Finance

Berkshire Hathaway CEO Warren Buffett on Saturday assailed regulators, politicians and the media for confusing the public about the safety of U.S. banks and said that conditions could worsen.
Buffett, when asked about the recent tumult that led to the collapse of three mid-sized institutions since March, launched into a lengthy diatribe about the situation.
“We want to be there if the banking system temporarily gets stalled in some way,” he said. “It shouldn’t, I don’t think it will, but it could.”

Berkshire Hathaway CEO Warren Buffett on Saturday assailed regulators, politicians and the media for confusing the public about the safety of U.S. banks and said that conditions could worsen from here.
Buffett, when asked about the recent tumult that led to the collapse of three mid-sized institutions since March, launched into a lengthy diatribe about the matter.

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“The situation in banking is very similar to what it’s always been in banking, which is that fear is contagious,” Buffett said. “Historically, sometimes the fear was justified, sometimes it wasn’t.”
Berkshire Hathaway has owned banks from early on in Buffett’s nearly six-decade history at the company, and he’s stepped up to inject confidence and capital into the industry on several occasions. In the early 1990s, Buffett served as CEO of Salomon Brothers, helping rehabilitate the Wall Street firm’s tattered reputation. More recently, he injected $5 billion into Goldman Sachs in 2008 and another $5 billion in Bank of America in 2011, helping stabilize both of those firms.

Ready to act

He remains ready, with his company’s formidable cash pile, to act again if the situation calls for it, Buffett said during his annual shareholders’ meeting.
“We want to be there if the banking system temporarily gets stalled in some way,” he said. “It shouldn’t, I don’t think it will, but it could.”
The core problem, as Buffett sees it, is that the public doesn’t understand that their bank deposits are safe, even those that are uninsured. The Berkshire CEO has said regulators and Congress would never allow depositors to lose a single dollar in a U.S. bank, even if they haven’t made that guarantee explicit.

The fear of regular Americans that they could lose their savings, combined with the ease of mobile banking, could lead to more bank runs. Meanwhile, Buffett said that he keeps his personal funds at a local institution, and isn’t worried despite exceeding the threshold for FDIC coverage.
“The messaging has been very poor, it’s been poor by the politicians who sometimes have an interest in having it poor,” he said. “It’s been poor by the agencies, and it’s been poor by the press.”

First Republic

Buffett also turned his ire on bank executives who took undue risks, saying that there should be “punishment” for bad behavior. Some bank executives may have sold company stock because they knew trouble was brewing, he added.
For example, First Republic, which was seized and sold to JPMorgan Chase after a deposit run, sold its customers jumbo mortgages at low rates, which was a “crazy proposition,” he said.
“If you run a bank and screw it up, and you’re still a rich guy… and the world goes on, that’s not a good lesson to teach people,” he said.
Berkshire has been unloading bank shares, including that of JPMorgan Chase and Wells Fargo, since around the start of the 2020 pandemic.
Recent events have only “reconfirmed my belief that the American public doesn’t understand their banking system,” Buffett said.
He reiterated several times that he had no idea how the current situation will unfold.
“That’s the world we live in,” Buffett said. “It means that a lighted match can turn into a conflagration, or be blown out.” More

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OMAHA, Neb. — Warren Buffett said Saturday that Berkshire Hathaway doesn’t plan on taking full control of Occidental Petroleum, an oil giant where it has amassed a stake north of 20%.

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“There’s speculation about us buying control, we’re not going to buy control,” the ‘Oracle of Omaha’ said at Berkshire’s annual shareholder meeting. “We wouldn’t know what to do with it.”
In August last year, Berkshire received regulatory approval to purchase as much as a 50% stake. Since then, Buffett has been steadily adding to his bet, including this year, boosting the conglomerate’s stake in the Houston-based energy producer to 23.5%. The moves had fueled speculation that the 92-year-old investor could acquire the whole company.
“We will not be making any offer for control of Occidental, but we love the shares we have,” Buffett said. “We may or may not own more in the future but we certainly have warrants on what we got on the original deal on a very substantial amount of stock around $59 a share, and warrants last a long time, and I’m glad we have them.”
Berkshire owns $10 billion of Occidental preferred stock, and has warrants to buy another 83.9 million common shares for $5 billion, or $59.62 each. The warrants were obtained as part of the company’s 2019 deal that helped finance Occidental’s purchase of Anadarko.
Shares of Occidental were down about 3% this year, after more than doubling in 2022. The stock was the best-performing name in the S&P 500 last year.
— CNBC’s Sarah Min contributed reporting. More

“In the general economy, the feedback we get is that, I would say, perhaps the majority of our businesses will actually report lower earnings this year than last year,” Buffett said Saturday.
The 92-year-old investing icon believes that some of his managers at Berkshire subsidiaries were caught off guard by the swift change in consumer behavior, as they put the Covid-19 pandemic behind them.

OMAHA, Neb. — Warren Buffett struck a pessimistic tone about Berkshire Hathaway’s myriad of businesses on Saturday, saying he expects an earnings decline in light of an economic slowdown.
“In the general economy, the feedback we get is that, I would say, perhaps the majority of our businesses will actually report lower earnings this year than last year,” the “Oracle of Omaha” told tens of thousands of shareholders at Berkshire’s 2023 annual meeting.

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Berkshire has fared well so far despite a challenging macro environment with operating earnings jumping 12.6% in the first quarter. The strong performance was driven by a rebound in the conglomerate’s insurance business. Overall earnings also rose sharply thanks in part to gains its equity portfolio, led by Apple. Berkshire’s railroad business, BNSF, along with its energy company did see year-over-year earnings declines last quarter.
The 92-year-old investing icon believes that some of his managers at Berkshire subsidiaries were caught off guard by the swift change in consumer behavior, as they put the Covid-19 pandemic behind them. This led them to overestimating demand for certain products, and now they will need sales to get rid of the excess inventory.
“It is a different climate than it was six months ago. And a number of our managers were surprised,” Buffett said. “Some of them had too much inventory on order, and then all of a sudden it got delivered, and people weren’t in the same frame of mind as earlier.”
The U.S. economy is grappling with a series of aggressive rate hikes, which partly triggered three bank failures in the span of just a few weeks due to mismatched assets and liabilities. The Federal Reserve just approved its 10th rate hikes since 2022, taking the fed funds rate to a target range of 5%-5.25%, the highest since August 2007.
“It was more extreme in World War II, but this was extreme this time,” Buffett said. More

Berkshire Hathaway CEO Warren Buffett said Saturday that regulators avoided a financial disaster by making sure that Silicon Valley Bank customers didn’t lose money in the firm’s collapse.
The FDIC protected SVB customers in the process by invoking the systemic risk exception during the March tumult, which allowed the regulator to make all depositors whole.
“It would’ve been catastrophic” if regulators hadn’t done that, Buffet said during his annual shareholder meeting.

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Berkshire Hathaway CEO Warren Buffett said Saturday that regulators avoided a financial disaster by making sure that Silicon Valley Bank customers didn’t lose money in the firm’s collapse.

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The sudden downfall of SVB in March forced the Federal Deposit Insurance Corp. to seize the bank, selling some of its assets to First Citizens weeks later.
The FDIC protected SVB customers in the process by invoking the systemic risk exception during the March tumult, allowing the regulator to make all depositors whole, even if their accounts exceeded the $250,000 coverage threshold.
“It would’ve been catastrophic” if regulators hadn’t done that, Buffet said during his annual shareholder meeting.

Shareholders watch Warren Buffett and Charlie Munger from the overflow room during the Berkshire Hathaway annual meeting on Saturday, May 6, 2023, in Omaha, Neb.
Rebecca H. Gratz | AP

Allowing uninsured depositors to lose money would’ve “started a run on every bank in the country,” he said.
So the move, which brought criticism because it protected venture capital investors, startups and other sophisticated players, was “inevitable” in Buffett’s view.

Protecting uninsured depositors contributed to the estimated $20 billion hit that the FDIC’s Deposit Insurance Fund took in the SVB receivership. The biggest U.S. banks are expected to cover the economic cost of that through special fees.
This story is developing. Please check back for updates. More

“What gives you opportunities is other people doing dumb things,” the “Oracle of Omaha” said at Berkshire Hathaway’s annual shareholder’s meeting.
Value investing typically refers to buying underappreciated stocks or businesses when others are selling them at a discount.

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Warren Buffett on Saturday boiled down value investing, the strategy that has helped him amass his wealth, in one sentence.

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“What gives you opportunities is other people doing dumb things,” the “Oracle of Omaha” said at Berkshire Hathaway’s annual shareholder’s meeting.
Value investing typically refers to buying underappreciated stocks or businesses when others are selling them at a discount and then holding them for the long term. This approach has led to some of Buffett’s biggest investment — especially when others were panicking.
During the 2008 financial crisis, the legendary investor bought Bank of America, which is still one of his biggest holdings. He also acquired shares of Goldman Sachs, but has since sold his stake in the banking giant.
Buying when others were selling in fear has in part helped Berkshire return a whopping 3,787,464% from 1965 through the end of last year. That’s way more than the S&P 500’s 24,708% return in that time.
And while Buffett acknowledges that the world is changing, he thinks value investing opportunities abound.

“In the 58 years we’ve been running Berkshire, I would say there’s been a great increase in the number people doing dumb things, and they do big dumb things,” he said. “The reason they do it is because, to some extent, they can get money from people so much easier than when we started.”
“I would love to be born today, go out with not-too-much money and hopefully turn it into a lot of money,” Buffett said.
Charlie Munger, Berkshire Hathaway vice-chairman and Buffett’s long-time right-hand man, has a more pessimistic view on value investing.
“I think value investors are going to have a harder time now that there’re so many of them competing for a diminished bunch of opportunities,” Munger said. “My advice to value investors is to get used to making less” money.
Despite Munger’s more downbeat outlook for value investing, Buffett thinks opportunities will present themselves to value investors given the short-term view of so many people in today’s society.
Follow CNBC’s livestream of Berkshire Hathaway’s 2023 annual meeting here. More

This dividend-paying ETF may help protect investors during wild market swings.
Capital Wealth Planning’s Kevin Simpson is recommending to clients the Amplify CWP Enhanced Dividend Income ETF (DIVO), which focuses on blue-chip companies likely to increase future dividends.

“We want strong, powerful dividend growth,” the firm’s chief investment officer Kevin Simpson told “ETF Edge” on Monday. “That’s, more than anything, the fuel that feeds our engine.”
DIVO is a five star-rated Morningstar fund and was launched in December 2016. The Amplify ETFs website lists Microsoft and Procter & Gamble as its top holdings.
The ETF also uses a covered call options strategy to generate more gains. Simpson contends it can increase capital appreciation potential while still minimizing risk exposure.
“The covered call piece is implemented as a means of harvesting volatility to protect a little bit of the downside,” he said. “We tactically sprinkle in some short-term, out of the money covered calls.”
When asked about whether selling covered calls forfeits upside reward potential, Simpson claims there’s a balance at play.

“We’re thinking about how can we capture 80% to 90% of the rising market and limit the drawdown in the participation in a down-market to 65% or 75%,” he said. “Covered calls work best when you need them … [the] most.”
DIVO is virtually flat so far this year.

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Operating earnings, which encompass profits from the conglomerate’s fully-owned businesses, totaled $8.065 billion in the first quarter.
That’s up 12.6% from $7.16 billion a year prior.
Profit from insurance underwriting came in at $911 million, up sharply from $167 million a year prior.
Insurance investment income also jumped 68% to $1.969 billion from $1.170 billion.

Warren Buffett at Berkshire Hathaway’s annual meeting in Los Angeles, California. May 1, 2021.
Gerard Miller | CNBC

Earnings for Warren Buffett’s Berkshire Hathaway jumped in the first quarter, thanks in part to a rebound in the conglomerate’s insurance business.
Operating earnings, which encompass profits from the conglomerate’s fully-owned businesses, totaled $8.065 billion in the first quarter. That’s up 12.6% from $7.16 billion a year prior.

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Profit from insurance underwriting came in at $911 million, up sharply from $167 million a year prior. Insurance investment income also jumped 68% to $1.969 billion from $1.170 billion.
Geico saw a big turnaround in the quarter, returning to a big underwriting profit of $703 million. The auto insurer suffered a $1.9 billion pretax underwriting loss last year as it lost market share to competitor Progressive. Ajit Jain, Berkshire’s vice chairman of insurance operations, previously said the biggest culprit for Geico’s underperformance was telematics.
The company’s railroad business, BNSF, along with its energy company saw year-over-year earnings declines. Operations classified under “other controlled businesses” and “non-controlled businesses” had slight increases from the year-earlier period.
Berkshire’s cash hoard swelled to $130.616 billion from $128 billion in the fourth quarter of 2022. Berkshire also repurchased $4.4 billion worth of stock — the most since the first quarter of 2021 — up from $2.8 billion at the end of last year.
Berkshire’s net earnings, which includes short-term investment gains, increased to $35.5 billion in the quarter from $5.6 billion in the same period a year ago, reflecting a first quarter comeback in Warren Buffett’s equity investments, such as Apple. Though Buffett cautions investors to not pay attention to quarterly fluctuations in unrealized gains on investments.

The company’s latest quarterly results come ahead of the conglomerate’s annual shareholders meeting, an event known as “Woodstock for Capitalists.”
Berkshire Class A shares are up 4.9% this year through Friday’s close, lagging the S&P 500’s 7.7% advance. However, the stock is less than 3% below an all-time high.
— CNBC’s Yun Li contributed reporting.
Follow CNBC’s livestream of Berkshire Hathaway’s 2023 annual meeting starting live at 9:45 a.m. ET Saturday here.
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People at the See’s Candies display at the Berkshire Hathaway Shopping Day event, May 5, 2023.
David A. Grogan | CNBC

Berkshire Hathaway’s annual shareholder meeting this weekend is kicking off with a shopping extravaganza.
Called the “Berkshire Bazaar of Bargains,” the shopping event is a tradition at the yearly convention. With over 20,000 square feet of showroom space and more than 50,000 items of inventory, the exhibit hall features goods from a myriad of the conglomerate’s holdings.

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This year, shareholders can snap up Warren Buffett-themed plush dolls from Squishmallows for the first time. They can also snag Buffett-themed apparel from Brooks Sports, as well as Berkshire chocolate coins from See’s Candies.
The event is held in downtown Omaha at the CHI Health Center. Only shareholders can participate at the event, and claim the discount.
CNBC and CNBC.com will exclusively cover the annual meeting starting Saturday at 10 a.m. ET.

Squishmallows

A person visits the Squishmallows display at the Berkshire Hathaway Shopping Day event, May 5, 2023.
David A. Grogan | CNBC

Yun Li | CNBC

This is Squishmallows’ first time ever at Berkshire’s shopping event, and the toy brand turned out to be a big hit. The plush toys attracted long lines at checkout with many shareholders snagging Warren Buffett cartoon dolls.

Yun Li | CNBC

An image of Warren Buffett at the Berkshire Hathaway Shopping Day, May 5, 2023.
Yun Li | CNBC

Berkshire got into Squishmallows through its acquisition of Alleghany, which closed in the fourth quarter of 2022. While Alleghany’s main business is insurance, the company is also a conglomerate. It owns a few non-financial businesses, including Jazwares, which is a U.S. toymaker with brands like Pokémon and Squishmallows.

See’s Candies

The See’s Candies display at the Berkshire Hathaway Shopping Day event, May 5, 2023.
Yun Li | CNBC

Yun Li | CNBC

The sweets at See’s Candies again drew a big crowd at the “Woodstock for Capitalists.” The “Berkshire Box” of chocolate featuring a dancing Buffett on the package was a popular item at the booth. So was chocolate walnut fudge, a favorite of the Oracle of Omaha. Buffett said See’s Candies sold 11 tons of peanut brittle and chocolates at last year’s event.

Brooks Sports

People wait on line at the Brooks display at the Berkshire Hathaway Shopping Day event, May 5, 2023.
Yun Li | CNBC

Investors could buy sneakers, socks and t-shirts bearing illustrations of Warren Buffett from the Brooks booth. They can also participate in the 5K run co-hosted by the sportswear company and Berkshire in downtown Omaha on Sunday morning.

Pampered Chef

The Pampered Chef display showing Warren Buffet at the Berkshire Hathaway Shopping Day event, May 5, 2023.
Yun Li | CNBC

A cardboard cutout of Warren Buffett in an apron greeted shoppers at the Pampered Chef booth, where investors could pick up kitchen tools — including a spatula with the Oracle of Omaha’s face on one side, and Charlie Munger’s on the other.

Borsheims

Jewelry display from Ruchi New York at Borsheims shareholder-only shopping night.
Yun Li | CNBC

Jewelry display from Ruchi New York at Borsheims shareholder-only shopping night
Yun Li | CNBC

There’s a separate shareholder-only shopping event at Borsheims, about 14 miles away from the main convention center. Berkshire shareholders browsed through one-of-a-kind jewelry, engagement rings and watches available for purchase at a discount. This seven-carat emerald ring from Ruchi New York is selling for $400,000 with 25% off (picture above, on the right). More