Buffett says Berkshire in good hands, lauds Apple despite lowering stake

A cutout picture of Berkshire Hathaway Chairman Warren Buffett welcomes shareholders to shop at the Pampered Chef booth at the Berkshire Hathaway Inc annual shareholders’ meeting in Omaha, Nebraska, U.S. May 3, 2024. REUTERS/Scott Morgan

By Jonathan Stempel and Koh Gui Qing

OMAHA, Nebraska (Reuters) -Warren Buffett assured Berkshire Hathaway shareholders on Saturday that the executives expected to succeed him were ready for the job, and he heaped praise on Apple although Berkshire trimmed its position in the iPhone maker.

Warren Buffett attends the Berkshire Hathaway annual shareholders’ meeting in Omaha, Nebraska. REUTERS/Scott Morgan

Speaking at Berkshire’s annual meeting, the legendary investor paid tribute to his late business partner Charlie Munger and said he expected the conglomerate’s cash pile, now a record $189 billion, to keep growing.

The meeting was the 60th for Buffett, who since 1965 transformed Berkshire from a failing textile company into an $862 billion colossus owning the BNSF railroad, Geico car insurance, Dairy Queen and dozens of other businesses.

Shareholders attend the Berkshire Hathaway Inc annual shareholders’ meeting in Omaha, Nebraska, U.S. May 3, 2024. REUTERS/Scott Morgan

Buffett, 93, told shareholders that Vice Chairmen Greg Abel and Ajit Jain have proven themselves the right people to lead Berkshire after he departs.

Abel, who was designated Buffett’s successor as chief executive in 2021, and Jain have directly overseen Berkshire’s operating subsidiaries since 2018.

“When you’ve got somebody like Greg and Ajit, why settle for me?” Buffett said. “It has worked out extremely well.”

“I don’t know quite how (Abel) does it, but we’ve got the right person, I can tell you that,” he added.

Buffett said he would want Abel, 61, upon becoming chief executive, to have final say on capital allocation decisions regarding Berkshire’s portfolio of public stocks.

Investors had long considered Todd Combs and Ted Weschler, who manage part of Berkshire’s $335.9 billion equity portfolio, leading candidates to manage more or all of it.

Apple CEO Tim Cook arrives for the Berkshire Hathaway Inc annual shareholders’ meeting, in Omaha, Nebraska, U.S., May 4, 2024. REUTERS/Scott Morgan

The meeting, part of a weekend Buffett calls “Woodstock for Capitalists,” was the first since Munger died in November at age 99. Buffett described Munger, his longtime his friend and foil, as the “architect of today’s Berkshire.”

Oliver Hou of Beltsville, Maryland runs past a security guard as attendees rush inside as the doors open for the Berkshire Hathaway Inc annual shareholders’ meeting in Omaha, Nebraska, U.S., May 4, 2024. Hou said he got in line at 3am. “I want to get good seats, cheer and be close to Buffett” during his second time attending the conference. He got a center seat in the 15th row. REUTERS/Scott Morgan

Buffett gave no sign he plans to step aside, telling shareholders, “I feel fine,” while joking he shouldn’t take on four-year employment contracts.

DECREASING APPLE STAKE, GROWING CASH

Squishmallows resembling Berkshire Hathaway chairman Warren Buffett and former vice chairman Charlie Munger at the Berkshire Hathaway Inc annual shareholders’ meeting in Omaha, Nebraska, U.S. May 3, 2024. REUTERS/Scott Morgan

Before the meeting, Berkshire announced first-quarter results, including a 39% jump in operating profit to a record $11.2 billion.

In a surprise, Berkshire reported it had sold about 13% of its Apple shares, reducing the value of its stake to $135.4 billion from $174.3 billion. Apple’s stock price fell 11% in the quarter.

The sale was the main reason Berkshire’s cash hoard soared. Buffett said cash might grow to $200 billion this quarter, reflecting the risks he sees from high stock market valuations and geopolitical conflicts.

Kathy Ireland, Chief Executive and Chief Designer, Kathy Ireland Worldwide, takes a photo with Irv Blumkin, CEO and Chair, Nebraska Furniture Mart, and his wife Susie Blumkin, at the Berkshire Hathaway Inc annual shareholders’ meeting, in Omaha, Nebraska, U.S., May 4, 2024. REUTERS/Scott Morgan

Despite reducing the Apple stake, Buffett praised the company, saying it was “an even better business” than two of Berkshire’s oldest and largest investments, American Express and Coca-Cola.

The iPhone was “one of the greatest products, and it may be the greatest product, of all time,” Buffett said with Apple Chief Executive Tim Cook in the audience.

Berkshire invested in Apple in 2016, and the normally tech-phobic Buffett came to view it as a consumer goods company with strong pricing power and devoted customers.

While some investors have expressed concern that Apple comprised too much of Berkshire’s equity portfolio, Buffett said Apple would remain his company’s biggest stock investment, barring unforeseen events.

Abel, meanwhile, pledged to fight lawsuits seeking tens of billions of dollars from Berkshire’s PacifiCorp utility unit over Oregon wildfires in 2020. He described it as a substantial challenge, and said many claims were unfounded.

Shareholders reelected all 14 Berkshire directors, and rejected six shareholder proposals, all of which Buffett opposed.

At the start of the meeting, shareholders watched a video tribute to Munger, including scenes of Omaha from 1924 when he was born and clips of Buffett and Munger through the years.

Munger had been a fixture on stage with Buffett at the meetings, known for laconic and acerbic comebacks to Buffett’s musings about Berkshire, the economy, Wall Street and life.

Berkshire’s stock is up 23% over the last year. While that lags the Standard & Poor’s 500’s 25% gain, Berkshire has risen 218% over the last decade versus the S&P’s 172% gain.

LINES FORMED HOURS BEFORE MEETING

Before the meeting, thousands lined up in raw, rainy weather to enter the arena, sometimes several hours in advance. When the doors opened at 7 a.m., many ran for the best seats.

The weekend also featured an exhibit hall for shareholders to buy goodies such as Berkshire T-shirts and Squishmallows toys at exhibits by Berkshire-owned companies.

Serena Lam, 32, an investment manager who traveled with 40 others from Hong Kong, said she arrived at 2:30 a.m.

“I want to see Warren Buffett,” she said. “I want to get his perspective about Japanese stocks. I flew over 25 hours for this.”

As usual, Buffett interspersed comments on Berkshire’s portfolio with musings about wealth and life, including his own.

“I enjoy managing money for the people who trust me. I like the feeling of being trusted,” he said. “If I’m lucky, I can go on for six or seven years, or it might end tomorrow.”

(Reporting by Gui Qing Koh and Jonathan Stempel in Omaha; additional reporting by Scott Morgan in Omaha and Davide Barbuscia in New York; editing by Ira Iosebashvili, Megan Davies, Cynthia Osterman, Jason Neely and Diane Craft)