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What to expect from Warren Buffett and Charlie Munger

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Warren Buffett attends Berkshire Hathaway’s annual Los Angeles meeting. May 1, 2021.

Gerard Miller | CNBC

Warren Buffett is set to kick off Berkshire HathawaySaturday’s Annual Shareholder Meeting was an emotional success. The “Oracle of Omaha”, which is now back in deal-making, and the Conglomerate’s outstanding stock crossed a significant milestone were just a few of the highlights.

This year’s Woodstock for Capitalists will be attended by tens to thousands of shareholders. It is the first time that this event has been held in Omaha since 2019, following disruptions at Covid-19. CNBC hosts the event the exclusive livestreamSamstag, starting at 9:45 ET

Investors around the globe are waiting to hear from the 91-year-old chairman CEO, along with his right-hand man Charlie Munger at 98, following a flurry of investment activities — stakes in Occidental Petroleum and HPPurchase of Alleghany. Not only featuring hours of commentary from the legendary duo, this renowned event will also include exhibits of Berkshire’s wide range of holding companies — from ice cream maker Dairy Queen to insurer Geico and battery maker Duracell.

Whitney Tilson (CEO of Empire Financial Research), who attends Berkshire’s shareholder meeting every year for the past 25 years, stated that “This meeting is intended for diehard value investors and diehard Buffett or Munger lovers like me.” The masters are there to teach us. You’ll find it intellectually, emotionally and psychically fulfilling.

Below are some topics Buffett would like to discuss with shareholders.

  • The market outlook The stock market has suffered a correction on fears of inflation and rising rates. What can investors do to navigate volatility and an uncertain economic environment?
  • More cash is available: Buffett has been putting capital to work as of late. His buying spree will it continue? Will he be able to make an “elephant-sized deal?”
  • Slowdown in BuybacksBuffett is seeing Berkshire share prices outperforming Berkshire. Is Buffett going to stop his buyback program or slow down?
  • The Life After Buffett and Munger Berkshire’s succession plan
  • China, Russia’s Invasion in Ukraine, and other topics

Looking for market guidance

Berkshire shares ride high in volatile markets. Class A shares achieved a key milestone last month, topping half a million dollars for the first time as investors embraced the safety of the diversified conglomerate during geopolitical turmoil and surging inflation. The stock is up more than 10% this year, compared to a 10% loss for the S&P 500.

Buffett provided a much-needed assurance to investors at the 2020 annual meeting in the midst of the pandemic by saying that the U.S. would be able to weather this crisis as it has through all previous wars and crises.

“Nothing can basically stop America,” Buffett said. “The American miracle, the American magic has always prevailed, and it will do so again. … This belief was reinforced during World War II. This was something I believed during the Cuban Missile Crisis and the Financial Crisis.

As the Federal Reserve rushes aggressively to reduce 40-years-high inflation, investors have been finding it more difficult to navigate this macroenvironment. After a yield-curve-inversion and poor economic data, there are fears that the economy will fall into recession. Not to mention the fact that the U.S. remains vulnerable to the pandemic.

Berkshire Hathaway is a great company that has taken many hits. Tilson stated that there is probably more anxiety out there. People are seeking wisdom and direction in an extremely strange market, where inflation is rampant and there’s a lot of war.

Buffett, prior to his recent buying spree was a net buyer of stocks over the past five quarters because he found few bargains in the soaring equities.

Slowdown in buyback

Berkshire’s performance has been driven by its aggressive buybacks. Last year, the company bought back a record amount of shares worth $27 billion.

David Kass is a Berkshire shareholder who is a professor of finance and an assistant at the University of Maryland. Buffett will not buy back shares that are below their intrinsic value.

Evidence suggested that the reduction in debt has begun. Berkshire spent $6.9billion to purchase back shares during the fourth quarter. This was slower than the $7.6billion repurchased in that quarter. Buffett revealed in his annual letter that Berkshire bought back $1.2billion of its stock from February 23 to 23, according to Buffett.

What is a significant investment?

Buffett-watchers are wondering if Berkshire is planning a large investment.

Kass explained that Buffett could be offered additional opportunities in the future by recent falls in stock markets resulting in an anticipated tightening in monetary policy from the Federal Reserve.

This March Berkshire agreed to buy insurance company Alleghany for $11.6 billionIn cash. The transaction is Berkshire’s largest acquisition in six years. In 2006, it purchased Precision Castparts industrial company for $37billion.

Buffett is yet to complete the so-called “elephant sized acquisition”, which he has been promising for years. He previously blamed the market’s high prices for his inaction.

Succession

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