Buffett And Berkshire’s Entertainment Value Is Waning

(Bloomberg Opinion)

Berkshire Hathaway Inc. is a gigantic conglomerate that owns a bunch of boring businesses outright and has big stakes in a few arguably less-boring ones. That its annual shareholder meetings have nonetheless become pop-culture spectacles dubbed “Woodstock for Capitalists” can be chalked up in large part to the folksy charm of Chairman and Chief Executive Officer Warren Buffett and his long-running buddy act with tart-tongued Vice Chairman Charles Munger.

That buddy act technically ended with Munger’s death in late November — at “99.9 years,” Buffett said, as Munger had been due to turn 100 on New Year’s Day — but it was still a chief theme of Saturday’s annual meeting in Omaha, Nebraska. The ceremonies began with a movie about the Munger-Buffett partnership, which unlike past such films was broadcast to viewers outside the CHI Health Center Arena as well as those within. And during the long Q&A that followed (at least the morning session; I’m writing this before the start of the afternoon activities), Buffett’s occasional invocations of Munger provided most of the bright spots.

Apart from that, it was hard work: long disquisitions on the workings of utilities, real estate and other industries by vice chairman of non-insurance operations and Buffett heir apparent Greg Abel; shorter ones on a variety of insurance topics by vice chairman of insurance operations Ajit Jain; and rambling remarks on management style, climate change, overseas investing, taxes and other topics by the gravelly voiced Buffett that were at times profound and at times entertaining but suffered from the absence of Munger’s pithy interruptions.

Subtract Buffett, and you have an event that I doubt many people will want to travel to Omaha for or watch on CNBC, and the 93-year-old made clear that he didn’t think he had many more annual meetings to go.  “I feel fine,” he said, “but I know a little about actuarial tables, and I shouldn’t be taking on any four-year employment contracts.”

There is, of course, another thing beyond the charms of Buffett and Munger that gave Berkshire shareholders such strong feelings of attachment to the company. Investing in Berkshire over decades made many of them very rich — allowing them to do things like donate $1 billion to the Albert Einstein College of Medicine in New York to make it tuition-free, which Ruth Gottesman, whose late husband was an early Berkshire investor, did in February and was applauded for at the meeting.

But in his most recent letter to shareholders, released in February, Buffett made clear that he didn’t think such stories would be part of the company’s future, either. “All in all, we have possibility of eye-popping performance,” he wrote — Berkshire has simply become too big. The company is sitting on a cash pile that Buffett expects to reach $200 billion by the end of this quarter, but he said on Saturday that he and his managers don’t see an opportunity to deploy it.

So what is the company good for? From the shareholder letter again: “Berkshire do a bit better than the average American corporation and, more important, also operate with materially less risk of permanent loss of capital.” That’s not nothing! It’s just also not really deserving of a cult following.  The days of Woodstock for Capitalists are clearly numbered. Does anybody have a replacement in the works?

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts. A former editorial director of the Harvard Business Review, he is author of “The Myth of the Rational Market.”

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