Source : News Bulletins/CNBC-TV18
CNBC’s Becky Quick, in her special show, Warren Buffett: The Billionaire Next Door - All Access, CNBC spoke exclusively to Warren Buffett and took an "exclusive" look inside the Buffett's annual meeting with Berkshire Hathaway Shareholders; getting an unprecedented access into the world of one of the world’s most successful investors. Becky accompanied Buffet for three days and shares with us, her impressions of the tour...
Every year, Warren Buffett invites each and everyone of his shareholders here to his hometown for the granddaddy of all annual meetings. Over 30,000 of them will actually show up to the centre just to catch a glimpse of the 'Oracle of Omaha,' as Warren Buffet is called. Over the next three days, Warren Buffett will tirelessly answer questions from his shareholders. He will walk miles through this Convention Centre through all the back halls and he will catch up with old friends over a can of Coke or a game of bridge.
And for the first time, CNBC is with him every step of the way from setup to breakdown and everything in between.
It is the calm before the storm. Hundreds for Berkshire’s owner in town, building the exhibits that cover this 200,000 square foot floor. Tonight they get to meet their big boss, Warren Buffett.
It is Thursday evening and the Oracle of Omaha’s whirlwind weekend is just beginning. First he meets with the troops, employees from dozens of Berkshire’s companies, taking photos with each and everyone.
We are all heading to the Omaha Bridge studio to play with long time friend Carol Loomis, Editor at Large of Fortune Magazine.
Q: Tonight when you play bridge, what is your strategy?
Loomis: To win.
Buffett: We have probably played about eight years in a row and we come out on Thursday night always before the meeting to play.
Q: Have you done the last few years?
Buffett: I am glad you asked. I think about the eight times that we have played, we won about five in a row.
Q: There is like 30 teams or something?
Buffett: Yes. Then last year we came second.
Loomis: One year in between we were sixth or seventh or out of the money. I am not sure.
Q: If they voted now that you guys are in here, at this point?
Buffett: They have voted every place in the world, not because we were winning.
It is the first of many late nights for Buffett. This game goes on for more than three hours. Playing against the world’s richest man, doesn’t seem to intimidate his opponents.
Buffett and Loomis ultimately take home second place.
After spending Friday morning in the office, the oracle heads over to the Quest Center to check on the progress.
First stop, the Live Bulls representing Justin Boots. That was acquired by Buffett in July 2000. Then it is off to the collectors car, made by Marman Industries, which is a company that he started buying into late last year. These cars are worth over USD 1 million apiece.
But Buffett’s favourite stop may be the See’s Candeies display. He picked up that when Richard Nixon was President in 1972. Here he can size up the peanut butter and the chocolate fudge that he will be snacking on all through the meeting tomorrow.
Q: How many of these do you eat usually during the meeting? How many ounces?
Buffett: Fudge is probably USD 130 in the ounce. Certainly 8 ounces, that is USD 1000. The Coke is USD 150 for 12 ounces. There is almost 1 and half ounces of sugar in a 12-ounce can. Sugar is pure carbohydrates. So, three cokes is USD 450. And then you go to lunch.
Q: So how many calories do you consume on a day for the annual meeting?
Buffett: Plenty.
Q: How many dinners do you go to?
Buffett: I go to two dinners tonight and I go to two dinners tomorrow. But I won’t eat a lot during these necessarily. Dinners are not when I load up. I’ve already had peanuts and then a chocolate chip ice cream, and a Cherry Coke this morning. That is it. Now it is time for lunch.
Narration: Of course lunch is no low-cal affair. Buffett picks the menu for the special sit-down with managers of Berkshire’s 88 companies. His favourite foods are all here. Hotdogs, hamburgers and of course ice-cream sundaes. This is a unique event.
Buffett: We have no business arrangement at Berkshire where our managers have a meeting. We have one meeting for the CEOs and one for the CFOs. But I never call our managers here. So, they don’t even get to know each other except through this meeting.
Narration: He takes time to thank the managers and remind them what is important to Berkshire.
Buffett: Although we had like to have more money, we have got all the money we need and we don’t have an ounce more of reputation that we need and we never want to trade reputation for more money. Fortunately we don’t have to.
Narration: Back on the floor, Buffett puts the displays to the test climbing on Gus the Bull.
With 30,000 of his closest friends eager to hear his every word, Buffett makes sure his sound systems are up to par.
Buffett: The big news from Omaha is that Carol Loomis and Warren Buffett finished second last night in a local bridge tournament.
As dawn breaks on Saturday, the line to get into the Quest Center is growing by the minute. The Billionaire Next Door arrives at 6 am, just in time to see a portrait of himself being created that uses all Benjamin Moore paint, another Berkshire company. This one was acquired in January 2001.
In just eight minutes, Michael Israel creates a portrait of Buffett that will be auctioned off later this year to benefit Girl’s Inc, which is a favourite Buffett charity. Buffett goes into his usual routine, welcoming the media and taking a crowded spin around the floor.
But the crowds this year is bigger and more aggressive than ever before. After greeting the gecko (GEICO) and donning a leather biker jacket, Buffett finally seeks sanctuary backstage with his daughter Susie.
Q: Have you ever seen him as crazy as this before?
Susie Buffett: No he gets crazy every year. It is fun but crazy.
Q: Why do you think that is?
Susie Buffett: If I give back these sort of boring answer then I think it is true is that he truly is, he is this regular old guy who is doing what he does everyday and he is the most honest business person in the country. People love that, they need it, they want to hear it, they trust him and it causes more and more people to come.
The other piece of it I think is people hear about how fun it is; they want to be part of the party.
When Buffett takes to the stage he isn’t alone. By his side, as he has been for nearly 50-years longtime friend and Vice Chairman Charlie Munger.
Warren Buffett: Charlie and I need each other now. Charlie is 84, I am 77. So I can see and he can hear. So we have to work together even, I can remember his name most of the time.
Q: When you get up on stage you guys just gave each other a signal like you take this one and I will take this one?
Charlie Munger: Warren is the ringmaster. But the interesting thing about this is a normal corporation would not want the top executives out there for six hours taking questions on every subject. Imagine that the legal department would howl on some other corporations. But we don’t answer them.
Q: Have you ever had the lawyers trying to get you guys to not say so much or not write so much?
Buffett: We gave up a longtime ago. I said in my first annual report Berkshire Hathaway, Ropes & Gray were the attorneys for Berkshire and they have been there before and there is this ritual where they send the annual report to the attorney. The guy was a wonderful guy. But I sent it to him and he said, you have changed the basics. What the hell was that, he never saw it on the report.
Buffett is the ultimate showman. Every year he plans a surprise for the shareholders. This year the surprise is daytime soap star Susan Lucci. She has gamely agreed to come out and greet the crowd.
The show is about to begin to a standing room only audience. After five hours and over a 100 questions from shareholders Buffett and Munger spend another two and a half hours meeting each and everyone of Berkshire’s international shareholders.
Buffett: They have this autograph on the passport. That is one of the things that we get asked to autograph.
Q: Are you allowed to autograph passports?
Buffett: Apparently, I mean we have been autographing. If not, I’ll have to go with this protection programme after this dinner.
The day still isn’t over. Buffett goes to two dinners and gets about five hours of sleep. Sunday, he is right back at it, visiting the crowd shopping at his jewellery store at Borsheim’s and playing bridge with Berkshire Manager and some other friends.
After a three-hour press conference he heads to dinner at Gorat’s with his family and of course his friends including Berkshire Board Member, Bill Gates and celebrates.
Not many CEOs arrive at their annual meeting to roaring applause from their shareholders. But Berkshire Hathaway’s annual meeting got its start from much more humble beginnings.
Buffett says, “You would have to go way back. We used to hold them in New Bedford, Massachusetts, where Berkshire Hathaway started. I would go back there and there was me and somebody taking the minutes. We would have about anywhere between eight and 12 people for the next 10 or so years until about 1981. We held a luncheon at National Indemnity. So, it was a slow starter.”
Talking about how the event got bigger and gained momentum, Buffett says, “I think shareholders felt welcome, which is somewhat unusual. We welcomed their questions, we met with the people in lobbies and then we gradually added various little factors like some of the products that our companies sold.” He adds, “We liked talking about whatever questions our shareholders might ask.”
According to Buffett, his shareholders were real owners. “They want to learn more about the company. There are two different types, the very sophisticated type that want to ask sophisticated questions and also the type who put a good bit of their life savings in it.
Rob Sullivan, a Berkshire shareholder buying stocks since the 1970s calls Buffett the Michelangelo of investing. He says, “I advise everybody that there is never a better person to manage money than Warren Buffett. I’ve never met one. I don’t think I ever will meet one. He is the Michelangelo of investing. It is a six sigma event that we might not ever see again in the next 100-200 years.”
Sullivan adds, “At one point we had 550 A-shares, because we bought them at less than USD 200-300.” The average price for an A-share today is over USD 130,000.
Talking about his people and the business, Buffett says, “Some ticker symbol that moves around in a chart or something that gets recommended by some analyst, it is a real honest to god business that they have bought into and that they are going to part of for the rest of their lives.”
Warren Buffet is a man of numbers. He tracks everything from the investment he makes, down to the shareholders requests and the number of requests for tickets for his annual meeting. In the weeks leading to his meeting, his favourite game is guessing the number of requests that come in. Warren buffet laughs saying “ It’s like guessing the earning numbers.”
On the D-Day, the carefully decorated (Convention) Hall turns into a madhouse, with shareholders rushing through the door looking for seats in the front row. Warren Buffet recalls a time when he was standing near the entrance and people just rushed by him in search of seats in the front row to get a clear view him.
A spot on the floor of the display areas at the venue of the Meeting is difficult to get. Buffet says that it is difficult to decide amongst Berkshire’s 88 companies, whom to let in. When Berkshire’s shareholders come in for the meeting, the whole city of Omaha benefits. The city’s hotel rooms book up fast. Furniture shops, jewellery stores offer discounts to visiting shareholders. One retailer describes the event – the Berkshire weekend as the ‘Grand Slam’ of all retailing. Big spenders come in private jets. Buffett says that people are in a mood to buy.
