Sometimes the best investment is in yourself. Or at least, in what you know best. And no one knows Berkshire’s intrinsic value better than Buffett.
With a cash pile of more than $145 billion at the end of the 2021’s first quarter, Buffett bought back some $6.6 billion in Berkshire shares during the first quarter. The pace of buybacks has been decelerating from prior quarters, however.
Buffett used to describe share buybacks as basically an accounting gimmick, as something done in order to goose a stock price, and often done without enough price discipline. He’s typically wanted to deploy cash in big acquisitions or stock purchases.
But in 2018 he loosened his buyback policy as Berkshire’s cash kept growing. “We can’t buy companies as cheap as we buy our own and we can’t buy stocks as cheap as our own,” Buffett said.
Never say never. Buffett stayed largely away from tech stocks for many years, saying he didn’t understand their business models. Now Apple is a huge holding—Berkshire owns just over 5%.
Even so, Buffett doesn’t describe Apple in tech-y terms. “I feel that I understand Apple and its future with consumers around the world,” he said.
“Apple has fantastic management—Tim Cook was under appreciated for a long time, and he has a product that people absolutely love,” he said. “There’s an installed base of people and they get satisfaction rates of like 99%.”
It’s okay to admit mistakes. There were a lot of mea culpas at the annual meeting. Buffett admitted that it likely was a mistake to sell some Apple stock last year, and that he learned a lot of lessons from a failed healthcare venture with JPMorgan Chase & Co. and Amazon.
Pick your public battles wisely. Buffett has been a Bitcoin skeptic.
When asked for his views on cryptocurrency at the annual meeting, he dodged the question. “We’ve probably got hundreds of thousands of people watching this that own Bitcoin, and we’ve probably got two people that are short,” he said. “So we have a choice of making 400,000 people mad at us and unhappy, or making two people happy, and that’s just a dumb equation.”
Munger, however, let it rip. “I don't welcome currency that is so useful to kidnappers and extortionists,” he said.
Guard your competitive edge. One questioner asked if Buffett’s famed portfolio managers at the company, Todd Combs and Ted Weschler, might have a higher public profile in the future. “They are assets of Berkshire, and there is no reason for them to be out there educating other people on how to compete with us,” he said.
Cultivate optimism. Buffett is a pretty cheery person, often extolling the virtues of capitalism. He recommends a sort of even keel approach to life: “In 62 years, Charlie and I have never gotten into an argument, never got mad at each other,” Buffett said.
Studies have shown that optimists have a better quality of life than pessimists, and people high in optimism have a better quality of life than those less optimistic. The only problem with this observation? Charlie Munger is 97, and his world view can sometimes be bleak. But his views on Berkshire and Buffett? Very optimistic.
—With assistance from Katherine Chiglinsky.
This article was provided by Bloomberg News.