More than 40,000 people are expected to descend on Omaha this weekend for the first in-person meeting of Berkshire shareholders since 2019. They will travel hundreds, and in some cases thousands, miles to hear from the famous Oracle of Omaha. , who turned 91 in August. But even when Berkshire thrives, it faces an unusually large number of challenges. The nation’s largest public pension fund, the California Public Employees’ Retirement System, plans to support a shareholder proposal that would remove Buffett, who is also CEO and chairman of Berkshire, as chairman. Proponents of her case have been working to make the actual transcript of this statement available online. Asset manager Neuberger Berman backs another proposal that requires Berkshire to disclose data on climate-related risks to its businesses. Three giant institutional shareholders, BlackRock Inc., Vanguard Group and State Street Corp., supported a similar measure last year. Mr. Buffett also faces other questions: what to do with the huge amount of cash accumulated over the last decade, how the company will operate when he is no longer at the helm, and whether he is doing enough to adapt to a changing investment world where capital is pouring in. to new types of assets such as cryptocurrencies. All these pressures are coming at a difficult time, as central banks are withdrawing their support for the economy and markets are becoming more volatile. Mr Buffett did not comment on any of the questions before Saturday’s meeting. At previous rallies, he said Berkshire had a proper succession plan and had little confidence in his lieutenants. Mr Buffett told shareholders in his latest annual letter that he had difficulty finding companies that met his criteria for long-term ownership. On Saturday morning, Berkshire said first-quarter earnings fell as it was hit by investment losses and weaker results in its insurance business. Operating profit, excluding some investment results, rose to $ 7.04 billion from $ 7.02 billion last year. During the pandemic, he continued to travel to a minimum. He told former CBS News presenter Charlie Rose in an interview earlier this month that he had flown twice in two years, once to see his sister. He said he is still happy at work, although he can not read or type numbers as fast as he did in his later years. He also suggested that he not rush to leave. “I’m still in overtime, but I’m still out there,” he said. Because fans still support Buffett The proposals that will be put to the vote on Saturday face great chances. Mr. Buffett has a 32% stake in the company, as well as a legion of hard-working individual shareholders behind him. This has allowed Berkshire, which is urging investors to vote against the proposals, to repeal similar measures in previous years. The National Center for Law and Policy – which has proposed board independence not only to Berkshire but also to Goldman Sachs Group Inc., The Coca-Cola Co., Mondelez International Inc. and Salesforce.com Inc. – argues that the governance of a company The structure is stronger when the two roles are held by different people. It is backed by a retirement system known by the acronym Calpers, which oversees more than $ 450 billion in investments for more than 2 million current or retired civil servants across California. Calpers said it generally supports separate chairmanships and managing directors in all the companies in which it holds shares, because corporate governance is more effective in this way. “Our position does not reflect Mr. Buffett’s insight as an investor,” Simiso Nzima, Calpers’s global equity investment director, said in an email.
View of the California Civil Servants Retirement Headquarters in Sacramento, California.
Photo: Max Whittaker / REUTERS
The Berkshire board said in response to the proposal that it agreed that the two roles should be separated – not as long as Buffett is managing director. As soon as Mr. Buffett leaves, the board intends to appoint a non-executive director as its chairman. Mr Buffett said his son, Howard, would succeed him as president. Companies are increasingly making their boards more independent, making Berkshire extreme — though by no means unique. Last year, 59% of S&P 500 companies had separate chairmanships and managing directors, according to Spencer Stuart, a board and executive recruiting firm. This is from 55% in 2021 and 41% in 2011. Academic research on the subject was mixed. A study from Indiana University’s Kelley School of Business, for example, found that segregating roles helped companies get in trouble, but actually hurt them if they were already doing well. Mr. Buffett’s longtime fans have seen variations of this fight played in the past. They are familiar with the allegations that Berkshire – which is headquartered with about two dozen employees and has no officials in the press or investor relations – is very opaque. Mr. Buffett does not meet with institutional investors to try to win their favor. Nor does it devote special time to analysts in terms of sales that cover the company. But investors say their faith in Mr. Buffett is so deep that they could not care at all about it.
Pavlos Lountzis, President of Lountzis Asset Management. Berkshire remains his company’s largest shareholder.
Photography: Pavlos Lountzis
The first stock bought by Paul Lountzis, president of Lountzis Asset Management, when he founded his company in 2000, was Berkshire. This weekend will mark what he considers to be the 32nd or 33rd Berkshire shareholders’ meeting. (It’s hard to count.) Speaking to The Journal from his office, he sat facing Mr. Buffett and Charlie Munger’s right-hand man and in front of a portrait of the two men together. “I think they smoke a lot of cannabis out there,” he joked about Calpers, the pension fund pushing for an independent board chairman. For Berkshire long-term investors, Mr. Buffett’s history speaks for itself. Between 1965 and 2000, Berkshire generated 20% compound annual profits. The S&P 500 returned 10.2% including dividends over the same period. That’s why, Mr. Lountzis said, Berkshire remains his company’s largest shareholder – and because he believes that, even at 91, Buffett is perfectly capable of continuing to wear both hats. “What Warren has done so well over the years is create value for shareholders. And that’s the most important thing, after all, “said Ryan Kelley, chief investment officer at Hennessy Funds, which owns Berkshire shares in its large-cap fund. What to do with all this cash A more pressing issue for Berkshire? What to do with his huge pile of cash. Berkshire had a record $ 144 billion in cash and cash equivalents at the end of last year, excluding those it held on freight and utilities. This is much more than Mr. Buffett and his investors would prefer. In fact, Mr. Buffett wrote to shareholders in February that he would prefer to maintain 100% of its net worth in shares. The problem? He struggled to find anything he felt was worth buying and keeping in the long run. “These periods are never pleasant,” Buffett said in a letter, adding that at times like these, he sometimes finds it attractive to repurchase Berkshire shares. Since the February letter, Berkshire has put some of its cash into operation. In March, it reached an agreement with Alleghany Corp. for the acquisition of the insurance company for $ 11.6 billion. In April, Berkshire revealed that it had created a $ 4.2 billion stake in HP Inc. But overall, it was a relatively quiet time for Berkshire. Investors are itching to see Mr. Buffett make some big moves. “Are there still places Warren can find value? “I’m curious to hear his thoughts,” said Kelley. Problem with the hot-button Another point of pressure for Berkshire: how it handles climate change. Two separate shareholder proposals ask Berkshire to disclose how it manages climate-related risks across all of its businesses, and whether it will begin to measure and publish greenhouse gas emissions related to its insurance business. It is not the only company targeting activist investors. Investor advocacy groups say climate change is the No. 1 issue among the record number of shareholder proposals submitted so far this year. “Shareholder advocates want concrete plans for carbon neutrality,” said Heidi Welsh, executive director of the Sustainable Investments Institute, in a …
