I attended my first shareholders’ meeting of Berkshire Hathaway in Omaha this weekend. My investment manager, Gary Watkins (Banyan Capital), has been a shareholder and regular attendee of these meetings for some time. I had heard of these meetings as the ‘Woodstock of Capitalism’.
As I walked over to the convention center at 7:00 AM a few blocks from the hotel (we booked the reservation almost a year ago- hotels in Omaha book up quick for this event) I observed the crowd gathering outside. Gary had gone over at 3:00 AM to secure good seats. They were close enough that I could have hit Warren Buffet with a rock, not that this thought would occur to me in any other context other than to describe how close the seat was. Thank you Gary.
The crowd was as middle America as a Norman Rockwell painting. This is not the typical crowd you would expect at a shareholder’s meeting of one of our largest conglomerates. There were elder couples, very casually dressed; perhaps retired or a small business owner. There were young couples, many with children. There were also many other small investment managers like Gary, and some investment rock stars like Mario Gabelli who I passed going to my excellent seat.
But most of the wealthy here were like those in The Millionaire Next Door: understated. It was fitting given that Warren Buffet, one of the wealthiest men in America, is similarly understated. He lives in the same house in Omaha he bought in 1958.
The crowd was largely white, but the most dominant minority was Asian. There seemed to be relatively few Blacks or Hispanics. Others who had been to previous meetings noted that the Asian segment was much larger than they had seen in the past, but that it had been growing.
There were many students, many from Columbia, Warren’s alma mater. As the attendees filtered into the arena the atmosphere seemed like a cross between a large church revival and a rock concert. There had to be over 35,000 in the hall and even the crappiest seats; those behind the stage with no view were filled to capacity.
For over 5 hours, with one break, this entire audience sat mesmerized listening to two old men field questions. To the left were three business journalist including Andres Ross Sorkin, Carol Loomis, and Becky Quick from CNN who filtered submitted questions. To the left were three financial analysts (they don’t smile much) who channeled questions. Questions were also taken from individuals from various stations in the audience.
Warren Buffet and Charlie Munger sat at a table in the middle and answered questions ranging from the philosophical (How do you find your core competence?) to the technical (Why would you add capital to a division that it only showing 1/10 of 1% return on capital).
Warren is the gregarious first responder. He has a joy about his work that is inescapable. His ability at age 83 to recall precise specific performance numbers of the 80 companies they own is incredible. He can instantly recall the amount of rail traffic on his Burlington Northern Railroad for the last comparative quarter, and then address the next question about the price he paid for Nebraska Furniture Mart 30 years ago both with flawless precision.
Charlie Munger (90 years old), his partner for over 50 years, sits expressionless most of the time looking like a cross of the famous farmer with a pitchfork in the classic art piece American Gothic and Yoda from Star Wars. Like Yoda when he speaks it is profound and wise; unlike Yoda he is even more sparse with words and far more clear.
These two characters could have been a comedy skit on Saturday Night Live, or they could have been giving a philosophy lecture. The crowd hung on every word these two brilliant, wealthy and humble men would impart. It was often Munger’s surprisingly brief response to complex questions that the audience found most entertaining. It takes an immense amount of wisdom and understanding to be so brief in such circumstances.
Besides sharing a common interest in the financial success of the company this community shared an understanding of how capitalism works far beyond the technical aspects taught to every MBA. They understand the moral aspects and the virtues it requires.
They understand that capitalism is not just about numbers and faceless categories of people. It is about businesses that are productive, thriving and opportunistic that serve customers. It is about Dairy Queen, Nebraska Furniture Mart, Tony Lama cowboy boots, See’s Candy, Borsheims Jewelers, Heinz Ketchup, Geico Insurance, Iscar cutting tools, Burlington Northern Railroad and dozens of other successful companies in the Berkshire portfolio.
This seems lost of the current debate about equality and the distribution of wealth. Our market system allows everyone to participate in this historically unique phenomenon, but there are very few who have the wisdom and virtues of Warren Buffet and Charlie Munger to deploy capital as wisely as they have. They have benefitted thousands of shareholders, probably millions of employees, and certainly many millions of customers and suppliers to their companies.
It is a community of capitalists that attended this meeting and it is that community that drives this economy.