2023-05-05 13:48:19 ET
Get set for Berkshire Hathaway's ( NYSE: BRK.B ) ( NYSE: BRK.A ) annual meeting, aka "Woodstock for capitalists, and Q1 earnings on Saturday. Topics likely to be discussed at the annual meeting include: Warren Buffett's overall insights into the U.S. economy, the recent regional bank failures, where the company plans to invest its cash, its recent investments in Japan,
The big question on investors minds every year is what will the company do with its huge stash of cash? While for years Warren Buffett had been itching for an elephant-sized acquisition, he now appears focused on buying stakes in well run companies that buy back their own stock.
At Dec. 31, 2022, the investment behemoth held ~$128.7B of cash and short-term securities. Now that SPACs have weakened as competition for acquisitions, has the outlook for all-out acquisitions improved? Earnings, to be released on Saturday morning, will disclose how much of its own stock Berkshire ( BRK.B ) has repurchased. In Q4 2022, it bought back ~$2.6B of its shares.
The recent turmoil in the banking industry is likely to be a topic of discussion, as Chairman and CEO Buffett has been a high-profile investor in the sector. In the wake of the 2007-2008 financial crisis, Berkshire acquired large stakes in some of the largest U.S. banks such as Bank of America ( BAC ), Wells Fargo ( WFC ), Citigroup ( C ), and U.S. Bancorp ( USB ) — stakes that the company still holds today. Do the recent stresses in regional banks provide a similar opportunity for investors?
SA contributor Logan Kane expect Buffett to discuss his recent investments in Japan. "Japan is a case where valuations are very cheap in large part due to the government making the currency artificially weak," he said in a Seeking Alpha Roundtable . "This means the entire country is 20%-25% cheaper than it would be in a free market for investors with US dollars."
Kane also expects investors to ask about Buffett's long-term plans for Occidental Petroleum ( OXY ), in which the company has amassed a 23.6% stake as of late March.
For questions about its operating businesses, Buffett or insurance chief Ajit Jain are likely to be asked about GEICO's efforts to catch up with rival Progressive's ( PGR ) use of telematic and algos for claims settlement and pricing, said SA contributor Jim Sloan during the SA Roundtable.
CFRA analyst Catherine Seifert thinks that investors may also ask about the company's reinsurance strategy. With strong demand and pricing for reinsurance, what's the company's strategy to leverage the trend?
As for its railroad, what is Berkshire ( BRK.B ) doing at its BNSF to prevent freight train derailments and to protect the environment?, Seifer wrote in a recent note.
Will Buffett and Munger step back? With Buffett at 92 and Charlie Munger at age 99, it will be interesting to see if more Berkshire Hathaway ( BRK.A ) executives share the stage with the dynamic duo. In recent years, Greg Abel, who has been named as Buffett's successor as CEO, and Jain, who runs Berkshire's insurance businesses, have answered questions related to their bailiwicks.
Once again shareholder proposals will urge the company to disclose more on climate-related risks and workforce diversity. And once again, those proposals will likely be defeated as Buffett has 31.5% voting control.
"Regardless of the outcome of the shareholder vote, we think the issues put forth by shareholders at the upcoming annual meeting are valid issues that Berkshire needs to address as the climate change drumbeat grows louder," said CFRA analyst Catherine Seifer in a note.
Another shareholder proposal seeks to separate the roles of chairman and CEO, now both held by Buffett. In previous meetings, Buffett has given no indication that he would give up one of those roles. A similar shareholder proposal failed at last year's annual meeting.
"One thing that won't change is that we will always have a lot of cash on hand," Buffett said at last year's meeting.
More on Berkshire Hathaway:
- Berkshire Hathaway's Annual Meeting: Roundtable Discussion on Buffett, Munger, and the Big Gathering in Omaha
- Charlie Munger sounds warning on U.S. commercial property market
- Warren Buffett ramps up bets on Itochu, Mitsubishi, other Japanese trading houses
- Berkshire for Recessions: But the Time to Prepare for a Flood Is Before It Starts Raining
- Berkshire Hathaway hikes Occidental Petroleum stake after new purchases
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Warren Buffett, Charlie Munger to take the stage at Berkshire meeting