2024 Berkshire Hathaway Annual Meeting: 5 Takeaways For Investors
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Berkshire Hathaway shareholders flocked to Omaha, Nebraska on Saturday to listen to from CEO Warren Buffett and different Berkshire executives. For about 5 hours, Buffett took questions on Berkshire’s many companies, investing and life on the whole.
The assembly included a video tribute to Buffett’s longtime associate and Berkshire vice-chairman Charlie Munger, who died in November at age 99. Shareholders kicked off the gathering with a standing ovation for Munger, who Buffett calls the “architect of Berkshire.”
Listed here are some key takeaways for traders from the assembly.
Berkshire Hathaway annual assembly: Key takeaways for traders
1. Portfolio replace
Berkshire’s first quarter outcomes revealed that it trimmed its stake in Apple by about 13 p.c. The iPhone maker continues to be the biggest place in Berkshire’s portfolio and stood at $135.4 billion on the finish of March, down from $174.3 billion on the finish of 2023.
Buffett praised Apple’s enterprise and stated it was very probably it will stay Berkshire’s largest inventory place on the finish of the yr and that Berkshire would probably maintain it after he’s gone.
Buffett additionally stated he offered Berkshire’s complete stake in Paramount World and that he was “one hundred pc accountable,” including that that they had misplaced “fairly a bit of cash.” Some Berkshire watchers had speculated that the place was held by Todd Combs or Ted Weschler, two funding managers who work for Berkshire.
2. Money pile grows in absence of engaging funding alternatives
Berkshire’s huge money pile grew to greater than $182 billion on the finish of the primary quarter and Buffett stated it was truthful to imagine it will attain $200 billion on the finish of the second quarter.
“I don’t thoughts in any respect, beneath present situations, constructing the money place,” Buffett stated. “After I take a look at the options of what’s accessible within the fairness markets and I take a look at the composition of what’s occurring on the earth, we discover it fairly engaging.”
Berkshire has typically held giant quantities of money and been keen to attend till it finds funding alternatives that meet its necessities. Buffett has traditionally put money to work throughout market downturns akin to throughout the 2008 monetary disaster.
“We’d like to spend it, however we gained’t spend it until we predict we’re doing one thing that has little or no danger and might make us some huge cash,” Buffett stated.
3. Don’t make funding choices based mostly on taxes
Berkshire has many long-term investments which have seen huge beneficial properties over time akin to Coca-Cola, American Categorical and Apple. Berkshire pays taxes on any dividends it receives from these holdings, however capital beneficial properties aren’t taxed till shares are offered.
However Buffett instructed shareholders that holding an funding simply to keep away from paying taxes doesn’t make plenty of sense.
“Virtually everyone I do know pays much more consideration to not paying taxes than I believe they need to,” Buffett stated. “We don’t thoughts paying taxes at Berkshire.”
4. AI might be dangerous
Buffett was requested a couple of occasions throughout the assembly concerning the potential influence of synthetic intelligence on the economic system and Berkshire. He in contrast AI to the event of nuclear weapons, saying you’ll be able to’t put the genie again within the bottle.
“As somebody who doesn’t perceive a rattling factor about it, it has huge potential for good and large potential for hurt,” Buffett stated. “I simply don’t understand how that performs out.”
Buffett additionally warned concerning the potential for funding scams that use AI to trick folks into handing over their cash. Scamming is “going to be the expansion business of all time,” Buffett warned.
Berkshire’s companies will have the ability to adapt to the brand new expertise and can use AI to develop into extra environment friendly, Berkshire vice-chairman Greg Abel instructed shareholders.
5. Local weather change poses dangers for traders
The Berkshire assembly additionally highlighted the dangers that traders face in sure industries from local weather change. Berkshire utilities in western states face dangers as wildfires develop into extra frequent and regulators and traders grapple with who ought to bear the prices.
Berkshire’s PacifiCorp unit faces billions of {dollars} in liabilities for its position in Oregon’s 2020 wildfires, however Buffett reiterated on the annual assembly that Berkshire wouldn’t knowingly “throw good cash after unhealthy.”
Berkshire’s huge insurance coverage operations additionally face dangers from local weather change as hurricanes doubtlessly develop into extra frequent, extra highly effective and take completely different paths.
“The quantity of exercise by way of storms, each the frequency and the severity, can also be so extreme that the losses in Florida make it very troublesome for the danger bearer to earn money,” Berkshire’s vice-chairman for insurance coverage Ajit Jain stated, however added Berkshire had elevated its publicity to Florida up to now yr and “nothing unhealthy occurred.”
Editorial Disclaimer: All traders are suggested to conduct their very own unbiased analysis into funding methods earlier than investing resolution. As well as, traders are suggested that previous funding product efficiency is not any assure of future worth appreciation.