Warren Buffett presides over the 2025 Berkshire Hathaway annual shareholder meeting — 5/3/25

Key Concepts

• Berkshire Hathaway Shareholder Meeting 2025: Annual event where shareholders gather to hear from Warren Buffett, Greg Abel, and Ajit Jain, and to engage with Berkshire's subsidiary companies.
• Capital Allocation: The process of deciding how to invest a company's available funds to maximize returns and shareholder value.
• Succession Planning: The process of identifying and developing future leaders to ensure a smooth transition of leadership within an organization.
• Tariffs: Taxes imposed on imported goods, often used to protect domestic industries or as a tool in international trade negotiations.
• Insurance Underwriting: The process of assessing and pricing risk in the insurance industry.
• Float: The money that an insurance company holds from premiums before it pays out claims.
• American Exceptionalism: The belief that the United States is unique and holds a special place among nations.
• Value Investing: An investment strategy that involves buying undervalued assets with the expectation that their market price will eventually reflect their intrinsic value.
• AI (Artificial Intelligence): The development of computer systems that can perform tasks that typically require human intelligence.
• Operating Earnings: Profits generated from a company's core business operations, excluding investment gains or losses.
• Derivatives: Financial contracts whose value is derived from an underlying asset, index, or interest rate.
• De-Energization: The process of shutting down power lines to prevent wildfires.
• Doge (Digitalization of Government): A government initiative to improve efficiency and productivity through the use of digital technologies.

Berkshire Hathaway Shareholder Meeting 2025: Special Coverage

Event Overview

• CNBC's live coverage from Omaha, Nebraska, featuring Becky Quick and Mike Santoli.
• Warren Buffett, Greg Abel, and Ajit Jain to answer shareholder questions.
• Notable guests include Jeff Rachor (Berkshire Hathaway Automotive), Irv Blumkin (Nebraska Furniture Mart), Ron Olson (Berkshire board member), Bobby Kotick (Activision founder), and Congressman French Hill.
• 138,000 tickets requested, up 10,000 from last year, but the CHI Center only holds 40,000.
• Hillary Rodham Clinton's presence added extra security measures.

Berkshire Hathaway Earnings Report

• Stock closed at an all-time high.
• B shares up nearly 20% this year.
• Earnings below expectations due to a drop in insurance underwriting earnings and foreign exchange losses from the surge in the Japanese yen.
• Equity portfolio took a $5 billion accounting loss due to stock market decline as of March 31st.
• Berkshire noted that macroeconomic and geopolitical events are affecting operating results, with tariffs being a major concern for shareholders.
• The company did not list the value of its five largest holdings as of March 31st, but the stocks remained the same (American Express, Apple, Bank of America, etc.).
• Cash hoard increased from $334.2 billion at the end of 2024 to $347.7 billion at the end of the first quarter of 2025.
• Berkshire did not buy back any shares in the latest quarter due to the stock trading at a rich valuation (1.8 times book value).
• Berkshire's cash hoard is now greater than the combined cash of Apple, Microsoft, Google, and Amazon.

Analysis with David Samra (Artisan Partners)

• Insurance underwriting impacted by the LA fires, a major natural disaster.
• Berkshire is uniquely positioned to underwrite and pay large claims due to its capital.
• Modest growth in manufacturing and retail operations, reflecting GDP trends.
• Nice growth in the energy business under Greg Abel's management.
• Investment operations affected by mark-to-market fluctuations.
• Rough quarter in insurance may stabilize premiums pricing.
• Greg Abel's involvement provides incremental supervision to operating businesses.
• Greg was involved in successful Japanese investments, borrowing in yen.
• The cash stockpile is due to a combination of Apple's valuation increase, a lack of undervalued opportunities, and flexibility for future acquisitions.
• Eager to hear thoughts on the underwriting cycle, wildfire issues impacting the energy business, and the impact of tariffs.

Apple and Tariffs with Steve Kovac (CNBC)

• Tim Cook managed the supply chain ahead of April tariffs.
• More than half of iPhones sold in the US in the June quarter will be sourced in India.
• More products will be sourced from India (iPhones) and Vietnam (AirPods, watches, Macs).
• $900 million cost impact from tariffs, affecting margins slightly (45-46%).
• No clarity on the tariff picture beyond the June quarter, leading to downgrades on Wall Street.
• Tim Cook is attending the Berkshire meeting.
• No evidence of pull-forward demand ahead of tariff announcements.
• Huawei is eating into Apple's market share in China due to anti-American sentiment.
• Apple needs to offer exciting features like foldable phones and AI to attract Chinese customers.

Berkshire Hathaway Retail Operations

• Sees Candies sales were up 9% over Friday of last year, selling over 24,000 pounds of chocolate.
• Special Warren and Charlie Squishallows are in high demand at the Jazwares booth, selling about a thousand per hour.
• Only one book being sold on the floor: "60 Years of Berkshire Hathaway" by Carrie Sova, with 5,000 copies available.
• Signed copies of the book are being auctioned off to raise funds for the Stephen Center, serving the homeless population in South Omaha.

Berkshire Hathaway Automotive with Jeff Rachor

• Consumers are rushing to take advantage of non-tariff cars, leading to a surge in sales.
• The FOMO effect is temporary and peaked in March, with demand expected to moderate.
• Forecast is for business to normalize, with tariffs offsetting strong sales in the second half of the year.
• Affordability remains the biggest challenge in the automotive industry.
• The administration is learning about the unintended consequences of tariffs.
• OEMs and suppliers are taking prudent measures to mitigate the impact of tariffs.

Warren Buffett's Opening Remarks

• This is his 60th annual meeting.
• Records were set yesterday in attendance and sales.
• Introduced Greg Abel and Ajit Jain, highlighting their diverse backgrounds.
• Introduced the directors, including lead director Sue Decker and Ron Olson, who is retiring from the board.
• Special thanks to Ron Olson for his 28 years of service.
• Acknowledged Tim Cook for making Berkshire a lot of money.
• Thanked Melissa Shapiro and Carrie Sova for their contributions to the event and the 60th-anniversary book.
• Announced that 20 signed copies of the 60th-anniversary book were being sold to raise funds for the Stephen Center, with Berkshire matching the contributions.

Q&A Session: Key Topics and Insights

• Tariffs and Trade: Buffett argued against tariffs as an act of economic war, advocating for balanced trade and international cooperation. He emphasized that the US should not alienate other countries and that a prosperous world benefits everyone.
• Japanese Investments: Buffett expressed strong confidence in Berkshire's investments in Japanese trading companies, stating that they will not be selling any stock and that they expect to build long-term relationships and find new opportunities.
• Cash Position: Buffett explained that the large cash position is not a market call but a result of a lack of compelling opportunities and a desire to be ready for future acquisitions. He emphasized that they would spend a hundred billion if something made sense.
• Real Estate vs. Stocks: Buffett stated that stocks offer more opportunities than real estate due to the ease of transactions and the complexity of real estate deals.
• AI and Insurance: Jain acknowledged that AI will change the insurance industry but emphasized the importance of waiting for opportunities to crystallize and not chasing fashionable trends. Buffett stated that he would prefer Ajit's judgment over any AI product.
• American Exceptionalism: Buffett defended the concept of American exceptionalism, highlighting the country's progress and resilience despite its flaws.
• Patience and Investing: Buffett emphasized the importance of patience in investing but also the willingness to act quickly when opportunities arise.
• GEICO Turnaround: Jain credited Todd Combs for turning around GEICO by improving rate matching, telematics, and cost reduction.
• Greg Abel's Succession: Buffett praised Greg Abel's abilities and expressed confidence in his leadership. Abel emphasized the importance of maintaining Berkshire's culture, values, and financial strength.
• Currency Risk: Buffett stated that they do not hedge currency risk except in the case of the Japanese investments, where they have attempted to match purchases against yen-denominated funding.
• Emerging Markets: Buffett advised emerging markets to develop a reputation for having a solid currency and being business-friendly.
• Private Equity in Insurance: Jain noted that private equity firms have become active in the life insurance business but that Berkshire is no longer competitive in that space due to their higher leverage and more aggressive investment strategies.
• Lessons for Young Investors: Buffett advised young investors to associate with smart people, find something they would do even if they didn't need the money, and be careful about who they work for.
• Market Volatility: Buffett downplayed recent market volatility, stating that it is not a dramatic bare market and that investors should not be frightened by market declines.
• Setbacks in Life: Buffett acknowledged that everyone experiences setbacks and that it is important to focus on the good things in life.
• Autonomous Vehicles: Jain stated that autonomous vehicles will change the insurance business, shifting from operator error coverage to product liability.
• Operating Earnings: Buffett reviewed Berkshire's operating earnings, noting the decline in insurance underwriting income and the mixed performance of the general businesses.
• Share Repurchases: Buffett stated that Berkshire has not made share repurchases this year due to the stock trading at a high valuation and the 1% buyback tax.
• Becoming Katherine Graham: Buffett recommended the documentary "Becoming Katherine Graham" on Amazon Prime, calling it an incredible story of American history.
• Succession Plan: Buffett announced that he will recommend to the board that Greg Abel become the CEO of Berkshire Hathaway at year-end.

Halftime Show

• Mike Santoli and Becky Quick recap the morning session.
• Warren Buffett thanked Tim Cook for making more money for Berkshire than he had.
• Buffett called the Trump administration's protective stance a "big mistake."
• Buffett said he's sitting on the sidelines for now but wants to be ready when a buying opportunity presents itself.
• Irv Blumkin (Nebraska Furniture Mart) discussed the impact of tariffs on the retail industry and the shift in sourcing from China to Vietnam, Cambodia, Malaysia, and Indonesia.
• Jeff Rachor (Berkshire Hathaway Automotive) discussed the surge in sales due to consumers rushing to take advantage of non-tariff cars.
• Bobby Kotick (Activision founder) discussed the importance of capitalism as the foundation of democracy and the need to address spending in the US.
• Katie Kramer interviewed Benji Sanderson, a shareholder who asked a question about Greg Abel.

Afternoon Q&A Session

• Greg Abel's Management Style: Abel described his management style as more active, engaging with managers and encouraging collaboration.
• Wildfire Liabilities: Abel discussed the steps Berkshire is taking to protect its utility companies from wildfire liabilities, including asset maintenance, de-energization, and working with regulators.
• Capital Allocation: Abel outlined his approach to capital allocation, emphasizing the importance of maintaining Berkshire's culture, values, and financial strength.
• High-Tech Capital Investment: Buffett said it's always better to make a lot of money without putting up anything than it is to make a lot of money by putting up a lot of money.
• Doge: Buffett said that bureaucracy is amazingly prevalent and contagious even in our capital system.
• Succession Plan: Buffett announced that he will recommend to the board that Greg Abel become the CEO of Berkshire Hathaway at year-end.

Conclusion

The 2025 Berkshire Hathaway Shareholder Meeting provided valuable insights into the company's performance, investment strategy, and future leadership. Warren Buffett's announcement of Greg Abel as his successor marked a significant milestone in the company's history, signaling a new era while maintaining the core principles and values that have guided Berkshire Hathaway for decades. The discussions on tariffs, capital allocation, and the changing business landscape highlighted the challenges and opportunities facing the company in the years to come.