Warren's World: A Trek to Buffett's Omaha
They just might be the most expensive shares on the planet. Berkshire Hathaway A shares traded in the range of $25-40,000 in the 1990s and have traded at prices nearing $150,000 per share.
Tens of thousands of stockholders of A and the more affordable B shares, which sell closer to $80 per share, flock each year to Nebraska to hear multibillionaire investor and company Chairman Warren Buffett, the "oracle of Omaha", address the shareholders.
This is no run-of-the-mill annual shareholders meeting most of which are short, often carefully scripted and with few shareholders present.
Dubbed "the Woodstock of capitalism", the meeting and its related festivities lasts for three days and is a total immersion for enthusiastic Berkies, BRK stockholders.
Centre for Financial Studies founder, professor Glenn Cleland, boarded a plane in Bangor, Maine and headed for the meeting for the first time this year. What he learned from the passenger seated next to him, a seasoned Berkie, served as his introduction to the Berkshire Hathaway culture.
Cleland was so entranced by what he was hearing that he almost didn't notice that they were flying through a tornado. "Conditions were so bad that our plane was the last one allowed to land that night," he remarks.
Upon arriving at his hotel, Cleland met several more "Berkies", among them a doctor from New Jersey, and a Microsoft software programmer from Beijing, China.
It soon became apparent to him that people from all over the world were converging on Omaha for the Berkshire Hathaway shareholders' meeting.
While most companies cannot claim to have a sizeable turnout of retail shareholders at their meetings, an estimated 40,000 people were reported to be vying for the 20,000 seats in the main area of the Qwest Centre where this year's meeting was held at the end of April.
Wanting to make sure he got in when the doors opened at 7am, Cleland lined up outside the meeting venue at 3:30 am. His keenness earned him a position at the front of the line.
Says Cleland of the experience, "People brought sleeping bags to stay warm during the early morning lineup. I have never heard of such zeal for an annual general meeting."
But even that didn't guarantee him getting the best seat in the house. "The doors opened to a barrage of people wearing running shoes clamouring to get into the building. Unlike me many of them knew exactly where they were going."
Cleland describes a father and son team from Scotland whom he met. Attending the Berkshire shareholders' meeting was on the elder Scotsman's "bucket list", a term referring to one of the top things he wanted to do in during his lifetime. He had just turned 50 and was strong in his resolve to get to the meeting. After all, he had gone to Iceland to see the Northern Lights, another item on his bucket list, and not only did he not see them, he got caught in the flurry of activity surrounding the recently erupted volcano. When he looked around the meeting room Cleland was delighted to see that both Scotsmen had made it inside.
"It's the only shareholders' meeting I am aware of that actually makes money," marvels Cleland. He likens it to a big trade show for Berkshire's companies where shareholders and their guests dish out money for everything from diamonds at Blorsheim's to Dilly Bars at Dairy Queen.
Company executives have been known to cringe at the thought of answering shareholder questions at corporate annual meetings. But not at the Berkshire Hathaway gathering. Warren Buffett and his vice-chairman, Charlie Munger,revel in the experience fielding questions from 9:30 am to 3:30 pm with a short break for lunch. At 79 and 86 years old (or young) respectively the pair respond to questions ranging from their investment in Goldman Sachs to the recent purchase of Burlington Northern Santa Fe Railway with humour and directness. Buffett's style has been described as "where Albert Einstein meets Andy Griffiths".
Cleland is in awe. "Imagine that. A company with an approximate $200 billion in market capitalization and these two guys are responding to questions for six hours as they drink Coke and eat candy, both products of the Berkshire conglomerate."
"It is amazing. They run the firm like a family event, sort of like a mom and pop operation."
When Cleland reflects on his experience and reviews the 25 pages of notes he took from the meeting he is awestruck by what Buffett has accomplished. "Everyone knows about his investment acumen but I was in awe of his leadership and managerial ability. You start realizing the shareholders and managers were attracted to Buffett because of his unwavering integrity."
Cleland ponders the lessons learned. "At a time when people have lost faith in the financial industry, Warren Buffett makes a terrific ambassador for business and capitalism. With the current witchhunt by governments to lay blame on Wall Street for the current financial debacle, Buffett clarifies and defends Goldman Sachs' position."
Buffett stresses the importance of balancing government regulation with the need for companies to earn solid returns on their investments. Too much regulation risks closing the spigot of investment.
Cleland plans to take some of his students to the Berkshire Hathaway meeting next year. "The experience is a good way for students to transition from the Centre's Student Investment Fund (SIF) program into careers in the investment profession."
The SIF program teaches senior-level students how to invest in the capital markets. They have grown the initial fund value of $1 million of real money in 1998 to approximately $2.4 million today.
