Summary Berkshire Hathaway's annual meeting 2021

ANNUAL MEETING OF THE BERKSHIRE’S SHAREHOLDERS

The annual meeting of the shareholders of Berkshire Hathaway . was held in 2021. It was the only live stream event on May 1. The meeting, as was organized in Los Angeles, was attended by its 90 years old CEO Warren Buffett, the Executive Vice Chairman of the company, Charlie Munger, aged 97, along with the 58-year-old Vice Chairman of Non-Insurance Business Operations, Greg Abel, and the former Vice Chairman of Insurance Operations, Ajit Jain. The anchorperson and the journalist from CNBC, Becky Quick, went through the questions given by shareholders and other investors so interested. The key findings from the annual meeting report and Quarter 1, 2021 earnings report are given below.

Investment and Operating Result

EPS (earning per share) for each Class A share rose to a positive gain of $7,638 in Q1,2021 after a loss of $30,653 in Q1 2020. The company’s investment profile played an important role in achieving this dramatic gain. In quarter 1, 2021, a loss of $70.275 billion was recorded, but in the first quarter of 2021, a gain of $5.700 billion was recorded. Buffet noticed in a webcast that a self-inflicted rescission resulted in an unrealized loss in Q1 2020. This self-inflicted recession was the consequence of COVID-19 lockdowns which resulted in a stock market selloff.

An increase in revenue was recorded collectively by all Berkshire's operating divisions, which were 5.4%, year after another i-e from $61.265 billion to $64.599 billion. The income of Pretaxs operating divisions was 23.8%, from $6.926 billion to $8.577 billion. Berkshire holds a big cash reserve, cash, cash equivalents, and short-term investments in US Treasury Bills.

Collective Assets until March 31, 2021

The cumulative assets until March 31, 2021, was $142.211 billion, which were previously $135.014 billion as of December 31, 2020. This shows an increase of 5.3% in the past three months.

Investing in an S&P 500 index fund—an ideal investment

The Company repeated its long-established stance of ideally serving an average investor by investing in an S&P 500 index fund and not by striving to pick stocks. Buffet gave an illustration by presenting a list of the world’s top 20 companies in terms of market capitalization both in 1989 and today. He mentioned that the top 20 companies in the world in 1989 are no more in the same position today; furthermore, Apple ., which has a market capitalization of more than $2 trillion, is 20 times more valuable than the one in 1989.

Buffet further explained his suggestion to new investors that a diversified index must be preferred over picking a stock. He also noted that few investors have been able to select long-term winners. He said that there's a lot more to picking stocks than finding out a superior industry. He also gave an example of the auto industry and noticed over 2,000 defunct companies in the US alone. There were only three automaker companies in the US by 2009 and two out of them were in bankruptcy at that time.

Berkshire's apprehensions in March 2020?

a shareholder questioned that the company was too afraid when his economy faced a recession, and the stocks plunged due to pandemics and lockdowns. The shareholder also suggested that the company invest its large cash reserves in working at this market bottom. It also pointed out that the prominent company made haste in selling airline stocks. It was also observed that the notable beneficiaries of the government help were the airlines, but it was also noticed that this help came after the sale of these holdings by Berkshire.

Impact of SPACs

Apart from an influx of "gamblers" in the market who were engaged in day trading and options trading last year, the negative influence was also noticed by Buffett and Munger from the rise of SPACs, which were increasing the price of potential acquisitions. It was uneconomic for Berkshire. Buffett termed SPACs an"exaggerated edition of gambling" for which investors are paying unnecessary fees and in which the managers often invest the money to get a fee, not emphasizing the quality of the investments.

Responding to a question about trading apps such as Robinhood, Buffett added that they are worsening the gambling issue in the markets. He was keen to read the prospectus of Robinhood upon going public for the sake of looking into details on how they make money while not charging commissions.

On shifting to greener electric generation, it was observed that transmission was the major problem. It was added that constructing new high-voltage transmission lines requires permission to use the way which crosses state lines and private property. Greg Abel noticed that the energy unit of Berkshire already had a multi-year plan which was underway in it, the coal-burning electric generation plants were being closed. Responding to a question about the proposed federal tax increase on capital gains, estates, and businesses, a quotation was offered by Munger from Benjamin Franklin.

Responding to a question about the departure of residents from California as a consequence of increased taxes and an increase in the cost of living, Munger said that It is quite silly for states to expel wealthy people who are paying most of the taxes and support philanthropic and civic organizations. The state of Florida is clever, and the state of California is silly, he added.

Criticism on Cryptocurrency

Responding to a question regarding cryptocurrencies, Munger said he did not welcome means to pay kidnappers and extortionists.

Berkshire is manageable

Responding to question about the management of a big company like Berkshire, Munger said that the decentralization has helped them managed their affairs just as it did to Roman Empire. Responding to a question regarding the major unfunded public pension liabilities in several states, Buffett said that this is likely to get worse if the tax hikes, as a result, spur the departure of residents.