The whole performance is humourous and self-effacing, in way that the supremely successful can get away with. Berkshire Hathaway has few points to prove. In the 47 years since Buffett established the fund, using a textile merchant as a vehicle, its value has risen by an average of 20pc a year. Someone who invested $ 1000 at the outset would now have more than $ 10m, compared to around $ 100,000 if they had invested the same amount of money in the S&P 500. “If that’s what failure looks like, I wouldn’t mind some more of it,” Munger quipped on Saturday.
He and Buffett used the event to expound the importance of taking a long-term view, and giving managers space to do their jobs, rather than hovering over them to squeeze out every penny – two key features of Berkshire Hathaway’s investment style.
“We are keeping certain businesses that you would not get a pass grade at business school if you wrote down our reasons [for doing so],” Buffett admitted. “We are very disciplined in some ways, and by other business standards we are very sloppy. Every single company [we invest in] probably has more cash in it than it would if someone else was running it.”
“We over-trust…It’s worked out well for us,” added Munger.
By the same token, the two men criticised the activist investors who take stakes in businesses they think are failing, in order to manoeuvre their way onto the board and force a change strategy. Munger, the quieter of the pair, recalled the writer Oscar Wilde to sum up his views: “It is the pursuit of the uneatable [sic] by the unbeatable.”
Buffett is not above applying a little soft shareholder pressure himself, however. Berkshire Hathaway abstained from voting against Coca-Cola’s controversial pay proposal, but reportedly pushed for changes behind closed doors. Asked why the did not declare his hand publicly, he said he did not want to “go to war” with the drinks giant, but that Berkshire Hathaway had got what it wanted in any case.
In a long question and answer session with Berkshire Hathaway shareholders, they hold forth on everything from the importance of good financial education in schools (“Not everybody has bright parents”), to the threat Google’s self-driving car poses to the auto industry (considerable), to the importance of jailing Wall Street’s rogues, not just levying fines on companies.
(“The way to change behavior is to have the fear that somehow it is going to come home to them”)
Berkshire Hathaway has a superlative track record, but it is the chemistry between Buffett and Munger, and their wide-ranging views which draw the crowd each year.
“It is like going to church” says Alex Hamon, a French-born investment manager who now lives in New York. “You are reminded of the good things you have to do, and where the limits are. If you are religious, you go to churches and temples to be reminded about this. If you are an investor, you have to go back to [Omaha] to remind yourself how not to be distracted.”
“He is a mentor to all of us,” adds Simon Denison-Smith, founder of Metropolis Capital, a small London-based investment fund. He has been coming to the Berkshire Hathaway event for the last decade, during which time the number of attendees has more than doubled. “It has become a bit more fancy. I think it’s getting a bit over the top, actually,” he says, although he adds that he will continue to make the annual journey as long as he is a Berkshire Hathaway shareholder.
Others go for the fun. One couple travelled from Indonesia just for the “circus” of hearing Buffett speak, bribing their your daughter with the promise of a trip to Disneyland afterwards. She signals her glee with a big thumbs up, but it is clear that the Berkshire Hathaway function has her parents just as excited.
A group of middle-aged women, wearing beige clothes and big jewellery, attend every year to go shopping. The night before the main event, Buffett stages a reception at Borsheims, his Omaha jewellery store, offering shareholders deep discounts on gold and diamonds. The most expensive piece is priced at $ 130,000, but $ 1,750 will get you a diamond pendant engraved with Buffett’s signature.
The basement of the CenturyLink centure is also turned into a make-shift mall, where frenzied buyers swoop on goods produced by the companies in the Berkshire Hathaway portfolio. Alongside the cowboy boots and Fruit of the Loom T-shirts, shareholders can pick up boxershorts, bottles of ketchup, and M&Ms, all emblazoned with Buffett and Munger’s caricatures.
The younger of these two men walks the floor before the shareholder meeting opens, answering questions and engaging in a bizarre newspaper-throwing contest. On Saturday, he was briefly joined by Bill Gates, the founder of Microsoft and a member of the Berkshire Hathaway board. The event, often dubbed the “Woodstock of Capitalism”, must have been one of relatively few times in Mr Gates’ adult life where he is not the main attraction.
Bill Gates participates in the newspaper throwing competition. Image: Reuters
However, the Buffett and Munger’s charisma also leaves them with one major problem. On Saturday, the two men were repeatedly asked about their succession plans, and their confidence in Berkshire Hathaway’s long-term prospects.
Buffett predicted that there would be plenty of speculation about its future in the year after his death, but also that the Berkshire Hathaway brand would endure, with plenty of other talent behind it.
He made little comment on his successor, widely tipped as his eldest son, Howard, save to say that he hoped Berkshire’s eventual leader would find his or her own equivalent of Munger.
“Berkshire is better off with the two of us working together. There is no question about it,” he said, adding that working as a double act also makes the job “more fun”.
Some investors thought the pair should make more effort to bring their younger executives on stage with them. But for others, the question mark over the future of Berkshire Hathaway is part of the draw. Many of the people who crammed into the CenturyLink on Saturday had travelled thousands of miles because they do not expect Munger to be around for much longer.
During Saturday’s event, Buffett referred to the nonagenarian as his “canary in the coalmine”.
“Most 90-year old men are gone soon enough,” Munger shot back wryly.
Buffett looked amused, as the veracity of that statement sank into the crowd. “The canary has spoken.”