Value Investing

2014 Berkshire Hathaway Annual Meeting With Warren Buffett, Charlie Munger – Q&A in Full

Full Q&A morning session from the 2014 Berkshire Hathaway Annual Meeting with the world’s richest man and most successful investor, Warren Buffett and his partner, Charlie Munger.

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Warren Buffett

AM 2014 Berkshire Hathaway Annual Meeting With Warren Buffett, Charlie Munger - FULL Q&A

Transcript

Good morning. Before we start. There are two very special guest I'd like to introduce have Stand-Up the first. Even though he was on tour he he took a quick detour. Daum ought to be here today and when my friend Paul Anka please stand up. All with all the talk that had been around about my succession I thought it was probably a good idea to try and hook up with someone famous that might give me a shot at a second career. So we were available for weddings and funerals and bar mitzvahs. We actually had one offer to the day I thought it was kind of insulting and they offered a thousand dollars and I mean for me and Paul that really seemed a little ridiculous. I told the people out and they said OK it will make it that is just Paul Kamuzu. Now we have one other very special guest. This affair does not just happen by itself and there's a young woman who had a baby boy named Brady in September and she is Marshal together 400 plus of the people from our various companies and put on the show you you're witnessing today. And I just want to say a special thanks to the woman we all love and especially me Carrie Solvit Carrie OK now we get down to the minor players and we'll introduce the board of directors. They were going to have the will of the board meeting or the shareholders meeting I should say after the Q and A which will end with 330 and then we'll recess for 15 minutes and at 345 reinstitute the or begin the shareholders meeting.

But for those of you who won't be around at 345 I'd like to have a chance to meet the directors now so I will introduce them one at a time and ask them to stand Harders and maybe hold your applause until they are all for standing and then you can go crazy. So doing it alphabetically and if you'll stand as I give your name. Howard Buffett Steve Burke Sue Dacher Bill Gates Sandy godsman Charlotte Guymon Don Kiel my partner Charlie Munger Tom Murphy Rod Olson Walter Scott and Merrill Wittmer and that is the board of directors of Berkshire. We have just a couple of slides and then we'll move right into the course of questioning which will go on until roughly noon. Take a break at noon and come back about 1:00 o'clock and then we'll continue until 330 at which point we'll adjourn and then have the annual meeting at 345. But there are just a couple of slides that we released our earnings yesterday. And I've always emphasized we try to release our earnings always after the markets closed and preferably after the markets closed on Friday so that people will have a full weekend to digest the information because the there's a lot of information about Berkshire every quarter and it's contained primarily in a 10 Q that we make available for you to read over the full weekend. So we always are due not not to just look at the summary figures but but take a look at the 10. Q It's great reading and absorb all of that by Monday morning. But here we have the summary for the first quarter.

And as you can see our operating earnings were down a bit and that was more than accounted for in insurance underwriting and you should understand that insurance underwriting from quarter to quarter really doesn't mean that much. For one thing it can be quite affected by changes in foreign exchange which really don't have anything to do with our insurance business but at least in the reality of interim results our insurance business now has a float of 77 billion dollars and that 77 billion dollars is ours to invest and whether it costs us anything or not is determined by whether we have an underwriting profit. So even though our underwriting profit in the first quarter was quite satisfactory but nevertheless down from the first quarter of last year the insurance business is marvelous for us. And if we if we even breakeven that 77 million dollars which is subtracted from net worth I mean that's a liability on the balance sheet. But if it's cost free it really does us about as much good as net worth itself does. So it's a it's a very remarkable business and frankly if we average an underwriting profit over the years I'll be very happy and you should be very happy with what our insurance business does for us. But it was down in the first quarter. And like I said that more than accounted for the decline in earnings. We always advise you to pay little attention or pay no attention really to quarterly or even annual realized gains or losses in securities because we make no attempt to time the sales of securities to produce earnings or in any given quarter we just try to manage the money as well as we can.

And we let the chips fall where they may in terms of whether those actions produce gains or losses in the short term. We hope that they produce a lot of gains over the longer term and they have. But they should be ignored and attempting to interpret our shorter term earnings. With that I would like to give you a little preview of a vote that is taking place and we'll talk more about when we get the shareholders meeting. But it's so remarkable that I wanted to put it up.