Authors: JordanBy Katherine Chiglinsky and Noah BuhayarIf a major company needs capital or a private firm wants to sell, Warren Buffetts checkbook is often the one they seek out.Will that stay the case when its someone elses signatureThat was the question from several Berkshire Hathaway Inc.
shareholders at the firms annual meeting Saturday, adding a fresh angle to the topic of succession for the 87-year-old chairman.
Berkshires desire to utilize a cash pile that has grown to more than $100 billion makes finding large-scale deals a key issue for whoever will be the conglomerates next leader.Buffett downplayed any unique skill he has to drum up deals, using his inability to find recent ones as evidence.
Berkshire often makes large investments in times of panic, when its stable capital, and not the Buffett name, is the allure, he argued.The reputation belongs to Berkshire now, Buffett said at the meeting in Omaha, Nebraska.
We are the first call and will continue to be the first call.Charlie Munger, Buffetts 94-year-old vice chairman, said already most acquisitions are coming from the chiefs of the companys operating subsidiaries, not he and Buffett."Its happening more there than it is at headquarters," he said.Although Buffett named two vice chairs this year in a step toward succession, he didnt directly address the race for his heir at the meeting.Overall, the meeting had a similar feel to recent years.
Buffett and Munger traded one-liners and fielded a few tough questions.
But, by and large, the two managed to charm their fans again and keep most of them in their seats for the entire six-hour session.
Here were some other topics of interest.Combs, WeschlerInvestors got some detail on the performance of the two men Buffett has handed some of his stock-picking duties.
The billionaire said the deputies have both slightly beat the SP 500 Index since they started managing Berkshires money.Todd Combs and Ted Weschler, who together oversee about $25 billion, have almost identical performance since they joined, Buffett said.
Combs was hired by Berkshire in late 2010 and Weschler joined about a year later.
While Buffett said their performance roughly amounts to matching the SP 500, theyve received some incentive pay that they only get if they outperform that benchmark.Its been better than Ive done, so naturally I cant criticize, he said.Healthcare VentureBuffett tried to temper high hopes for the healthcare venture hes pursuing with Amazon.com Inc.
and JPMorgan Chase Co.
While he said they should name a chief executive officer in the next couple months and other companies have expressed interest in joining, Buffett acknowledged the many obstacles it faces."We will see what happens," he said.Crypto BashingBuffett and Munger were definitive in their disdain for cryptocurrencies in answer to a question at the meeting.
Buffett said they will likely come to a bad ending because their value depends on someone wanting to buy them for even more money.They draw in a lot of "charlatans" and people of "less than stellar character," Buffett said.Munger was even more forceful in his aversion to the assets."Its just disgusting," he said.
Its like "somebody else is trading turds and you decide I cant be left out."China OptimismThe pair were confident that trade tensions between the worlds two largest economies wouldnt escalate into something that derails progress.
And they were bullish on the prospects for China.Buffett suggested he should do a deal in China this year because of the luck of the number eight there -- and his turning age 88 in August.
American investors are missing out on opportunities in China, said Munger who has previously encouraged Buffett to invest there.It just looks like its too hard sitting in Omaha to outsmart the Chinese market, Munger said.
But its where people should be looking, he said.Musk and MoatsThe meeting also ignited some sparring between Berkshire leaders and Elon Musk, the head of electric carmaker Tesla Inc., over the theory of moats around businesses."Elon says a conventional moat is quaint, and thats true of a puddle of water," Munger said referring to Musks comments on an earnings call earlier in the week.
"Its ridiculous.
Warren does not intend to build an actual moat.
Even though theyre quaint."While Buffett said it does seem like more moats have become susceptible to invasion recently, he still observes plenty of companies, such as Berkshires Sees Candies unit, where theyre holding firm.Elon may turn things upside down in some areas, I dont think hed want to take us on in candy, Buffett quipped.
There are some pretty good moats around.Musk fired back at his fellow billionaires on Twitter Saturday.Im starting a candy company its going to be amazing," Musk tweeted.
I am super super serious."