Like Muslims go to Mecca and Jews go to Jerusalem, those of us of the value investing faith also have a pilgrimage to make. We go to Omaha to pay our respects to the Oracle at the Berkshire Hathaway Annual Meeting. This year is my first year paying homage. It’s been nearly 10 years in the making but like a good religion, my faith has only strengthened over that time. And our spiritual leaders (gods to some) - Charlie Munger and Warren Buffet aren’t getting any younger. Figured it was time to make the trek.
I'm excited to meet people who are fellow devotees (met a few wonderful people on the plane in fact) and also hear the gospel straight from the horse's mouth. I'm also excited to hear more about:
Apple: Buffett recently announced that he bought another 75 million shares of Apple. That would make it one of the largest positions in his portfolio at nearly ~250 million shares and a market value of ~$30 billion. He's told us before what he likes about the business - it's the ecosystem and the natural replacement cycle as a result of the low likelihood that someone is going to switch to a competitor. But would love to hear more about what continues to tickle his fancy about Apple (when he owns a Samsung flip phone!)
Health Care: Earlier in the year, Buffett announced a joint venture of sorts with Jamie Dimon and Jeff Bezos and their respective companies at fundamentally rethinking healthcare to potentially buck the cost curve and bring down medical care costs. Todd Combs was heading up the initiative and search for a CEO. I'm interested to hear about the progress on tackling one of the biggest problems facing our nation and the world at large.
The Bet: Ten years ago, Buffett made a bet with hedge fund manager Ted Seides that the S&P 500 could beat any basket of funds managed by the "smart" money picked by Ted. The S&P blew the pants off all of the funds picked when the bet wrapped up at the end of 2017 even though the S&P only produced an annualized return of 8.5% over that time. He spoke to it at length in his annual letter but I'm sure it will come up in the meeting.
Loading up the Elephant Gun: As of the year end 2017, Buffett has ~$116 billion of cash on the balance sheet so the question arises - what does he want to buy next? General equity prices are high so maybe he's waiting out the market for a more "sensible purchase price". The recent annual letter did express an interest in acquiring more real estate brokerage businesses in what is a very fragmented industry. Although Berkshire Hathaway HomeServices is the second largest real estate brokerage operation in the country, it only did 3% of business last year. In the annual letter Buffett said, " Given sensible prices, we will keep adding brokers in this most fundamental of businesses." But brokerage operations will hardly dent $116 billion so excited to read between the lines for any other clues on acquisitions.
Also, for those of you making the same trek or just maybe streaming from afar, I thought I would share some of the things I’ve been reading and perusing over the last few weeks as I prepared for this journey. See below. For those that can't make the pilgrimage to Omaha - the Annual Meeting will be live streamed on Yahoo Finance as it has been the last two years and will also be available as a podcast, a few days after the meeting. The podcast was a godsend for me as I could listen to it in chunks on my drive to work. On the other hand - if you plan to be in Omaha in the flesh- give me a holler!
My Hit List to Prepare for the Pilgrimage to Omaha
Podcast of last year's meeting chunked out into 10 wonderful episodes (thank god)
All the past annual letters
And of course- this year’s annual letter