4 Hot Items on Warren Buffett's Plate

Berkshire Hathaway's (NYSE: BRK-A  ) (NYSE: BRK-B  ) annual meeting -- the so-called Woodstock for capitalists -- takes place this weekend. While the Q&A format has changed this year -- questions were submitted in advance -- shareholders will no doubt be interested in the following four topics:

1. Berkshire Hathaway's succession plan
Every year that passes means we are a year closer to Buffett's death. It is quite natural, then, that shareholders are increasingly interested in his succession plans, given that the man and the firm he built are so intertwined. A new name has surfaced, courtesy of Alice Schroder, Buffett's biographer: Byron Trott, Buffett's investment banker at Goldman Sachs. Buffett has praised Trott publicly, and there are probably few people outside Berkshire who understand the firm as well as he does.

Don't expect Buffett to name his successor(s) this weekend. But he may be inclined to give more details concerning the structure of leadership after he has moved on, along with other steps he has taken to protect the integrity of Berkshire's culture and operations. In the same spirit, board member Bill Gates, co-founder of Microsoft (Nasdaq: MSFT  ) , recently announced that his own commitment to Berkshire is "a lifelong thing."

2. Buffett's derivative bets
Buffett's sale of puts on major world stock indexes is a source of handwringing among shareholders and pundits, some of whom see an inconsistency between these positions and Buffett's criticism of derivatives. Buffett wrote about these positions in some detail in his most recent annual letter in order to explain how he thinks about these bets.

Nevertheless, I expect that the topic will come up again, as mark-to-market losses cloud shareholders' assessment of what looks to me like classic Buffett: being well-compensated to take on a large potential exposure to risks that he understands well. I'm convinced that he hasn't gone insane.

3. Investment opportunities
In recent years, Buffett has complained that he faced increasing competition for deals from financial buyers like private equity firms, but between credit drying up and skittish limited partners, private equity has mostly hit the sidelines for the time being. This creates opportunity for a cash-rich investor like Buffett, who doesn't need to rely on the capital markets to finance transactions.

Keep your ears open for what Buffett has to say on deal flow. Are many more ideas being brought to him? Are there more family businesses up for sale? What about deals abroad? Don't expect him to name potential targets or even sectors of interest, but he could indicate whether there are any large deals in the pipeline.

4. Public securities portfolio
Given the size of Berkshire's equity portfolio, there was no way it could escape the bear market in 2008. Shareholders may be interested to hear his views on his investments in companies such as ConocoPhillips (NYSE: COP  ) , Johnson & Johnson (NYSE: JNJ  ) , and U.S. Bancorp (NYSE: USB  ) , the shares of which are all changing hands well below Berkshire's reported cost.

I certainly expect these four topics to garner attention, but it'll also be interesting to look for any surprises -- Buffett's usually able to produce one or two every year.

More Foolishness:

Take a hint from Warren Buffett's recent investments in Goldman preferred shares with fat yields: In this market, dividends -- those that are sustainable -- will be a big component of future shareholder returns. The team at Motley Fool Income Investor can show you how to build and manage a portfolio of stocks that pay a solid yield. To find out their top five recommendations for new money now, take advantage of a 30-day free trial today.

Alex Dumortier, CFA has no beneficial interest in any of the companies mentioned in this article. Berkshire Hathaway is a Motley Fool Stock Advisor selection. Berkshire Hathaway and Microsoft are Motley Fool Inside Value picks. Johnson & Johnson is a Motley Fool Income Investor selection. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (30)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 01, 2009, at 5:41 PM, FinancialFellow wrote:

    I still believe that Berkshire will never be quite the same company once Buffett retires/dies. Sure, he'll pick some good folks that can do a good job of leading the company and picking solid investments after he departs but, there's only one Warren Buffett.

    His replacements won't be quite as good as he is and I suspect that their replacements won't be as good as they are. Sooner or later all empires fail. The same holds true for businesses. Berkshire is not exception.

    The story of Berkshire and Buffett really is a phenominal story, though. I love watching his interviews on CNBC, Fox Biz, etc... The annual shareholder meeting is a hoot, too.

    I've spent some time following Berkshire's investments and hold many in my portfolio. Recently, however, I've diversified some of my holdings through lending: http://financialfellow.com/2009/04/22/peer-to-peer-lending-o...

  • Report this Comment On May 02, 2009, at 11:23 PM, catoismymotor wrote:

    I am a great admirer of St. Warren of Omaha. How he goes about making his picks is a wonderful example to all investors. With that being said I think that his comments at his annual meeting yesterday concerning how the present administration has handled the financial crisis we not on the mark. I will admit that I think he said what he did to help market stability and help maintain, if not boost, the financial stocks held by BRK-A. I think he is not thinking past the date he forsees as that of his death, selling the future of his children and grandchildren cheap. I am usually a "glass is half full" kind of guy, but not when it comes to how our government has handled things thus far. Feel free to tear me to shreds on this one. I will feel disappointed if you don't.

  • Report this Comment On May 04, 2009, at 10:02 AM, CAPTAINWACK wrote:

    catoismymotor, your right on the money. Sir Warren is completely out of touch with the rest of us working class people in America and is just doing his political grandstanding thing. Hope and wishing the market back to black isn't going to work. We still have 13 million ++ people collecting unemployment in the US and it's getting worse everyday. What the unemployment number doesn't include is that millions of construction and the self-employed have little or no work at all but can't collect benefits because they don't pay unemployment taxes. I alone know of 30 plus people who haven't received a pay check in months. So just keep watching the unemployment number for the next few quarters, as more people run out of benefits and drop off the chart we will be told that layoffs have "stabilized" and the economy is on the mend. This rosie day picture will be painted over and over until your brain washed and you think all is well and it's OK to go out and spend money like a drunkin whore again.

    But don't worry, good old Warren has no problem spending his money as he jet-sets around the world preaching the good times are back.

    If he was so smart why didn't he see this coming and cash out? Could have saved his investors billions.

  • Report this Comment On May 05, 2009, at 1:43 AM, 8Lives wrote:

    Buffet's philosophy for the investing timeframe, for equities, is "forever".

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 889599, ~/Articles/ArticleHandler.aspx, 3/31/2015 4:25:01 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...