In a few words:
- Berkshire’s annual meeting remains an exceptional source of information and learning for the investor;
- A vibrant tribute to Munger who died “at his peak at 99”;
- Canada is not a foreign country;
- “Berkshire’s main investments will always be in the United States.”
Tribute to Munger
Through a nearly 30-minute video paying tribute to Charlie Munger, who died last November at the age of 99, we learned that Messrs. Munger and Buffett were not only great friends, but business partners and life enthusiasts. Although sharing the same philosophy, they were largely complementary. According to Mr. Buffett, “Charlie had much broader interests than mine.” Although they didn’t always agree when making a decision, Mr. Buffett says they never bickered in more than 50 years of working together. “We had a lot of fun working together. Even more so when some of our investments failed. It was a great pleasure to try to find solutions to our problems together.”
Like Buffett, Mr. Munger continued to read and learn throughout his life. Buffett: “I’ve never had anyone reach their (cognitive) peak at 99.” According to Buffett, Charlie met the greatest minds of the last 2000 years through books. “No need to have a meal with them.” He adds: “We continued to learn together.” To the listeners in the assembly, he said: “Meet as many of the great people of history as you can.”
His Perception of the Stock Markets
Mr. Buffett rarely says what he thinks about the stock markets in a direct and precise way. He tends to imply, and you have to know how to read between the lines to understand his perception of the markets. This time, it seemed obvious to me that Mr. Buffett considers the markets rather expensive and that he does not find much of an interest in them. He also seems rather concerned about what’s happening in the world.
He said in part: “With everything going on in the world, cash seems like a good investment.” He says he’s waiting for the right opportunity. He repeated a baseball batting analogy: “We are waiting for the right opportunity. We only swing at pitches we like. Things aren’t attractive now.”
One of Berkshire’s great advantages is its ability to be the lender or investor of last resort during financial or economic crises. We saw this during the 2008-2009 financial crisis when the company invested substantial sums in several companies (Mars, Goldman Sachs, Bank of America, Dow Chemical). Under “normal” market conditions, it becomes increasingly difficult for the company to invest substantial sums.
Investing Outside the United States
On the heels of investing some $6 billion in several Japanese companies starting in 2020, Mr. Buffett was asked whether Berkshire was likely to invest more internationally in the future, particularly in China and in Hong Kong.
According to Buffett, “Berkshire’s main investments will always be in the United States.” Also, he emphasizes that Berkshire participates in the growth of international markets through investments in several American companies such as American Express or Coca-Cola. He adds that he understands the American market very well, while this is not the case for international markets. Thus, Berkshire will continue to be, “U.S.-oriented. Its biggest future investments will likely be in the United States and Berkshire is unlikely to make major investments outside the United States.” He adds that he sees much less risk in the American market than in any other country.
Canada Is Not a Foreign Country
I was pleasantly surprised that Mr. Buffett spoke specifically about Canada and the possibility of investing significant sums there. He notably said that Berkshire was “fortunate to have numerous activities, a significant presence, in Canada”. He also says he is “very comfortable with the Canadian environment”.Although there are few large companies in Canada, he would have “no hesitation in investing substantial sums in Canada”, suggesting that Berkshire was currently evaluating the possibility of making such an investment in the country.
Picks and Shovels
According to Mr. Abel, the demand for electricity will be very strong in the coming years. In Iowa, where Berkshire Energy has a strong presence, this demand is expected to “double by 2035”. The development of artificial intelligence, data centres, and the deployment of electric vehicles will significantly increase the demand for electricity, particularly that from renewable sources. In Nevada, another key state for Berkshire Energy, demand is expected to “triple by the end of the 2030s.”
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