“Our cash and Treasury bills were $182 billion at the quarter end, and I think it’s a fair assumption they (could) go up to $200 billion at the end of this quarter.”

“I don’t mind at all under current condition building the cash position. When I look at the alternatives, what’s available in equity markets and the composition of what’s going on in the world, we find it quite attractive.”

US debt

“Almost everybody I know pays a lot more attention to not paying taxes than I think they should, we don’t mind paying taxes at Berkshire.”

“In fiscal policies something has to give and I think higher taxes are … likely. If the government wants to take a higher share of your income or mine or Berkshire’s, they can do it. They may decide that someday they don’t want the fiscal deficit to be this large because that has some important consequences so they may not want to decrease spending so they may decide they’ll take a larger percentage of what we own and we’ll pay it.”

“My best speculation is that US debt will be acceptable for a very long time because there’s not much alternative.”

APPLE

“We own American Express which is a wonderful business, we own Coca Cola which is a wonderful business, and we own Apple which is an even better business.”

“Unless something really extraordinary happens we will own Apple, American Express and Coca Cola.”

“At the end of the year I would say it’s extremely likely that Apple is the largest common stock holding we have.”

He added, “No company hardly does business around the world like Coca-Cola. I mean, they are the preferred soft drink in something like 170 or 180 out of 200 countries. Those are rough approximations from a few years back probably, but that degree of acceptance worldwide is almost unmatched.”

Buffett on AI

“I do think.. it has enormous potential for good and an enormous potential for harm.”