Seven Points Buffett Emphasized at Berkshire's Shareholders Meeting

Berkshire Hathaway (ticker: BRK-A, BRK-B, hereinafter “Berkshire”) held its annual shareholders meeting on Saturday, the 4th.

As usual, Chairman and CEO Warren Buffett and Vice Chairman Charlie Munger spent several hours answering shareholders’ questions.

Below are seven key points from Buffett’s remarks.

【U.S. Individual Stock Trends】What to watch in Berkshire’s results and Buffett’s remarks

1. About share repurchases

Berkshire repurchased about $1.7 billion worth of its own shares in Q1 2019.

This is larger than the total amount of buybacks in the latter half of 2018.

Note that Berkshire, in mid-2018, revised its buyback program to permit repurchases whenever Buffett and Munger judged Berkshire stock to be trading at a material discount to intrinsic value.

Buybacks have indeed expanded, but given Berkshire’s significant cash hoard (about $114 billion), the scale was not what many investors had hoped for.

In response, Buffett said buybacks are being conducted conservatively and that cash is not held for the sole purpose of repurchasing stock.

And he stated, “If Berkshire’s stock price falls below intrinsic value, we will not hesitate to buy back shares. We are prepared to spend up to $100 billion.”

2. On the rising “socialism” discourse within the Democratic Party

Buffett has consistently been explicit about his political views.

He is a Democrat and supported Hillary Clinton in the 2016 presidential election.

For the 2020 presidential race, some Democratic candidates have leaned toward socialist policies.

In response to related questions, Buffett prefaced with his personal view and rejected purely socialist ideas, saying, “I am a true capitalist.”

He also noted that a strong social safety net is necessary, but that does not mean the United States would become a socialist country.

3. About Kraft Heinz

Berkshire’s investment in Kraft Heinz (ticker: KHC) was one of its larger holdings, but in recent years the stock has fallen significantly, down more than 60% from its level at the start of 2017.

Additionally, accounting issues have delayed the release of the Q1 2019 results.

Berkshire purchased a 27% stake in Kraft Heinz in 2015, but Buffett has recently acknowledged that the purchase was expensive.

He told shareholders, “ Kraft Heinz’s business is doing very well.”

However, he also cautioned, “If you overpay for the business, it can lead to poor investment outcomes.”