Banking

Warren Buffett’s Unusual Pick For Year’s Top Event Raises Tantalizing Question

Berkshire Hathaway (BRKB) CEO Warren Buffett heads to Los Angeles for the company’s highly anticipated annual meeting this weekend.




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The annual “Woodstock for Capitalists” will be online for a second year due to the pandemic. But it’s the first time in more than 50 years it will be in a city other than Buffett’s hometown of Omaha, Neb.

The livestream begins 12:30 p.m. ET Saturday. Vice Chairman Charlie Munger will attend too, along with top lieutenants Ajit Jain and Greg Abel.

Berkshire Hathaway earnings for the first quarter are also due Saturday, revealing whether the conglomerate bought back more shares after a record $27.4 billion in repurchases last year.

Berkshire’s aggressive share repurchases contrasts with the M&A deals spun by Buffett during and after the 2008 financial crash. It suggests that the latest downturn and recovery haven’t offered the bargains that the investing legend typically pounces on.

As Buffett mostly sits on the deal-making sidelines, Berkshire’s cash pile finished 2020 at $138.3 billion. While that’s down from $145.7 billion in Q3, it’s still a gain from $128 billion at the end of 2019.

Buffett In LA LA Land

With this cash pile in mind, his unusual decision to travel outside Omaha for the annual meeting also begs the question why Los Angeles. Hedge funds reportedly have tracked corporate jets for clues on imminent deals, including an Occidental Petroleum (OXY) plane that was spotted in Omaha before Buffett announced a $10 billion investment in the oil company.

Surely corporate executives in LA will seek an audience with the Oracle of Omaha while he is in town.

Top publicly traded companies in the area include media and entertainment giant Disney (DIS), homebuilder KB Home (KBH), construction services provide AECOM (ACM) and Snapchat parent Snap (SNAP).

But Buffett doesn’t just invest in public companies, and one of the biggest private local ones is SpaceX, which is building a vast constellation of broadband satellites while becoming a major Pentagon and NASA contractor.

CFRA analyst Cathy Seifert declined to speculate about Buffett’s motives in LA. But in an April 24 note, she wrote that she still sees acquisitions remaining part of Berkshire’s capital allocation strategy.

To be sure, deal making may be far from his mind now as he has bemoaned “sky high” prices that set back his hopes for a big acquisition.

And in February, Buffett admitted that buying Precision Castparts for $37 billion in 2016 was a big mistake, citing its exposure to the hard-hit aviation and energy sectors. It forced an “ugly $11 billion write-down” that Buffett said reflected his error in paying too much for the business.


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Berkshire Hathaway’s class B shares rose 1.2% to 276.36 on the stock market today. BRKB stock is extended from a February breakout past a 235.09 flat-base buy point, meaning shares are not in buy range. Shares offered a follow-on buy point around 246 in late March off a test of the 10-week line, according to MarketSmith chart analysis, but are also extended past that entry.

The Q1 earnings statement will also reveal how much Berkshire Hathaway’s closely watched stock portfolio performed overall. It had a market value of more than $281 billion at the end of 2020, according to CFRA.

But details on individual stock buys and sells during the quarter will come later. A regulatory filing should be posted within days of the annual meeting.

In 2020, Buffett was an active buyer and seller of stocks, belying a reputation as a buy-and-hold investor. He cut a stake in Apple (AAPL) by 6% in Q4 2020 while keeping Amazon (AMZN) steady.

He dumped all his airline stocks and several long-held bank stocks last year, but sank more than $2 billion into Bank of America (BAC), turning it into his No. 1 stock by number of shares. Apple was No. 1 by market value and portfolio weighting, at 44%.

One Of The ‘Family Jewels’

Apple has emerged as one of the foundations of Berkshire. In a section of his annual letter titled “The Family Jewels and How We Increase Your Share of These Gems,” he noted in February that most of Berkshire’s value resides in its insurance operations, rail giant BNSF, its 5.4% ownership in Apple, and the Berkshire Hathaway Energy utility business.

Wall Street expects BNSF to benefit from a reopening economy in Q2. But analysts have speculated about broader consolidation among railroads now that Kansas City Southern (KSU) is the target of a bidding war between Canadian Pacific (CP) and Canadian National Railway (CNI).

Either deal would create the first freight-rail network connecting Canada, the U.S. and Mexico.

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