Observations on the 2014 Berkshire-Hathaway Meeting

Have you ever been to a company’s annual shareholder meeting?

If you directly own stock in a company, you are invited each year to attend the annual shareholder meeting. I typically don’t go, because most of the meetings are out of town and I don’t own enough shares to make much difference. I just vote by proxy – as I believe most others do.
The Berkshire-Hathaway company run by Warren Buffett and Charlie Munger of course, also holds an annual shareholder meeting. Unlike most other annual meetings, which typically are pretty dry and dull and are not well attended by shareholders, Buffett’s meeting draws huge crowds (around 40,000 in 2014).

My family and I went this year for the first time. I bought some B shares back in February and was able to get 4 ‘passes’ to attend – so I invited my two adult sons to go with my spouse and I.

Here are my observations on the meeting.

Reserve your hotel room a year in advance!

I made reservations in March and we ended up in a nasty, dirty, stained motel room. Two of us didn’t sleep well. Rooms downtown book up a year in advance. Even though we stayed about 9 miles west of town just off I80, it was difficult to find a room, even in March. Of course every hotel in town also doubles their rates for the Berkshire meeting weekend.

The Friday evening cocktail reception.

There was a cocktail reception held at the Borsheims jewelry store. We opted not to go to it. During the meeting, one of the shareholders prefaced their question for Buffett by reporting that he waited 2 hours to get a cocktail and never got one, so I assume it was pretty crowded.

You don’t need to get up and in line at 4 AM to get a seat.

None of us saw the benefit in standing in line for 3.5 hours to get a seat in the main hall. I had read that folks emptied out after the morning session and so wasn’t worried about being able to be in the same room as Buffett and the board.

We arrived at the Century Link Convention center in downtown Omaha around 8 AM and had no trouble finding parking spots very close to the meeting area. The highways were wide open on the drive downtown as well. Parking was very reasonable at $8 per car.

We took two cars (no one wanted to leave their car in the motel lot as we saw a lot of police activity in the area), and ended up in different lots.

We knew we might not find 4 chairs together, so each car load of two pursued their own seating for the Saturday meeting.

There was a security check of purses and bags at the one and only entrance you could go into at the convention center, but it didn’t slow us down. We fed right in and went directly up the escalator. Once at the top, we saw several rooms that were set up with screens and chairs – to hold overflow from the main meeting room. They were sparsely populated at 8 AM.

We walked quite a way to get to the auditorium where the main event was held. Most of the seats in the multi level (basketball?) arena were filled, except those directly behind the podium set up on the stage where Buffett and Munger would sit.

We easily found two seats together and found out later that the other two in our party also ended up in a section very close to us.

Later in the day, we found some seats on the front side of the podium and we all agreed that our seats behind it were better – due to the placement of the screens – we were pretty much at eye level with the screens.

My son suggested that I try for a press pass next year (as a financial blogger there isn’t much of a chance of that happening!) – but the press was up in the rafters and I think our seats were better!

The movie and prelims.

This started around 8:30 AM and was mostly filled with commercials – albeit funny ones – for the companies owned by Berkshire.

My favorite part was the duet Buffett sang with Paul Anka – “I did it my way”. Buffett has a surprisingly good voice! He later joked about this part of the film, saying that it is part of his succession planning – he and Anka will be available to sing at weddings! However, he went on to say that someone offered him $1,000 if they both sing or $10,000 if Anka sang alone. Anka did also attend the meeting.

They did the YMCA song in the movie, with glitzy lighting and real live Nebraska cheerleaders running down the aisles of the main floor – pumping up the shareholders there to sing along.

The seats were pretty cramped, but after the movie and about 1/2 hour of the question/answer session the crowd started thinning out (most likely to hit up the exhibition hall).

The question/answer part of the meeting.

There were 5 hours of questions and answers. Buffett fielded most of the questions, and typically spoke for quite some time on each of them. Then he tossed the mic to 90 year old Charlie Munger who quipped a short and usually humorous addition to the topic. At one point in the meeting, Buffett told the audience “It’s a good thing we don’t pay him by the word”! Munger has a wonderfully dry sense of humor.

The two of them sat by themselves on a table at center stage, surrounded by Coke products and Sees candy (which they appeared to munch quite freely throughout the day). The media personalities were at tables off to the side. All had a personalized bottle of coke in view! Do you think Berkshire might be involved somehow with Coke (duh… they own 9% and are the biggest shareholder and Buffett’s son Howard is on the Coke board).

Shareholders had submitted questions to several media personalities ahead of time and the media people picked questions to ask – and didn’t tell either Buffett or Munger what they were ahead of time. Media questions were interspersed with questions from actual shareholders – who spoke at one of around 10 microphone stations around the auditorium.

There were multiple screens and we had a perfect view of the two on them, plus I was able to see the Berkshire-Hathaway (BRK) board members from my seat. They were seated in the front row of the audience. Bill Gates was the most casually dressed and sat through the morning, for the most part, with his arms crossed across his chest.

Any public figure learns how to field questions and dance around issues as need be and Buffett is no exception. Of the two, he seemed to be the more diplomatic – with Munger being more likely to just lay it on the line as he saw it.

The most memorable discussion points for me.

• Coke executive compensation and the defense of Howard Buffett’s vote.

A shareholder asked how we could trust Howard Buffett (Warren’s son and a board of director of Coke) to uphold the Buffett mentality when he voted for the executive compensation package.

Buffett spoke at length, defending his son.  In the process he said that he himself had voted for similar compensation packages in the past and he laid out what, in reality, it is like to be on a company board, saying that there is kind of a  fraternity of the board members.

• Not sweeping cash out of the coffers of the wholly owned companies.

The question was, wouldn’t it make sense for Buffett to utilize the cash from all of the companies that Berkshire owns by sweeping it up to the parent company’s coffers. Buffett’s answer was no. Berkshire has a different philosophy – to trust the managers of their companies. If their cash was swept, the managers wouldn’t be as free to make their companies productive and Berkshire would lose a large degree of trust. Munger seconded that – saying:

“By the standards of the rest of the world, we over-trust.”

My favorite Buffett quote:

At one point, when answering a question about sweeping the money from wholly owned companies I believe, Buffett made the statement:

“If I am going to buy something, then I already know where the money is coming from.”

I like it because this is how I operate too.

The exhibit hall.

We left before lunch break to beat the crowds at the lunch stands. I had munched on some snacks in my purse (I also packed a paper bag full!) and wasn’t very hungry. There are a multitude of food stands so you really don’t need to buy the $14 boxed lunch that is offered by pre-order before the meeting starts!

We ate hot dogs and burgers with fries, standing up outside the arena. After that, we made our way down to the exhibit hall on the first floor of the convention center.

The most impressive thing about the exhibits were the sheer number of companies represented, all of which were associated in some way with Berkshire. Sees candy, the BNSF railroad, Net Jets, Coke, Geico (including the geico!), Buffett’s Secret Millionaire’s Club, The World Book and many more, including Ginsu knives, were there.

I broke a cardinal rule of never paying cash for merchandise I’m not taking with me and bought a set of knives for $40 – including shipping. The sales folks were entering the transactions on their electronic tablets. Ours asked if I wanted an email receipt or a text message. I chose email but never got the receipt. I may have thrown away $40 hard cash! We’ll see if they actually send the knives.

Net Jets tour.

After taking in the exhibits, we opted to take the shuttle to go see the Net Jet planes at the airfield. There were multiple full scale tour buses packed to the gills, one after another coming and going to that airfield. It took about 15 minutes to drive out there. We saw three jets inside the hanger. Most folks were waiting in line to get inside one of the planes, but my crew didn’t want to do that so we just walked around the outside of the planes and picked up a free soda. I walked around so many times that one of the plentiful policemen started giving me the stink eye!

After returning to the convention center, we went back into the arena where the Q/A session was still going strong. This time, as I noted above, we sat where we could actually lay eyes on Buffett and Munger – not just see them on a screen.

We opted not to stay for the half hour business portion of the meeting – as did most of the shareholders. I had already voted our proxy anyway! We let the crush of the crowd dissipate (which took only a few minutes) and then went to our cars and started the trek home. Again, there was no traffic to speak of.

Shareholder discounts

Other than the knife set, we didn’t take advantage of any of the shareholder discounts available. Our nasty motel was close to the Omaha Nebraska Furniture Mart (NFM) – which is a sprawling one story older building – quite different than the one close to us – but we didn’t shop there or at Borscheims. There were shuttles available from the convention center back and forth to those locations all day. If we had chosen to do so, we could have gone to the ‘picnic’ Saturday afternoon at NFM.

Will I go again?

Attending the meeting was a unique experience, made more enjoyable by having my husband and two sons enthusiastically attending with me.

I will consider going again, and hopefully, when the grand-kids are a bit older, will take them along.  We did see people of all ages at the meeting, from babies in back packs to grandma’s with walkers, but agreed that kids would get pretty bored, pretty fast at the actual meeting.

Want more?

For news and analysis, simply do an internet search on ‘2014 Berkshire Meeting’ and you will see media coverage analyzing most of the Q/A session as well as a lot of picutres. Lots of tweets out there too search Twitter using #brk2014 to see them.

What has been your experience with shareholder meetings?