Every generation has investment managers gurus and some manage to be multigenerational. If you consider multigenerational, you consider changes which happen in the economy. An interesting exercise is to look at the Forbes 400 list from 1980, 2000 and 2020, over the the 40 years the names have changed. If you wish you can go back further and consider if you were a buy and hold investor some companies were great performers then something changed and did they adapt or used the same formula but people changed? The point is something changed and did the investment manager change?
Warren Buffett is in his 90’s and he has more winners than losers through a variety of economic cycles which makes Berkshire Hathaway Inc annual meetings something to pay attention to. What is Warren’s philosophy towards investing and how does he choose to spend billions of dollars to invest? In an article by Jonathan Stempel and Carolina Mandl of Reuters, the annual meeting of Berkshire was held and the question and answer session was 5 hours. (if you want you can watch some of the clips on You Tube).
Berkshire’s operating profit was $7.1 billion and within the orbit of companies Berkshire controls supply chains were managed. Berkshire held plenty of cash and some of it was used to by more shares in Chevron and he although he does not often buy shares after a company has announced it is buying another, Berkshire has bought shares in Activision Blizzard ( a gaming company) which Microsoft has announced a bid to buy its shares.
A shareholder asked why he bought 14.6% of Occidental Petroleum and insurer Alleghany Corp? Mr. Buffett said he bought Oxy Pete because he read an analyst report and for Alleghany, the chief executive of Alleghany who once worked for Berkshire’s General Re business wrote to him.
Berkshire used $51 billion to buy equities and its cash stake went down $40 billion to $106 billion.
One thing Berkshire will not be doing is buying bitcoin and sometimes it is important to know what investment managers are not buying.
Linking to dividend paying stocks, Mr. Buffett loves dividend paying stocks particularly if they have moats or moat like conditions. Some of his biggest holdings are in Coca cola, BNSF railroad (they are not making any more railroads), General RE Insurance and Geico Insurance (they produce cash), Apple, Chevron and Occidental Petroleum and a host of other companies. Often times it is good to ask a guru what he or she does not like and then you can decide on what they like.
There are more questions than answers, till the next time – to raising questions.