At Berkshire Hathaway’s annual meeting in Omaha on May 6th, Warren Buffett reaffirmed his plans for Greg Abel to take over after he’s gone and anticipates that the transition will barely disrupt operations at the company, reports an article in Bloomberg. Abel was onstage at the meeting along with Buffett and his business partner Charlie Munger, answering questions posed by shareholders.
In one of the biggest takeaways from the event, Berkshire apparently will not make a move to acquire Occidental Petroleum outright, after spending months and billions of dollars building up its stake in the energy company. However, Buffett did indicate that they may purchase even more Occidental stock, according to Bloomberg. Another hot topic of discussion was the recent turmoil in the banking sector, the blame for which Buffett pinned squarely on the executives of the failed banks. Mistakes at the banks “[were hiding in] plain sight,” Buffett said, pointing to the jumbo, non-government-backed, fixed rate mortgages that First Republic was offering, including some that were interest-only for the first 10 years. Regulators were ignoring these massive missteps “’til it blew up,” Buffett contended, and in the case of Silicon Valley Bank’s collapse, the results would have been disastrous had not the federal government swept in to guarantee all of SVB’s deposits, most of which were for more than the FDIC’s $250,000 cap.
Although Berkshire saw a nearly 13% gain in earnings, to $8.07 billion in the first quarter of 2023, earnings are projected to decline amid inflation and high interest rates. But Buffett highlighted the profits at Berkshire’s insurance underwriting businesses as a major driver of the conglomerate’s profits, such as Geico, which posted $703 million in profits due to higher premiums and reduced spending on advertising, the article reports. The subject of Buffett’s quick buy-and-sell action in Taiwan Semiconductor Manufacturing also came up, with Buffett pointing to increased tensions between China and Taiwan as the reason why he sold off much of his holdings in the company, which he praised as one of the best in the world. Indeed, both Buffett and Munger encouraged the U.S. to increase trade with China and maintain smooth relations.
Meanwhile, Buffett doesn’t believe that Washington will let the U.S. default on its debt, as lawmakers scramble to raise the debt ceiling, despite many investors’ fears about what will happen if the default occurs. Even with these sorts of stressful impasses occurring more and more in Washington, Buffett called America an “incredible society” and that there is nowhere else he’d rather call his home.