Warren Buffett, the “Oracle of Omaha”, spoke at the Berkshire Hathaway annual meeting 2020, held on May 2. However, conditions were different this time.
Berkshire Hathaway Annual Meeting 2020 Takeaways
The Berkshire Hathaway Annual Meeting Event
The Annual Berkshire Hathaway shareholders meeting is recognized as the “Woodstock for capitalists”. In 2019 the event, which took place in Omaha, Nebraska on May 4, drew over 40,000 attendees.
This year, due to the coronavirus pandemic, the event was held behind closed doors. Shareholders were not allowed to go, but instead, the event was live-streamed on Yahoo, and investors from around the globe tuned in to obtain advice during these uncertain times.
Only Warren Buffett, CEO, and Greg Abel, Berkshire’s vice chairman of non-insurance operations, were physically present for the meeting. Even the board, including vice chairman Charlie Munger, was not physically present. History was made as Warren Buffett offered his views on the company, the economy, the markets, corporate governance, and much more.
Dow Jones Newswires reported that the city lost out on over $21 million making a massive local economic impact.
Berkshire Hathaway First Quarter Results
Like most of the rest of the world, Berkshire Hathaway reported its financial figures at a loss because of massive disruptions from the COVID-19 pandemic. The company mentioned the term COVID-19 31 times, and net losses of almost $50 billion were reported.
Operating earnings were up $5.9 billion
Investment gains were down $54.5 billion
Net earnings were down $30.7 billion per A share
Net earnings were down $20.4 billion per B share
Cash and equivalents were up $137.3 billion
Their auto insurance saw profits mainly because people have not been driving during the pandemic crisis, but their railroad utilities business activity has seen a considerable decline.
Paycheck Protection Program
The coronavirus pandemic has impacted small businesses massively in the U.S. and around the globe; restaurants, bars, and other non-essential businesses have been forced to close to follow “shelter in place” guidelines to reduce the spread of the virus.
Buffett said: “Well, I don’t want to get into politics generally, but I think that’s a very good idea to take care of the people having terrible trouble taking care of themselves in a period like this… I am 100% for taking care of the people that really get hurt by something that they had nothing to do with.”
He praised lawmakers for assisting small businesses with aid and “acting properly” regarding the matter.
Occidental Petroleum "Mistake"
Investors went crazy recently when oil prices went negative. The volatility of crude oil sparked stakeholders to question Warren Buffett about the investment he made in Occidental Petroleum (OXY) last year.
During the question and answer session, Buffett said: “If you’re an Occidental shareholder or any shareholder in any oil-producing company, you join me in having made a mistake in where oil prices went,”.
“[The investment] was attractive at oil prices that then prevailed. It doesn’t work obviously at $20 a barrel, certainly doesn’t work at -$37 a barrel. It doesn’t work at these oil prices. That is why oil production is going to go down in the next few years because it does not pay to drill. This situation is you don’t know where you’re going to store the incremental barrel of oil, oil demand is down dramatically. For a while, the Russians and Saudi Arabians were trying to outdo each other in how much they could produce. When you got too much in storage it doesn’t work its way out of that fast.”
Naturally, there were many questions around which investments shareholders should watch and Buffett advised the average investor to buy S&P 500 index funds.
Buffett cautioned investors that “anything can happen in terms of markets,” and that “you don’t know what’s going to happen tomorrow.” He advised to not use borrowed money to invest in case of future events that have adverse economic effects, such as 9/11.
Buffet Remains Optimistic
Buffet remains optimistic about the future of the American economy stating: “The range of possibilities on the economic side is still very wide”.
He said that it will take years to assess the full impact of the current “sidelining” of the U.S. economy and the impacts of the COVID-19 coronavirus pandemic. However, Americans have “faced tougher problems”. He went on to talk about historical events such as the Civil War in which 6% of the primary workforce died, a figure much higher than coronavirus mortality rates.
Buffet asserted that this young country, at 231 years, has made “miraculous” accomplishments and to “never bet against America”.
Did you tune in to the Berkshire Hathaway Annual Meeting 2020? What did you think about Buffett’s comments? Please tell us below.