Buffett reassures about Berkshire’s future, praises Apple even as he sells it By Reuters

Written by Jonathan Stemple and Koh Gui Cheng

OMAHA, Neb. (Reuters) – Warren Buffett paid tribute to his late business partner Charlie Munger at Berkshire Hathaway's (NYSE:) annual meeting on Saturday, while reassuring shareholders that the executives they expect to succeed him are ready for the job.

Buffett, legendary for his investment acumen, also praised Apple after unexpectedly revealing that Berkshire had reduced its stake in the iPhone maker. He said the company was a “better business” than two of Berkshire's oldest investments. American Express (NYSE:) and Coca-Cola (NYSE:)

It was the 60th meeting for Buffett, who took over Berkshire in 1965 and turned it into an enlarged $862 billion company that owns the BNSF railroad, Geico auto insurance company, Dairy Queen and other companies. Saturday's meeting was the first since Munger, Buffett's longtime friend, business partner and entrepreneur, died in November at age 99.

Buffett, 93, did not indicate any plans to step down, telling shareholders: “I feel fine,” while joking that he should not accept four-year employment contracts.

Munger was a fixture on stage with Buffett at meetings, and was known for his terse and acerbic responses to Buffett's often lengthy assessments about Berkshire, the economy, Wall Street and life.

Early in the meeting, shareholders watched a video tribute to Munger, including photos of Omaha from 1924 when he was born and video of Buffett and Munger over the years.

Buffett said Munger was “the architect of today's Berkshire.” “An architect is one who dreams, designs, and ultimately supervises the construction of great structures. Carpenters and beavers are needed—that's me—but the architect is the Berkshire genius.”

In a downtown Omaha arena, Buffett was joined on stage by Vice Presidents Greg Appel, named Buffett's successor as CEO in 2021, and Ajit Jain.

Abel, 61, and Jain, 72, have had direct oversight of dozens of Berkshire's operating subsidiaries since 2018, freeing up Buffett and, before his death, Munger to focus on capital allocation. Buffett said he was happy with the arrangement.

“When you have someone like Greg and Ajit, why take me?” He said. “It went very well.”

Decreased Apple stake, increased cash

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

But in a surprise, Berkshire announced that it had sold about 13% of its shares in Apple (NASDAQ:), reducing the value of its stake to $135.4 billion from $174.3 billion. Apple's stock price fell 11% this quarter.

The sale was the main reason Berkshire's cash stock rose to $189 billion, also a record. Buffett said cash could grow to $200 billion this quarter, reflecting risks from high stock market valuations and geopolitical conflicts.

Berkshire invested in Apple in 2016, and the normally technophobic Buffett has come to view the company as a consumer goods company with strong pricing power and loyal customers.

But some investors have expressed concern that Apple represents too much of Berkshire's stock portfolio, now worth $335.9 billion.

However, with Apple CEO Tim Cook in the audience, Buffett told Berkshire shareholders: “Unless something dramatic happens that really changes the capital allocation, Apple will be our largest investment.”

He said Berkshire remains committed to investing in the United States. “If we do something really big it will very likely be in the United States,” he said.

Meanwhile, Appel has pledged to fight lawsuits seeking tens of billions of dollars from Berkshire's utility unit PacifiCorp over the 2020 Oregon wildfires, but called it a major challenge.

Wake up so early

Before the meeting, thousands lined up early outside the square amid rainy weather. When the doors opened at 7 a.m., many ran to get the best seats.

“I've been here since 2:30,” said Serena Lam, 32, an investment manager who flew with 40 others from Hong Kong. “I want to see Warren Buffett. I want to know his views on Japanese stocks. I flew more than 25 hours for this.”

Bill Gunter, 72, a retired forester from Newfane, Vermont, said he arrived at 1:41 a.m. to stand in line, with a lawn chair to sit and sleep on.

“I feel very optimistic about Berkshire,” he said. “They are very diverse and have a good company culture.”

Berkshire stock is up 23% over the past year. While this lags behind the 25% gain, Berkshire has risen 218% over the past decade versus the S&P's gain of 172%.

The shareholder weekend, which Buffett calls “Woodstock for capitalists,” also included a gallery for shareholders to buy goodies like Berkshire T-shirts and Squishmallows toys at expositions held by Berkshire-owned companies.

Ruth Gearhart, 72, of Omaha, filled her bags with See's Candies as well as tongs and spoons from Pampered Chef. Buffett, an admirer, became a Berkshire shareholder 15 years ago.

“I trust him,” she said. “He's a great guy and he's got a lot of great people. He's going to help us get through this. I hate to see him go, but I think they've prepared well for this.”