The Berkshire Hathaway Shareholder Meeting (From Then To Now)

Warren Buffett, the CEO of Berkshire Hathaway, is without doubt the king of investing. There's never been anyone with a track record close to his, and it's unlikely there will be for a very, very long time. Buffett took over Berkshire Hathaway back in 1965, and since then he's recorded an average annual return of 19.8 versus the S&P 500's 9.9. This unbelievable long-term track record has not only made Berkshire Hathaway shareholders unbelievably wealthy, but it's given Warren Buffett a cult-like following. A cult that gathers once a year at the CHI Health Center in Omaha for the Berkshire Hathaway shareholders meeting. Tens of thousands of fans from all corners of the globe gather in Warren Buffett's hometown of Omaha to sample Berkshire's wares, meet like-minded investors, and listen to the wisdom of Warren and Charlie. The meeting is dubbed “Woodstock for Capitalists,” and I'm very excited to announce that thanks to Seeking Alpha, both myself and my good friend Hamish Hotter will be traveling to Omaha this weekend to bring you guys coverage of the event. There'll be content on both of our YouTube channels, the Young Investors podcast feed, and for the day-to-day stuff, you can also follow us over on Instagram as well. But in this video, with the biggest event on the investing calendar coming up in just a few days' time, let's take a look at how this event came to be what it is today and what we can expect from this year's meeting.

It's kind of funny. Berkshire Hathaway is currently America's largest company by real-world physical assets, and it's the sixth-largest company in the S&P 500. By taking the reins of this company back in 1965, Buffett has amassed a personal fortune worth more than a hundred billion dollars. But back at that time, Buffett didn't actually want to own Berkshire. Back around that time, Berkshire Hathaway was nothing more than a struggling textile manufacturer run by a man called Seabury Stanton. Buffett originally got into the company following Ben Graham's cigar butt approach in 1962. The original purchase of Berkshire was a terrible mistake. It was a cigar butt approach to investing, where we would look around for something with a free puff left in it. You know, it was soggy and kind of disgusting and everything, but it was free. When Buffett first bought into Berkshire, his plan was to hopefully take a free puff by selling his shares back to Seabury Stanton for a profit.

As the story goes, in 1964, Seabury Stanton spoke to Warren and agreed to buy back his stake for eleven and a half dollars per share. However, a few weeks later, when Buffett received the tender offer in writing, he noticed something peculiar. Stanton's offer was no longer eleven and a half per share but was actually eleven and three-eighths. It was an eighth below what he said to me and what he'd agreed to. So I found that kind of irritating, and I didn't tender. Then I bought a lot of stock and bought several blocks, and before long we controlled the company. This is a really interesting move by Buffett because it actually shows one of his rare moments of irrationality. Instead of doing the smart thing and just selling, he bought, bought, and bought some more until eventually he acquired a controlling stake in the business and fired Mr. Stanton.

Now, this might have given Buffett the last laugh, but Buffett's problem was that, well, he was now the proud owner of a failing textile manufacturer. Initially, Buffett maintained Berkshire's core business of textiles, but in 1967, he decided he had to look elsewhere and started expanding into the insurance industry and other investments. Berkshire first ventured into the insurance business with the purchase of National Indemnity for 8.6 million dollars, and later on, in the late 1970s, Berkshire acquired an equity stake in the one you'll all know—Government Employees Insurance Company, or Geico. Fast forward to 1973, and Buffett held the first Berkshire Hathaway shareholder meeting. A little bit different from what we see today, the first Berkshire shareholder meetings were hosted in the employee lunchroom of National Indemnity's office—a far cry from the CHI Health Center where it's held today. The trusty lunchroom was used from 1973 until eventually the meeting was moved to the Red Lion Inn in downtown Omaha in 1981. Interestingly, being nervous about attendance at this larger space, a Buffett associate actually recruited employees to stand in the room to make it look less empty. Little did they know in the long run, attendance was not going to be a problem.

By 1985, the crowd had grown to 250 people. The following year, the meeting moved again, with about a thousand people gathering in the Jocelyn Art Museum to hear Buffett speak. By 1990, again Buffett needed to switch to a larger venue with popularity surging. The meeting moved to the Orpheum Theater, where the meeting hosted 1,400 people. The intimate feel of the early meetings was gone, but the party had only just begun. In 1995, over 4,000 people showed up as the meeting moved again to the Holiday Inn Convention Center. In 1997, attendance grew to 7,700, and in 2000, the final relocation happened, and the meeting was held at the Quest Center in front of 13,000 people. That's where things really started to explode. In 2001, 17,000 people attended; in 2004, 19,500; in 2009, 35,000; and in 2015, 40,000. As the years ticked on, the venue would also evolve, being renamed the CenturyLink Center in 2011 and now the CHI Health Center since 2018.

From a small corporate event once held in a lunchroom, the Berkshire Hathaway shareholders meeting nowadays feels much more like a festival. Shareholders are required to get tickets for the event; there are security scanners at the entrances and long lines of people that start gathering in the early hours of the morning. Once the doors open, you can then make a choice: rush with your fellow cultists to secure a seat as close as possible to the front of the stage, or instead venture through the exhibition hall and sample the wares of Berkshire's many wholly owned businesses. From grabbing a coat to picking up some peanut brittle, to checking out the NetJets stall, to grabbing some Berkshire Hathaway merch, or exploring the latest RV from Forest River. But of course, make sure you're in the main arena by 8:30 a.m. for the annual Berkshire mini movie, and then after that it's all systems go—five or six hours' worth of pure wisdom from Warren and Charlie. It really is a fantastic event, and I was extremely fortunate to be able to go last year with Hamish as well.

I will say, you know, if you look up to Warren Buffett or Charlie Munger, or just if you follow their way of investing, you have to go at least once. And while the meeting is fantastic and all, and it's great to see your idols, the main reason I suggest everyone go is because of all the mini-events that surround the meeting and it's also the people that you meet while you're there. We were hanging out with keen value investors at Starbucks, at the pub, at a barbecue, at the event itself. It was awesome! They were everywhere! Downtown Omaha is overrun that weekend with like-minded value investors, and the big names in the value investing/Berkshire Hathaway space are there as well. Tim Cook was there, Bill Gates was there. We met investors like Guy Spier, Monash Pabrai, Tom Gayner, Matt Peterson, and Toby Carlisle. There was a meet-up event for Guy Spier's fund, Aquamarine; there was a brunch for Markel in the days leading up to and following the meeting. There are always investors floating around and side events to go to. It's an amazing networking opportunity; it's a fantastic weekend, and myself and Hamish are absolutely thrilled to once again be going this year.

As I noted, we couldn't have done it without our sponsor, Seeking Alpha. Hamish and Brandon's Berkshire Bonanza 2023 is brought to you by Seeking Alpha. Try Seeking Alpha Premium today to access Seeking Alpha's rating system, valuation breakdowns, ten years of financial data, unlimited news and analysis articles, plus have earnings call transcripts, investor presentations, SEC filings, and press releases all in one place. With the suite of tools that come with Seeking Alpha Premium, you can be confident, no matter what company you're looking at, you'll be able to get up to speed fast. But the best thing about our partnership is, if you sign up with our referral link, you can access a 14-day free trial of Seeking Alpha Premium, so go check them out, give Seeking Alpha Premium a go for yourself.

And now, let's get back to it.

To finish off the video, with the meeting fast approaching, I wanted to talk about what we can expect from this year's gathering. Well, the meeting itself will once again be live-streamed by CNBC starting at 9:45 a.m. Eastern at cnbc.com/BRKlive. So I think you can definitely expect the same format to remain as what we've seen in the last couple of years: a morning Q&A session, a lunch break, and then an afternoon Q&A session. But in terms of content, you know, typically there is a really good blend of long-term value investing wisdom from Warren and Charlie, as well as their thoughts and opinions on more current events. Typically, because the meeting is hosted by CNBC, they're kind of looking for sound bites and clickable headlines focused around current events. But Buffett and Munger are very aware of this, and they always try and answer from the perspective of the long-term investor.

So if I had to predict, I think there will definitely be some questions around, say, the recent bank failures, to which Warren will inevitably just say, you know, "No stress, calm down, everybody. This isn't 2008," like what he did on his recent CNBC interview. I think we'll probably hear a lot about the current state of the economy and investing when interest rates are high. I imagine Warren will probably be asked about bonds versus stocks in this sort of environment, and the idea of, say, staying in cash versus being invested. Beyond that, we'll also probably get some questions on the Japanese trading houses; he was recently over in Japan, and undoubtedly, we'll also get some questions on his continuing purchases of Occidental Petroleum. Not exactly sure, but if we're really lucky, Buffett might even reveal some of his next 13F information—perhaps just a little bit early.

So there should be lots of investing content from the meeting, and both myself and Hamish will be sure to bring you a full wrap of what went down on our channels the day or so after the event. So make sure you subscribe to see that content and follow us on Instagram if you want to see more of the day-to-day stuff of what we're up to or if you wanted to catch up with us at the meeting. And of course, for those that prefer audio, we'll also be doing long-form discussions over on the Young Investors podcast feed. But with that said, guys, thank you very much for watching, and the next time you'll see me, I'll be over in Omaha. So I'll see you there!