A Fool relates the tale of when he attended 'Woodstock for Capitalists'.
If you're going on your first trip to America, it's probably to New York, Florida or possibly California. Not I, my one and only trip across the pond was in 2001 for a four-day pilgrimage to Omaha, Nebraska.
Omaha means one thing to some investors; it's the headquarters of "The Sage of Omaha", Warren Buffett and his insurance-based conglomerate Berkshire Hathaway. Every year in late April / early May, thousands of shareholders descend upon Omaha for Berkshire's annual general meeting (AGM) and numerous associated events which are spread over a long weekend. If a British company gets more than few hundred people at its AGM it's a big event; in 2001 roughly 17,000 attended Berkshire's AGM (and over 35,000 in 2009).
A Potted History
So what's the fuss all about? Well, Berkshire's "A" shares have risen from about $18 in May 1965 when Buffett took over to roughly $90,000 today, in doing so propelling Buffett to the top of the various "rich lists" published around the world. Berkshire's "B" shares, which are within the price range of most investors, are about $2,900. However, Buffett's fame is not purely the result of his extraordinary investing success, but also because of the frugal way in which he lives and his many sayings.
All of this has been accomplished by buying shares at less than what Buffett calls "the intrinsic value of a business", buying good businesses with good management and a sustainable competitive advantage (Buffett calls this a "moat") and by thinking for the long-term (Buffett's favourite holding period is "forever").
Much of the reporting of Berkshire erroneously treats it as an investment trust, concentrating on Berkshire's huge stakes in firms like Coca-Cola and Wells Fargo. However, in recent years the real story behind Berkshire is that of its subsidiary companies such as Sees Candy and the car insurer GEICO.
Woodstock for Capitalists
In many companies the directors treat the AGM as an awful obligation to be cleared as quickly as possible. After all, those nasty shareholders might dare to ask awkward questions about their huge bonuses and massive share options whilst the firm has been losing money hand over fist. Some companies have even been known to hold their AGM on the evening of Christmas Eve to avoid facing the owners of the business. In contrast Buffett embraces his shareholders as co-owners in all respects; at Berkshire there are no share options for Directors, no bonuses for failure and Buffett is paid a mere $100,000 a year.
I arrived at the Civic Auditorium just before the doors opened at 7am, some two hours before the AGM started, to be somewhat surprised by the sight of thousands waiting in several queues. When the doors opened there was a mad scramble to get inside that was reminiscent of shoppers charging into a store for bargains in the sale. It turned out that a major reason for the "7am scramble" was caused by those people who wanted to register their question for the post-AGM question and answer session (Q&A).
Running alongside the AGM is a trade exhibition where many of Berkshire's subsidiary companies have displays, sell goods and take orders. In the few minutes whilst I was standing by the NetJets stand (Berkshire's subsidiary that sells fractional ownership shares in private jets) at least one sizeable sale was made.
Buffett is not only a commensurate businessman and investor, but he's also a pretty good salesman. Not for nothing is the Berkshire AGM known as "Woodstock for Capitalists" -- it can be difficult to leave Omaha without several carrier bags chock full of goods and Berkshire freebies.
Before the AGM started at 9am, were treated to a short film about Berkshire. My favourite part of the film showed Tiger Woods' new caddy (Buffett) advising him about how to play golf! Then after the formalities of the AGM were completed (at about 9.02am) we proceeded to the meat and potatoes of the day, where Warren Buffett and Berkshire's vice-chairman, Charlie Munger, fielded the question-and-answer session that lasted for about five hours (with a break for lunch).
The Berkshire Q&A session is unique in that Buffett and Munger are prepared to answer questions on not only any aspect of the business, but also upon on life in general. The pair of them make an excellent double act; Munger playing the straight man with his deadpan catchphrase "I have nothing to add" (but when he does, it's well worth listening). If the pair of them ever took up comedy on a full-time basis they'd be packing them in!
Meeting the Man
Buffett attends many events during the AGM weekend and I saw him close up three times. First was during the Friday afternoon session at Borsheims, the jewellers, where the crowd lining up to get autographs rivalled anything you'd see if Barack Obama turned up in Oxford Street. Second was at Dairy Queen (a fast food franchise) on Friday evening where I ended up taking photos of several people as they stood with Buffett.
Finally I got to say hello and shake his hand at the post-AGM baseball game where he threw the ceremonial first pitch and then took a turn at bat. With typical self-deprecating humour, he calls the speed of his pitching "95 miles per month" (top professional pitchers throw at about 95mph). It was a pretty good pitch; whilst it probably wouldn't have troubled Alex Rodriguez it's a strong indicator of the measure of the man that he even pays close attention to his pitching.
For the future
Having got to the end I see that I've left almost everything out; the book signings, meeting other investors, the problems encountered in ordering taxis in Omaha, how crossing Omaha's streets on foot can be like running across the M25, meeting Charlie Munger and my recommendations for books about Buffett and Berkshire (I'll sneak that in here; Roger Lowenstein: Buffett, The Making of an American Capitalist).
I haven't attended another AGM since but that's more a reflection of the distance and my fervent dislike of air travel. However, the quality of the AGM commentary that some fools put up on the Fool.com message boards is great compensation. Whilst Buffett is now 78 and Munger is 85 if loving your work has anything to do with it these two gentlemen have many years left with which to surprise us.
If you are a shareholder I'd recommend that you consider attending an AGM. Let's face it; anyone can visit Florida, but Omaha is an adventure (and you can always visit Disneyland on the way back!).
If you want to find out a bit more, check the company's website, especially the letters to shareholders which are contained in the annual reports. These are an absolute goldmine concerning business, investment and life in general.
More from Tony Luckett:
> Tony owns some Berkshire Hathaway "B" shares
