3 Takeaways From the 2023 Berkshire Hathaway Annual Shareholders’ Meeting

Berkshire stock (ticker: BRK.A, BRK.B) is behind the market this year, up about 5%, versus an 8% return for the
S&P 500.

Here are three takeaways from the meeting and the release of the company’s first-quarter results Saturday morning.

1. Buffett Says Opportunities Are Still Hard to Find

Berkshire Hathaway has nearly $130 billion in cash and Treasury bills on its balance sheet, leading to ongoing speculation about what the company might do with all that dry powder.

On Saturday, Buffett said he would rather do a deal for a large company than sit on the cash, earning interest, but that it depends on prices, noting that things are generally expensive these days.

He’d prefer to do a deal with a private company than a more complex transaction with a publicly traded firm, but there just aren’t that many private businesses of that scale available.

Buffett said that he wouldn’t seek to acquire
Occidental Petroleum
(OXY) in full, after accumulating roughly 24% of the oil and natural gas producer since early last year.

In the meantime, Berkshire is earning close to 5% on its Treasury bills.

2. Buffett Weighs In on Bank Collapses

Buffett, who is Berkshire’s CEO, had sharp criticism for the management teams of the several U.S. banks that have failed in 2023. He came prepared to discuss the turmoil in the sector, placing large printed signs reading “Available for Sale” and “Held-to-Maturity” on the table in front of him and Munger, to laughs from the audience. Those terms refer to the accounting treatment of securities on a bank’s balance sheet.

Buffett faulted management at
First Republic Bank
—which was shut down by the Federal Deposit Insurance Corp. last month before its takeover by
JPMorgan Chase
(JPM)—for concentrating its balance sheet in low-yielding assets that lost value as interest rates rose over the past year. 

He argued that regulation in the banking industry is important, but that officials need to do a better job of communicating with the American public to ensure confidence in the financial system and prevent further potential bank runs. That’s especially relevant in the 21st century, when digital banking makes it much easier for customers to move deposits from one bank to another.

“The situation in banking is what it always was,” Buffett said Saturday. “Fear is contagious. Sometimes the fear is justified, sometimes it isn’t.”

3. Abel Will Carry on the Buffett Legacy

Abel, who oversees Berkshire’s non-insurance businesses, spoke several times during the Q&A session on Saturday, expounding on the performance of businesses including the BNSF railroad and Berkshire Hathaway Energy. Buffett, 92, and Munger, 99, praised him for his long-term outlook and value-oriented approach. 

Abel is Buffett’s appointed successor as CEO. He was seen walking around the convention center floor at the Shareholder Shopping Day on Friday, shaking hands, taking photos, and interacting with shareholders.

Abel said he would carry on Buffett’s approach to capital allocation, seeking to buy back Berkshire stock when its price falls below their estimate of intrinsic value.

“When the opportunity presents itself, we’ll want to be an active purchaser of Berkshire shares,” Abel said Saturday. “It’s great for our shareholders to be able to own a larger share in all of Berkshire’s businesses.”

Berkshire bought back $4.4 billion of stock in the first three months of 2023, up from $2.6 billion in the fourth quarter of 2022.

See images from the event below:

Write to Nicholas Jasinski at nicholas.jasinski@barrons.com