Buffett shares good earnings news and AI insights at the meeting

Omaha, Neb. (AP) — Artificial intelligence may change the world in many ways, but new technology won’t take away opportunities for investors, billionaire Warren Buffett said, and he’s confident America will continue to thrive over time.

Buffett and his partner, Charlie Munger They spend Saturday answering questions At the annual meeting of Berkshire Hathaway inside a busy Omaha arena.

“New things to come don’t miss opportunities. What gives you opportunities is other people doing stupid things,” said Buffett, who had the opportunity to try ChatGPT when his friend Bill Gates introduced it to him a few months ago.

Buffett reiterated his longstanding optimism about America’s prospects even with today’s bitter political divisions.

He said, “The problem now is that partisanship has moved more towards tribalism, and in tribalism you don’t even hear the other side.”

Both Buffett and Munger said the United States would benefit from having an open trading relationship with China, so the two countries should be careful not to exacerbate tensions between them because the stakes are too high for the world.

“Everything that increases tension between these two countries is stupid, stupid, stupid,” Munger said. And whenever either country did something stupid, he said the other country should respond with incredible kindness.

The chance to hear two men answer all kinds of questions about work and life draws people from all over the world to Omaha, Nebraska. Some shareholders feel the urgency to attend now that Buffett and Munger are in their 90s.

“Charlie Munger is 99 years old. I just wanted to see him in person. I have to come while I can,” said Sheraton Wu, 40, of Vancouver.

“It’s a once-in-a-lifetime opportunity,” said Chloe Lin, who flew in from Singapore to attend the meeting for the first time and learn from the two legendary investors.

One of the few concessions Buffett makes to his age is that he no longer walks around the exhibition hall before a meeting. In years past, he’d been assaulted by contributors trying to take a picture with him while a team of security officers worked to manage the crowd. Munger has used a wheelchair for several years, but both men are still mentally savvy.

But in a nod to concerns about their age, Berkshire showed a series of clips of succession questions from past meetings dating back to the first filmed meeting in 1994. Two years ago, Buffett finally said Greg Abel would eventually replace him as CEO though. No retirement plans. Abel already oversees all non-insurance businesses in Berkshire.

Buffett assured shareholders that he has complete confidence in Abel to lead Berkshire in the future, and he has no other choice for the job because Abel is great in his own right. But he said a lot of what Abel will have to do is just preserve Berkshire’s culture and keep making similar decisions.

“Greg understands capital allocation as well as I do. He will make these decisions on the same framework that I use,” Buffett said.

Abel followed up by assuring the audience that he knows how Buffett and Munger have handled things for nearly six decades and “I don’t really see that framework changing.”

Although not everyone at the meeting is a fan. Outside the arena, pilots from Berkshire’s NetJets protested the lack of a new contract, and pro-life groups held signs declaring “Buffett’s billions kill millions” to protest his many charitable donations to abortion rights groups.

Berkshire Hathaway said Saturday morning that it earned $35.5 billion, or $24,377 per Class A share, in the first quarter. That’s more than 6 times last year’s $5.58 billion, or $3,784 per share.

But Buffett has long warned that those final numbers could be misleading for Berkshire because large fluctuations in the value of its investments — which it rarely sells — distort earnings. This quarter, Berkshire sold just $1.7 billion in stock while recording $27.4 billion in paper investing. Part of this year’s investment gains included a $2.4 billion increase related to Berkshire’s planned acquisition of a majority stake in Pilot Travel Centers in January.

Buffett says Berkshire’s operating profit, which excludes investments, is a better measure of a company’s performance. By this metric, Berkshire’s operating profit grew nearly 13% to $8.065 billion, compared to $7.16 billion a year ago.

The three analysts surveyed by FactSet expect Berkshire to report operating profit of $5,370.91 per Class A share.

Buffett came close to giving an official outlook on Saturday when he told shareholders he expects Berkshire’s operating profit to grow this year despite a slowing economy and many of its businesses will sell less in 2023. Berkshire will benefit from higher interest rates on its holdings, he said, and the insurance market looks good that way. general.

The first quarter of this year was relatively quiet compared to last year when Buffett revealed that he had spent $51 billion at the beginning of last year, acquiring stocks such as Occidental Petroleum, Chevron and HP. Buffett’s buying has slowed over the rest of last year except for a number of additional purchases from Occidental.

At the end of the first quarter of this year, Berkshire had $130.6 billion in cash, up from about $128.59 billion at the end of last year. But Berkshire spent $4.4 billion during the quarter buying back its shares.

Berkshire’s insurance unit, which includes Geico and a number of major reinsurers, reported an operating profit of $911 million, up from $167 million last year, driven by a rebound in Geico’s results. Geico benefited by charging higher premiums and reducing ad spend and claims.

But Berkshire rail company BNSF and its large utility unit reported lower profits. BNSF earned $1.25 billion, down from $1.37 billion, as the number of shipments it handled fell 10% after it lost a large customer and imports slowed at West Coast ports. The Utilities division added $416 million, down from last year’s $775 million.

Besides those larger companies, Berkshire owns a variety of dozens of other companies, including a number of retail and manufacturing companies like See’s Candy and Precision Castparts.

Berkshire is again facing pressure from activist investors who are urging the company to do more to rate climate change risks in a company-wide report. Shareholders were expected to brush aside this action and all other shareholder proposals on Saturday afternoon because Buffett and the board oppose them, and Buffett controls more than 30% of the vote.

But even as they resist detailing climate risks, a number of Berkshire subsidiaries are working to reduce carbon emissions, including rail and utilities. The company’s Clayton Homes unit is showing off a new home design this year that meets strict energy efficiency standards from the Department of Energy and comes pre-equipped for solar for later addition.