Saturday, May 03, 2008

In Omaha at the Warren and Charlie Show

I’m posting this from Omaha. I arrived here yesterday for the Berkshire Hathaway shareholders’ meeting. My trip was exhausting. I got up and 3 a.m. and headed for LaGuardia Airport. I made a connection in Chicago, but due to bad weather sat on the runway for almost three hours. I finally arrived in Omaha, rented a car, and raced to Borsheim’s Fine Jewelry, a Berkshire subsidiary. I went there to do an interview about my new book, Even Buffett Isn't Perfect, with Liz Claman of the Fox Business Network. I was starving and had a splitting headache. Except for some water, I had not eaten anything all day. Fortunately, the interview went very well.

After the interview, I headed off to my hotel in Bellevue, which is about 15 miles south of Omaha. Because 30,000 Berkshire shareholders came to Omaha for the meeting, there were no more rooms available in the city. I checked into my hotel and immediately fell asleep for several hours. As soon as I awoke, I headed back to Borsheim’s for a reception. The place was packed. As I walked past displays of $20,000 watches and other kinds of expensive trinkets, I could not help but notice the diversity of people, all of whom were Berkshire shareholders. They were young, they were old, and they were from all over the world.

The actual meeting began this morning at the Qwest Center. There was a large exhibit hall with many of Berkshire’s subsidiary companies showing off their wares. Shareholders could buy everything from See’s Candies to Fruit of the Loom underwear at discounted prices. Soon, the real show began. Susan Lucci, star of the soap opera “All My Children,” took the stage and announced that Warren Buffett decided to leave the company. She said she had just been appointed the new CEO of Berkshire Hathaway and that her first decision would be to initiate a dividend payment. Suddenly, Buffett came on stage and put a stop to that. This was all in keeping with his great sense of humor.

For several hours, shareholders bombarded Buffett and Munger with questions. Many of the questions had little to do with Berkshire’s business operations. Young people asked what they should do with their lives, a teacher asked what she should teach her students, and one man wanted to know if Buffett had accepted Jesus Christ as his Lord and Savior. Others asked about nuclear proliferation and mass transit policies. One man made a plea that Buffett read the U.S. Constitution and then call Roger Pilon of the Cato Institute. It quickly became evident that for many people in the audience, Buffett and Munger were more like cult figures than great businessmen. All of these people were clearly smart to invest in Berkshire stock. Nonetheless, some were quite wacky.

Although most people in the audience revere Buffett and Munger, not everyone was enamored with the dynamic duo. Several indigenous Americans complained that PacificCorp, which is owned by MidAmerican Energy Holdings, another Berkshire subsidiary, was damaging waterways with its damns. They wanted to know what Buffett intended to do about it. They also complained that they weren’t treated very nicely at last year’s meeting. Buffett was polite, but tossed these questions to David Sokol, chairman of MidAmerican, who gave some very diplomatic answers that did not quite seem to satisfy the questioners.

I was surprised that no one asked about Joe Brandon, General Re’s former CEO who suddenly resigned just a couple of weeks ago. Buffett has frequently praised Brandon in his annual letters to shareholders. The rumor is that Brandon resigned because federal prosecutors pressured Buffett to let him go. These authorities seem to believe Brandon was closely associated with some of the fraudulent schemes involving General Re and American International Group. Four people, included General Re’s former CEO, Ron Ferguson, were recently convicted for these schemes. Brandon, however, has not even been charged with any wrongdoing. Yet his reputation has been tarnished. It would have been nice if Buffett had shed some light on Brandon’s departure.

All in all, while I am glad I attended the event, I can’t say it was particularly instructive. It certainly was fun to meet and mingle with many of Buffett’s fans and to see all of Berkshire’s products on display in one place. However, I am convinced that one can learn a whole lot more by studying Berkshire’s annual reports than by attending its shareholders’ meetings.