Cute Fuzzy Bunny said:
The unknown factor in equity ownership in the short term is usually psychological. I've seen BRK shareholder meetings, they're like woodstock. IMO its a long term psychosis thats like Ben and Jerrys or Krispy Kreme stockholders...only the company makes good money and has sound financial foundations.
I wouldn't judge a stock either way by its annual meeting, but I think you're missing the point of the hoopla. It's free advertising, not a cult. Berkshire is made up of companies selling many different things to many customers. Buffett gathers these many people together, some of them with eight-figure portfolios, and spends the whole weekend selling to them. For some of the businesses, the annual meeting sales are bigger than the Thanksgiving-Christmas season. We're not just talking a sofa from Nebraska Furniture Mart-- we're talking NetJets shares, multi-carat jewelry, and tons of homebuilding materials. The GEICO gecko stays pretty busy, too.
So of course he wants to throw a huge party and let the fanatics get everyone in the mood to have a good time. It's like Koslowski used to do with Tyco, only this time all the shareholders are invited too.
I'm impressed at how Borsheim's prices their jewelry in terms of the unrealized capital gains that shareholders have on their "A" shares.
Cute Fuzzy Bunny said:
I'm quite sure that the stock takes a healthy drubbing the minute Warren bites the dust. And eventually comes back to 80-85% of the value of the day before.
Theres a Buffet premium though that I dont think you ever get back.
I might be a buyer on that "day after" though. But you might have to hold a few years to get the full effect of the bounce-back.
I don't know about that one. The stock was supposed to come under heavy pressure when Suzie died and all her shares went to her foundation. Then the stock was supposed to crater when Buffett announced his donation plan last July requiring the Gates Foundation to sell all the shares they receive each year. Yet over the last year share volume has barely budged. Even over the last decade, share volume has barely doubled. If the share volume gets big enough, though, the S&P500 might have to consider adding BRK to the index.
Look at what Buffett doesn't have to deal with: Every successful mutual-fund manager has had to contend with fund bloat. Every one save cash for shareholder redemptions during bear markets, no matter how many blue-light specials are flashing. Every manager has trouble getting in trades for gazillions of shares of stocks. Every conglomerate has trouble imposing their "culture" on their subsidiaries, and especially keeping the talent in place after they've sold out. Every CEO has to cater to the investors & analysts to keep their credit rating up (and their interest costs down). Every CEO has had to deal with ethics & legal issues... some more successfully than others.
Considering those factors, look how hard Buffett's successor would have to work to screw everything up. If they get an inch off the beaten path then the board will jerk their chain almost as hard as the shareholders.
I think most of Buffett's big moves over the last decade have been to reassure shareholders on the succession issue. Jain knows insurance better than most. Simpson's a better stock picker than Buffett. Many of the businesses have turned their CEOs over to the second generation without problems under Buffett's benign neglect, and I suspect that a lot more Boomer business owners are facing the same decision now. Howard Buffett's on the board, Bill Gates is on the board, and some Yahoo! just joined as well. Advertising for a Simpson successor to carry on the culture is sheer marketing brilliance.
I've spent the last six months reading just about every word written by or on the guy. The most interesting book wasn't really about him--
"Warren Buffet CEO" interviews the CEOs and attempts to predict who'd take over if Buffett died tomorrow. With Howard Buffett as Chairman, Jain running Gen Re, Simpson running what's left of the stocks (mostly at GEICO), and Santulli running the operations... not much has to change. Everybody's been working under Buffett for years and it's unlikely that they're going to take stupid pills the day after he dies.
The prospect of Boomers selling their companies to Berkshire to preserve their family heritage and escape estate taxes-- that's potentially huge. I also suspect that one of the board's first moves after Buffett steps down dies (who am I kidding) would be to declare dividends.
We'll have to see what
Alice Schroeder's biography has to say about succession. Buffett cooperated with her and she's no shill.
