Berkshire Annual Meeting Had Moments Needing Follow-Ups

While wide-moat-rated Berkshire Hathaway's BRK.A BRK.B annual meeting has always been entertaining, it hasn't generally been a big source of meaningful insight into the firm's operations. This year's event, which had the feel of past meetings--with CEO Warren Buffett and Charlie Munger joined by Ajit Jain and Greg Abel on a stage that resembled the one in Omaha taking questions directly from Becky Quick--was likely more comfortable for shareholders. That said, we feel that it was lacking in enough good quality questions aimed at the managers about the inner workings of Berkshire's businesses. We also think one of the biggest drawbacks of the annual meeting format is that it prohibits follow-up questions, which might directly challenge statements coming from management during the course of the meeting. While Becky Quick was apparently given some leeway to do so (which is something she does on a regular basis as a financial reporter), we felt there were many moments that went begging for follow-ups.

If we had to sum up our key takeaways from this year's meeting, at least from an analyst's perspective (which is likely different than what a shareholder or investor is looking for), we would highlight the following: management's discussion of Berkshire's lack of buying activity during the coronavirus market sell-off last year, the need for the firm to potentially raise its pandemic-related loss reserves, the notion that Buffett may raise the $20 billion cash backstop he's had in place for the insurance operations and his thoughts about the "dry powder" Berkshire has to pursue acquisitions, and the competitive positioning of both Geico and BNSF relative to their better-performing peers. Our general feeling over much of the past year has been that Berkshire was right to guard its cash reserves, and that with viable investment opportunities few and far between the past 12 months, the best option for the company's excess cash has been Berkshire's own common stock.

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