India question makes it to Berkshire Annual meeting; Buffett says, “a more energetic management” could consider the opportunity
India question makes it to Berkshire Annual meeting; Buffett says, “a more energetic management” could consider the opportunity
India has finally arrived on the Berkshire stage. For the first time in a Berkshire Annual Meeting, a question on India came up for Warren Buffett. The question was asked by Rajeev Agarwal of DoorDarshi Advisors, a US-based hedge fund that invests in Indian equities. Rajiv Agarwal asked, “Indian equities have done quite well in the last 5, 10, 20 years. It is the fifth largest economy and will be the third largest in the next few years. My question is, is Berkshire looking for activities in the Indian equity market and what will allow you to buy anything meaningful there?”
Warren Buffett said, “It is a very good question. I am sure there are loads of opportunities in countries like India.” The question, however, as Buffett explained, was whether Berkshire has any advantage or insights into those businesses in India or any contacts that will make possible some transactions that Berkshire would like to participate in. “That is something a more energetic management at Berkshire could pursue,” he said.
Buffett said Berkshire has a great reputation around the world (which should help this happen). He said, his Japanese experience has been fascinating enough. Last year, Berkshire bought into five trading houses in Japan citing deep undervaluation in companies that offer significant cash flows. Otherwise, Berkshire has largely invested only in the United State. Another exception has been his purchase of Chinese EV-maker BYD.
Continuing on India, Buffett added, “There may be an unexplored or unattended opportunity, but that may be something in the future. There are opportunities.”
Buffett again reiterated the dilemma facing Berkshire. “The question is if Berkshire has some kind of advantage in pursuing those (unattended) opportunities, particularly against people who are managing other people’s money and getting paid based on assets. There are plenty of people in the game who are buying and running businesses, and they are going to get rich anyway as their payment may be based on how much they buy rather than what they buy,” he said.
Considering Berkshire’s mammoth size and near $200 billion cash pile, Buffett has been buying out either large stakes in companies or making complete buyouts that can move the needle for the insurance giant. Buffett does not rely on investment bankers or brokers, who he has maintained do not have interests aligned with that of asset buyers.
Buffett has perfected the model of buying businesses directly from owners who are looking for a permanent home for their businesses for various reasons including lack of family succession. “We will see how the next management plays the game at Berkshire. “Fortunately, you don’t have to wait too long on the way down…although I am feeling fine… I know a little bit about actuarial tables so I know I shouldn’t be taking on any four-year employment contracts like several people are doing in this world,” he said. Buffett is 94.
Rajiv Agarwal’s DoorDarshi Fund’s mandate is to deliver superior returns by investing in “compelling opportunities in Indian equities over the long term.”