New York (CNN Business)Warren Buffett is going to Hollywood.
The annual Berkshire Hathaway (BRKB) shareholder meeting on May 1, normally held in Buffett’s home town of Omaha, Nebraska, will instead be livestreamed from Los Angeles.
Buffett, who has a net worth of more than $90 billion, said in Berkshire Hathaway’s shareholder letter Saturday morning that the meeting would be in LA so that vice chairman Charlie Munger. who lives in Southern California, can attend.
The 97-year old Munger did not go to last year’s virtual shareholder meeting in Omaha due to the Covid-19 pandemic. Instead, Buffett was joined on stage by another Berkshire vice chairman, Greg Abel.
“I missed him last year and, more important, you clearly missed him,” Buffett said of Munger, who is also chairman of California newspaper publisher Daily Journal (DJCO), which held its own shareholder meeting on Wednesday in Los Angeles.
Buffett said Abel and Berkshire’s third vice chairman, Ajit Jain, will also be on stage in LA to answer questions during the virtual May 1 meeting, which is scheduled to last from 1:30 pm ET until 5:30. Buffett said he hoped Berkshire can once again hold an in-person meeting in Nebraska in 2022.
The news of the annual meeting venue change was perhaps the biggest revelation in Buffett’s annual note to his devoted investors. But as he usually does, Buffett, also known as the Oracle of Omaha, dispensed some words of wisdom about the current state of the market.
Staying away from bonds and buying back more Berkshire stock
Buffett is not currently a fan of bonds because despite a recent uptick, yields remain historically low.
“Bonds are not the place to be these days,” Buffett wrote, adding that the yield on the 10-year Treasury, now hovering around 1.46%, was 15.8% in 1981.
“In certain large and important countries, such as Germany and Japan, investors earn a negative return on trillions of dollars of sovereign debt. Fixed-income investors worldwide — whether pension funds, insurance companies or retirees — face a bleak future,” Buffett noted.
Buffett, whose net worth is north of $90 billion, also defended Berkshire’s propensity for using cash to buy back its own stock. The company spent $24.7 billion last year to repurchase shares.
Some investors have argued that Berkshire could find a better use for its cash. The company ended the year with more than $138 billion in cash, which Berkshire could use to make more acquisitions.
“In no way do we think that Berkshire shares should be repurchased at simply any price,” Buffett wrote. “American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse.”
Still, some wonder if the 90-year old Buffett has lost his Midas touch. Berkshire Hathaway’s stock is up just 11% over the past year, compared to a nearly 23% gain for the S&P 500.
Berkshire Hathaway has lagged the broader market during the past five years, too. That’s despite the fact that Berkshire is a major investor in Apple (AAPL).
‘Hamburgers and Coke’
Buffett, however, defended the company’s investment strategy, describing it as like a classic diner.
“At Berkshire, we have been serving hamburgers and Coke for 56 years. We cherish the clientele this fare has attracted,” Buffett wrote.
Although he has dipped his toe into higher techs like Apple and Amazon (AMZN) recently, the majority of Berkshire’s investments are in slower growth “value” stocks such as Chevron (CVX), Verizon (VZ), American Express (AXP) and, yes, Coca-Cola (KO). (Buffett is an avid drinker of Cherry Coke.)
In other words, don’t expect Buffett to start investing in meme stocks like GameStop (GME) or momentum darlings such as Tesla (TSLA).
“The tens of millions of other investors and speculators in the United States and elsewhere have a wide variety of equity choices to fit their tastes. They will find CEOs and market gurus with enticing ideas,” he said. “Many of those investors, I should add, will do quite well.”
But Buffett stressed a more patient approach to investing.
“All that’s required is the passage of time, an inner calm, ample diversification and a minimization of transactions and fees,” he said.
And Berkshire Hathaway’s operating businesses enjoyed a solid end of 2020, despite the pandemic.
The sprawling conglomerate, which owns Geico, Dairy Queen, the Burlington Northern Santa Fe railroad, Duracell batteries and many other consumer, financial, industrial and energy companies, said Saturday it posted a net profit of $35.8 billion in the fourth quarter, an increase of 23%.
Berkshire’s operating profit rose nearly 14% in the quarter, to $5 billion.
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