Finance

“I would leave the capital allocation to Greg and he understands businesses extremely well,” Buffett told an arena full of shareholders at Berkshire’s annual meeting.
While Buffett has made clear that Abel would be taking over the CEO job, there were still questions about who would control the Berkshire public stock portfolio.

OMAHA, Nebraska — Warren Buffett said Saturday his designated successor Greg Abel will have the final say on Berkshire Hathaway’s investing decisions when the Oracle of Omaha is no longer at the helm.
“I would leave the capital allocation to Greg and he understands businesses extremely well,” Buffett told an arena full of shareholders at Berkshire’s annual meeting. “If you understand businesses, you’ll understand common stocks.”

Abel, 61, became known as Buffett’s heir apparent in 2021 after Charlie Munger inadvertently made the revelation at the shareholder meeting. Abel has been overseeing a major portion of Berkshire’s sprawling empire, including energy, railroad and retail.
Buffett offered the clearest insight into his succession plan to date after years of speculation about the exact roles of Berkshire’s top executives after the eventual transition. The investing icon, who’s turning 94 in August, said his decision is influenced by how much Berkshire’s assets have grown.
“I used to think differently about how that would be handled, but I think that responsibility should be that of the CEO and whatever that CEO decides may be helpful,” Buffett said. “The sums have grown so large at Berkshire, and we do not want to try and have 200 people around that are managing a billion each. It just doesn’t work.”
Berkshire’s cash pile ballooned to nearly $189 billion at the end of March, while its gigantic equity portfolio has stocks worth a whopping $362 billion based on current market prices.
“I think what you’re handling the sums that we will have, you’ve got to think very strategically about how to do very big things,” Buffett added. “I think the responsibility ought to be entirely with Greg.”

While Buffett has made clear that Abel would be taking over the CEO job, there were still questions about who would control the Berkshire public stock portfolio, where Buffett has garnered a huge following by racking up huge returns through investments in the likes of Coca-Cola and Apple.
Berkshire investing managers, Todd Combs and Ted Weschler, both former hedge fund managers, have helped Buffett manage a small portion of the stock  portfolio (about 10%) for about the last decade. There was speculation that they may take over that portion of the Berkshire CEO role when he is no longer able.
But it seems, based on Buffett’s latest comments, that Abel will have final decisions on all capital allocation — including stock picks.
“I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move,” Buffett said.
Abel is known for his strong expertise in the energy industry. Berkshire acquired MidAmerican Energy in 1999 and Abel became CEO of the company in 2008, six years before it was renamed Berkshire Hathaway Energy in 2014.
Correction: Berkshire’s equity portfolio is worth $362 billion. A previous version misstated the figure. More

OMAHA, Neb. — Warren Buffett said that Berkshire Hathaway is looking into an investment in Canada.
“We do not feel uncomfortable in any shape or form putting our money into Canada,” he told an arena full of investors Saturday. “In fact, we’re actually looking at one thing now.”

The billionaire investor has placed bets in the country in the past. He’s previously taken a roughly $300 million position in Home Capital Group that investors took as a vote of confidence in the troubled Canadian mortgage underwriter.
The “Oracle of Omaha” said during the annual shareholder meeting that he does not expect to make significant bets outside the U.S., saying his recent investments in Japanese trading houses were a compelling exception. But Buffett noted the similarity in operations between the Canada and the U.S.
“There’s a lot of countries we don’t understand at all,” Buffett said. “So, Canada, it’s terrific when you’ve got a major economy, not the size of the U.S., but a major economy that you feel confident about operating there.”

Warren Buffett walks the floor and meets with Berkshire Hathaway shareholders ahead of their annual meeting in Omaha, Nebraska on May 3rd, 2024.
David A. Grogen | CNBC

Buffett did not reveal the specific company he’s looking at north of the border or whether it was public or private.
“Obviously, there aren’t as many big companies up there as there are in the United States,” Buffett said. “There are things we actually can do fairly well that Canada could benefit from Berkshire’s participation.”

Canada’s S&P/TSX Composite Index is up about 5% this year. The economy has large financial and commodity industries.
The Berkshire Hathaway shareholder meeting is exclusively broadcast on CNBC and livestreamed on CNBC.com.

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There may be an untapped market for exchange-traded funds.
According to Calamos investments’ Matt Kaufman, there are trillions of dollars across CD and money market accounts, and it is a market ETFs should look to capture.

“That’s larger than almost the ETF space itself,” the firm’s head of ETFs told CNBC’s “ETF Edge” earlier this week. “There’s a lot of money on the sidelines that could move into this.”
Kaufman, who is in the interest rates will stay higher for longer camp, thinks structured and options ETFs designed for risk management and income can provide stability.
“We saw it being difficult to get risk management and income from bonds when rates were so low,” he said. “As rates have moved … off of zero or 4, 5% now, we can afford to deliver capital protection over an outcome period. And, when you can do that, there’s a lot of opportunities to use these products.”
Kaufman mentioned ETFs in this higher-rate environment can be particularly beneficial for people looking for opportunities to outpace inflation — especially retirees.
“You can get greater than the risk-free rate. …Your money is linked to the market with no greater downside risk,” Kaufman added. “This is all tax-deferred growth.”
Kaufman’s firm Calamos just started launching a suite of 12 structured protection ETFs.

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The Warren Buffett-led conglomerate posted an operating profit — which encompasses earnings from the company’s wholly owned businesses — that surged 39% to $11.22 billion from the year-earlier period.
That gain was led by a 185% year-on-year increase in insurance underwriting earnings to $2.598 billion from just $911 million.

Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024. 
David A. Grogen | CNBC

Berkshire Hathaway reported Saturday a huge year-over-year increase in operating earnings in the first quarter, while its cash holdings bubbled to record levels.
The Warren Buffett-led conglomerate posted an operating profit — which encompasses earnings from the company’s wholly owned businesses — that surged 39% to $11.22 billion from the year-earlier period.

That gain was led by a 185% year-on-year increase in insurance underwriting earnings to $2.598 billion from just $911 million. Insurance investment income also swelled 32% to more than $2.5 billion.
Berkshire’s railroad business raked in $1.14 billion in profit, down slightly from the first quarter of 2023. Its energy division saw earnings nearly double to $717 million from $416 million a year prior.
First-quarter net earnings, which include fluctuations from Berkshires stock investments, fell 64% to $12.7 billion. Buffett calls these unrealized investing gains (or losses) each quarter meaningless and misleading, but the unique conglomerate is required to report these numbers based on generally accepted accounting principles.

Record cash hoard

The company’s cash hoard reached a record high of $188.99 billion, up from $167.6 billion in the fourth quarter. That massive holding, well above a CFRA Research estimate of more than $170 billion, points to Buffett’s inability to find a suitable major acquisition target — which he has lamented in recent years.
The report comes ahead the company’s annual shareholder meeting, known as “Woodstock for Capitalists.” Buffett will answer questions from shareholders on everything ranging from the conglomerate’s holdings as well as his thoughts on investing and the economy.

This will also be the first annual meeting since the death of Vice Chairman Charlie Munger in November.
Year to date, Berkshire Class A shares are up more than 11%, reaching an all-time high in late February. The Class B stock, meanwhile, has gained more than 12% in that time.
Check out CNBC’s full coverage of this year’s annual meeting here. More

Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024. 
David A. Grogen | CNBC

OMAHA, Nebraska — Warren Buffett’s Berkshire Hathaway cut its gigantic Apple stake in the first quarter as the “Oracle of Omaha” continued to downsize his one-time favorite bet.
In its first-quarter earnings report, Berkshire Hathaway reported that its Apple bet was worth $135.4 billion, implying around 790 million shares. That would mark a decline of around 13% in the stake. Apple was still Berkshire’s biggest holding by far at the end of the quarter.

This is the second quarter in a row that the Omaha-based conglomerate has trimmed the stake in the iPhone maker. It sold about 10 million Apple shares (just 1% of its massive stake) in the fourth quarter. This filing, when accounting for the change in Apple’s stock price, would imply Berkshire sold about 116 million shares.
Buffett became a big fan of Apple after one of his investing managers Ted Weschler or Todd Combs convinced him to buy the stock years ago. Buffett even called the tech giant his second-most important business after Berkshire’s cluster of insurers.

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Many has speculated that the 93-year-old investing icon reduced his favorite stake due to valuation concerns. Apple’s stock gained a whopping 48% in 2023 as megacap tech shares led the market rally. At its peak, Apple ballooned in Berkshire’s equity portfolio, taking up 50% of it. The shares are trading at more than 27 times forward earnings.
Shares of the iPhone maker got a big boost in the past week after the firm announced that its board had authorized $110 billion in share repurchases, the largest in company history. However, Apple posted a decline in overall sales and in iPhone sales. The shares are down more than 4% so far this year amid concerns about how it will revive growth.
It’s not without precedent that the Berkshire CEO would adjust the Apple bet. He sold a bit of the stock in the fourth quarter of 2020, but Buffett admitted then that it was “probably a mistake.” Also it’s not usual for Buffett to trim a position that has grown so large.
Even with the sale, Berkshire is still Apple’s largest shareholder outside of exchange-traded fund providers. More

Squishmallows in the images of Warren Buffett and Charlie Munger display at the Berkshire Hathaway Annual Shareholder Meeting at Omaha, Nebraska, on May 3, 2024.
Sarah Min | CNBC

OMAHA, Neb. — Warren Buffett’s annual shopping event, the pregame to Berkshire Hathaway’s annual meeting, is wowing shareholders flocking here this weekend.
With over 20,000 square feet of showroom space and more than 50,000 items of inventory, the exhibit hall at the CHI Health Center features goodies from various Berkshire’s holding companies, from Brooks Running to See’s Candies to Jazwares.

Only shareholders can participate at the event and they can buy items at a special discount.
The annual meeting will be exclusively broadcast on CNBC and livestreamed on CNBC.com. The special coverage will begin Saturday at 9:30 a.m. ET.
Jazwares

Squishmallow pit at the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska, on May 3, 2024.
Sarah Min | CNBC

Jazwares, the American toymaker best known for its Squishmallows plushie line, was a hit last year when it first displayed its wares at Berkshire Hathaway’s conference, including the debut of a Warren Buffett plushie. This year, the company expanded its exhibit in the convention hall, making it three times larger.

Displays at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nevada on May 3, 2024. 
Sarah Min | CNBC

Some highlights include the latest Squishmallows toys in the images of Buffett and his longtime Berkshire partner, Charlie Munger, a splashy Squishmallows pit, as well as other displays.
‘Poor Charlie’s Almanack’

Charles Munger remembrance ahead of the Berkshire Hathaway Annual Shareholder Meeting at Omaha, Nebraska, on May 3, 2024.
Sarah Min | CNBC

The Bookworm only had one book to sell this year: “Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger.” That was at the request of Buffett in honor of his business partner of more than 60 years, who passed away in November at the age of 99.

FlightSafety

FlightSafety at the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska, on May 3, 2024.
Sarah Min | CNBC

Berkshire acquired pilot training company FlightSafety in 1996. At Friday’s shopping event, the firm brought a taste of what its training program looks like for professional pilots. Shareholders lined up to put on virtual reality glasses and experience the flight simulation training.
Pilot Travel Centers

Pilot Travel display ahead of the Berkshire Hathaway Annual Shareholder Meeting at Omaha, Nebraska, on May 3, 2024.
Sarah Min | CNBC

Truck-stop giant Pilot Travel Centers put up a big display with a real-sized red truck. The firm is largest operator of travel centers in North America, with more than 750 locations. Berkshire now fully owns Pilot Travel after buying the remaining 20% ownership interest from the Haslam family. The deal was not without drama as the Haslams last year sued Berkshire in a complaint that accused the conglomerate of using so-called pushdown accounting without authorization from the family.
Duracell

Duracell display at the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska, on May 3, 2024.
Sarah Min | CNBC

In 2016, Warren Buffett’s Berkshire Hathaway bought Duracell from Procter & Gamble, offering the consumer giant $4.7 billion of the shares it owned in P&G in exchange for the battery maker.
Brooks Running

Displays at the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska, on May 3, 2024.
Sarah Min | CNBC

Brooks Running attracted a long line of shareholders snapping up the 2024 special edition of its running shoes with “brk” on the side and a cartoon of a running Buffett on the insoles. Many shareholders are also set to participate in the Brooks “Invest in Yourself” 5K fun run and walk on Sunday, the morning following the annual meeting.
Dairy Queen

Dairy Queen display at the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska, on May 3, 2024.
Sarah Min | CNBC

Warren Buffett bought Dairy Queen in 1998 in a roughly $600 million transaction, and has made trips to the Omaha locations with his great-grandchildren. According to The Wall Street Journal, the billionaire investor has said in the past that his favorite DQ order is a vanilla soft serve topped with chocolate syrup and malted milk power.
Correction: Berkshire Hathaway’s annual shareholder meeting is held in Nebraska. Captions in an earlier version didn’t cite that state.

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Warren Buffett walks the floor and meets with Berkshire Hathaway shareholders ahead of their annual meeting in Omaha, Nebraska on May 3rd, 2024. 
David A. Grogan

When Warren Buffett kicks off Berkshire Hathaway’s annual shareholder meeting on Saturday, the absence of Charlie Munger will be on everyone’s mind.
Some 30,000 rapt shareholders are descending on Omaha for what’s been called “Woodstock for Capitalists.” Pandemic lockdown apart, it will be the first without Munger, Buffett’s longtime partner who passed away in November about a month shy of his 100th birthday.

“The meeting will only have one comedian up there” this year, said David Kass, a finance professor at the University of Maryland and a Berkshire shareholder, who has attended more than 20 annual meetings. “There’ll be, let’s say, a more serious, less humorous background.”
The annual meeting will be exclusively broadcast on CNBC and livestreamed on CNBC.com. Our special coverage will begin Saturday at 9:30 a.m. ET. For the first time, Berkshire will broadcast its annual meeting movie that had previously always been reserved only for those in attendance in Omaha. Many speculate this year’s will be a tear-jerker tribute to Munger.
Vice Chairman of Non-Insurance Operations Greg Abel, Buffett’s designated successor, will fill Munger’s seat in the afternoon session, helping answer shareholder questions. Vice Chairman of Insurance Operations Ajit Jain will join Buffett, the CEO, and Abel in the morning session. Buffett has said they expect to field about 40 to 60 questions Saturday.
“The tone of the meeting is certainly going to be a lot different without Charlie,” said Steve Check, CEO of Check Capital Management and a longtime Berkshire shareholder. “He was the one that really made it funny. It’s getting closer and closer to the transition, so it’s good to see Ajit and Greg on the stage.”

Warren Buffett and Charlie Munger at a press conference during the Berkshire Hathaway Shareholders Meeting, April 30, 2022.

Munger’s investment philosophy rubbed off on Buffett early on, giving rise to the sprawling conglomerate worth $860 billion that Berkshire is today. Generations of investors also appreciated Munger’s trademark bluntness and humor, rare to come by on Wall Street.

If anything, the sea of Buffett admirers will cherish his folksy wisdom even more as the “Oracle of Omaha” turns 94 in less than four months.
Here are some of the big topics shareholders want Buffett to discuss:

Inflation: Price pressures have proved sticky lately. What impact is inflation having on Berkshire’s businesses? Which businesses are being hurt (and helped) the most?
Apple: Why did Berkshire trim its Apple stake in the fourth quarter? Investors will look for Buffett’s outlook on the tech stock given its challenges in China and recent news of a giant, $110-billion stock buyback.
Secret stock pick: Berkshire has been buying a financial stock for two quarters straight. What is it?
Record cash: Does Buffett plan to put his record level of cash to work?
A slowdown in buybacks: With Berkshire shares outperforming this year, will Buffett continue to slow down his own buyback program?
Life after Buffett: More details on Berkshire’s succession plan.

Macro commentary
The annual meeting comes at a tricky time for markets as a pickup in inflation puts the brakes on the Federal Reserve’s plan to cut interest rates this year. While the Berkshire CEO doesn’t make investment decisions based on daily headlines, investors still are eager to hear any market commentary and guidance from the protege of the father of value investing, Ben Graham.
“They don’t time their investments,” Kass said of Berkshire. “The economy goes through cycles. They totally ignore cycles. They invest for a long run, and they really ignore what pretty much what the Federal Reserve is doing. I believe that will be his answer.”
Apple
Shareholders may seek an explanation as to why Berkshire sold about 10 million Apple shares (1% of its massive stake) in the fourth quarter. At the end of 2023, Berkshire owned 905,560,000 shares of the iPhone maker, worth more than $174 billion and taking up more than 40% of the portfolio.
The move came as a surprise to many because Apple has been Buffett’s favorite stock for years, and he even called the tech giant his second-most important business after Berkshire’s cluster of insurers. What’s more, the last time Buffett trimmed this bet, he admitted it was “probably a mistake.’

Arrows pointing outwards

Shares of the iPhone maker got a big boost Friday after the firm announced that its board had authorized $110 billion in share repurchases, the largest in company history. However, Apple posted a decline in overall sales and in iPhone sales.
Secret holding
There’s a small chance that Buffett will reveal the identity of the mystery bank stock that Berkshire has been buying for two quarters straight.
In the third and fourth quarters of 2023, Berkshire requested that the Securities and Exchange Commission keep the details of one or more of its stock holdings confidential. Many speculated that the secret purchase could be a bank stock as the conglomerate’s cost basis for “banks, insurance, and finance” equity holdings jumped by around $2.37 billion.
“He will comment as late as possible…. Charlie would be the only one that would let it slip once in a while. It’s not going to happen with Warren,” Check said.
Succession
Berkshire’s succession could be front and center at this meeting after Munger’s passing. Abel, became known as Buffett’s heir apparent in 2021 after Munger inadvertently made the revelation.
Abel has been overseeing a major portion of Berkshire’s sprawling empire, including energy, railroad and retail. Buffett revealed previously that Abel’s taken on most of the responsibilities at Berkshire.
Still, some questions remain as to who will be helping allocate capital at Berkshire, and the roles of Buffett’s investing managers Ted Weschler and Todd Combs, who is also the CEO of Geico. More

Berkshire Hathaway, led by legendary investor Warren Buffett, has been making a confidential wager on the financial industry since the third quarter of last year.
The identify of the stock — or stocks — that Berkshire has been snapping up could be revealed Saturday at the company’s annual shareholder meeting in Omaha, Nebraska.
In a time when Buffett has been a net seller of stocks and lamented a dearth of opportunities capable of “truly moving the needle at Berkshire,” he has apparently found something he likes — and in the financial realm no less.

Warren Buffett tours the grounds at the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska.
David A. Grogan | CNBC

Berkshire Hathaway, led by legendary investor Warren Buffett, has been making a confidential wager on the financial industry since the third quarter of last year.
The identity of the stock — or stocks — that Berkshire has been snapping up could be revealed Saturday at the company’s annual shareholder meeting in Omaha, Nebraska.

That’s because unless Berkshire has been granted confidential treatment on the investment for a third quarter in a row, the stake will be disclosed in filings later this month. So the 93-year-old Berkshire CEO may decide to explain his rationale to the thousands of investors flocking to the gathering.
The bet, shrouded in mystery, has captivated Berkshire investors since it first appeared in disclosures late last year. At a time when Buffett has been a net seller of stocks and lamented a dearth of opportunities capable of “truly moving the needle at Berkshire,” he has apparently found something he likes — and in the financial realm no less.
That’s an area he has dialed back on in recent years over concerns about rising loan defaults. High interest rates have taken a toll on some financial players like regional U.S. banks, while making the yield on Berkshire’s cash pile in instruments like T-bills suddenly attractive.
“When you are the GOAT of investing, people are interested in what you think is good,” said Glenview Trust Co. Chief Investment Officer Bill Stone, using an acronym for greatest of all time. “What makes it even more exciting is that banks are in his circle of competence.”
Under Buffett, Berkshire has trounced the S&P 500 over nearly six decades with a 19.8% compounded annual gain, compared with the 10.2% yearly rise of the index.

Coverage note: The annual meeting will be exclusively broadcast on CNBC and livestreamed on CNBC.com. Our special coverage will begin Saturday at 9:30 a.m. ET.

Veiled bets

Berkshire requested anonymity for the trades because if the stock was known before the conglomerate finished building its position, others would plow into the stock as well, driving up the price, according to David Kass, a finance professor at the University of Maryland.
Buffett is said to control roughly 90% of Berkshire’s massive stock portfolio, leaving his deputies Todd Combs and Ted Weschler the rest, Kass said.
While investment disclosures give no clue as to what the stock could be, Stone, Kass and other Buffett watchers believe it is a multibillion-dollar wager on a financial name.
That’s because the cost basis of banks, insurers and finance stocks owned by the company jumped by $3.59 billion in the second half of last year, the only category to increase, according to separate Berkshire filings.
At the same time, Berkshire exited financial names by dumping insurers Markel and Globe Life, leading investors to estimate that the wager could be as large as $4 billion or $5 billion through the end of 2023. It’s unknown whether that bet was on one company or spread over multiple firms in an industry.

Schwab or Morgan Stanley?

If it were a classic Buffett bet — a big stake in a single company —  that stock would have to be a large one, with perhaps a $100 billion market capitalization. Holdings of at least 5% in publicly traded American companies trigger disclosure requirements.
Investors have been speculating for months about what the stock could be. Finance covers all manner of companies, from retail lenders to Wall Street brokers, payments companies and various sectors of insurance.
Charles Schwab or Morgan Stanley could fit the bill, according to James Shanahan, an Edward Jones analyst who covers banks and Berkshire Hathaway.
“Schwab was beaten down during the regional banking crisis last year, they had an issue where retail investors were trading out of cash into higher-yielding investments,” Shanahan said. “Nobody wanted to own that name last year, so Buffett could’ve bought as much as he wanted.”
Other names that have been circulated — JPMorgan Chase or BlackRock, for example, are possible, but may make less sense given valuations or business mix. Truist and other higher-quality regional banks might also fit Buffett’s parameters, as well as insurer AIG, Shanahan said, though their market capitalizations are smaller.

Buffett & banks

Berkshire has owned financial names for decades, and Buffett has stepped in to inject capital — and confidence — into the industry on multiple occasions.
Buffett served as CEO of a scandal-stricken Salomon Brothers in the early 1990s to help turn the company around. He pumped $5 billion into Goldman Sachs in 2008 and another $5 billion into Bank of America in 2011, ultimately becoming the latter’s largest shareholder.
But after loading up on lenders in 2018, from universal banks like JPMorgan to regional lenders like PNC Financial and U.S. Bank, he deeply pared his exposure to the sector in 2020 on concerns that the coronavirus pandemic would punish the industry.
Since then, he and his deputies have mostly avoided adding to his finance stakes, besides modest positions in Citigroup and Capital One.

‘Fear is contagious’

Last May, Buffett told shareholders to expect more turbulence in banking. He said Berkshire could deploy more capital in the industry, if needed.
“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.”
Wherever he placed his bet, the move will be seen as a boost to the company, perhaps even the sector, given Buffett’s track record of identifying value.
It’s unclear how long regulators will allow Berkshire to shield its moves.
“I’m hopeful he’ll reveal the name and talk about the strategy behind it,” Shanahan said. “The SEC’s patience can wear out, at some point it’ll look like Berkshire’s getting favorable treatment.”
— CNBC’s Yun Li contributed to this report.

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