(Reuters) – Warren Buffett said on Saturday that Berkshire Hathaway Inc was supported by a U.S. economy that was doing much better than predicted at the start of the coronavirus pandemic, although investor euphoria is making it difficult deployment of liquidity.
Speaking at the Berkshire annual meeting, Buffett said the economy had been “resuscitated in an extraordinarily efficient way” thanks to the monetary stimulus from the Federal Reserve and the fiscal stimulus from the US Congress.
âIt got the job done,â Buffett said. âThis economy, right now, 85% of it is moving into high gear.â
Buffett lamented how an influx of special-purpose acquisition firms and inexperienced investors hoping to quickly earn wealth has made the markets feel like a casino, making it difficult for Berkshire to deploy more of its pool of cash. cash of $ 145.4 billion.
But the 90-year-old has retained his optimism for the future of the company he has led since 1965, including after his departure.
âWe’ve seen some strange things happen in the world over the last year, 15 months,â Buffett said. “It has reinforced our desire to find whatever is possible to make sure that Berkshire is, in 50 or 100 years, every part of the organization and then some of what it is now.”
The annual meeting was held in Los Angeles, where Buffett joined Berkshire vice chairman Charlie Munger, 97, to answer more than three hours of questions from shareholders.
Greg Abel and Ajit Jain, Berkshire’s other vice presidents and potential successors to Buffett as chief executive, also answered several questions.
Asked about their report, Jain said they don’t interact as much as Munger and Buffett, but talk quarterly about the companies they oversee.
Berkshire has abandoned its annual Shareholders’ Weekend in its hometown of Omaha, Nebraska for a second year, an extravaganza that normally attracts around 40,000 shareholders.
But Saturday’s meeting, broadcast online on Yahoo Finance, was “kind of what you love about Berkshire,” said Steve Haberstroh, partner at CastleKeep Investment Advisors in Westport, Connecticut. “It’s a little less about learning new things and more about remembering old things.”
Many of Berkshire’s dozens of operational units, which include Geico auto insurance and BNSF railroad, have rebounded as anxiety over COVID-19 subsides, more people get vaccinated, stimulus are spent, trade restrictions are relaxed and confidence in the economy grows.
Gross domestic product grew at an annualized rate of 6.4% from January to March, according to an earlier government estimate. Some economists predict that the economy will grow in 2021 at the fastest rate in nearly four decades.
Buffett admitted that the takeover made its decision last year to pull out stakes in the four major US airlines – US, Delta, Southwest and United – seemed untimely.
Munger, meanwhile, played down concern that Congress and the White House could raise the corporate tax rate to 25% or 28%, saying it would not be “the end of the world” for Berkshire.
Shareholders have rejected proposals forcing Berkshire to further disclose its efforts to tackle climate change and promote diversity and inclusion in its workforce.
But the two proposals received around a quarter of the votes cast, suggesting greater dissatisfaction than historically demonstrated by Berkshire shareholders. Buffett, who controls nearly a third of Berkshire’s voting power, opposed both proposals.
Saturday’s meeting came after Berkshire said first quarter operating profit rose 20% to around $ 7 billion, while net profit, including investments, stood at 11.7 billion. billions of dollars.
ATTENTION, SPACES AND ROBINHOOD
But there were signs that Berkshire had become more cautious of the markets.
As Berkshire repurchased $ 6.6 billion of its own shares between January and March, the pace of buybacks has slowed.
Berkshire also said it sold $ 3.9 billion more shares than it bought, although it still owns $ 151 billion in shares in just two companies, Apple Inc and Bank of America Corp. .
Buffett acknowledged that low interest rates have made Berkshire’s $ 140 billion insurance âfloatâ, which he uses for investments and acquisitions, less valuable.
He also said the growth of PSPCs, which make private companies public, has made buying entire companies expensive for Berkshire, which has not made a major acquisition since 2016.
âHe’s a killer,â Buffett said, referring to PSPC. “We probably have $ 70 billion or $ 80 billion, maybe something like that, that we would be happy to implement, … but we won’t have the chance to do it under these conditions.”
Berkshire executives also criticized business apps such as Robinhood, with Buffett saying they encourage a ‘game boost’ and Munger saying it was’ really horrible that something like this would attract investment from a civilized man. and decent citizens. This is deeply wrong. “
Buffett stood by Apple, calling the iPhone maker an “extraordinary company” with “must-have” products, and admitted he made a mistake by selling a small percentage of Berkshire shares to the end of last year.
At the end of the meeting, Mr Buffett said the odds were “very, very good” that next year’s meeting would again include shareholders.
âWe are really looking forward to meeting you in Omaha,â he said.
Reporting by John McCrank and Jonathan Stempel in New York; Additional reports and reviews by Megan Davies; Editing by Steve Orlofsky and Cynthia Osterman