Squawk Pod: Warren Buffett at Berkshire Hathaway 2026 Annual Meeting: part 2 - 05/02/26 | Audio Only

0:03 Hi podcast listeners.

0:05 This is CNBC's Becky Quick in Omaha, Nebraska,

0:08 and you are listening to part two of our full

0:10 coverage of the 2026 Berkshire Hathaway annual shareholder meeting.

0:14 We pick up here with CNBC's Bergkshire

0:16 Halftime show hosted by myself and Mike Sani.

0:20 It's a break between Greg Abel's two robust Q&A

0:23 sessions with Bergkshire's thousands of shareholders live in Omaha.

0:27 This year I had the chance to speak

0:28 directly with Warren Buffett during that break.

0:31 Let's jump back in.

0:33 Back to CNBC special coverage

0:35 of the Bergkshire Hathaway annual shareholder meeting.

0:38 I'm Mike Sani live in Omaha, Nebraska.

0:40 CEO Greg Ael and vice chairman

0:42 of insurance operations Ajit Jane taking questions

0:45 for a little over an hour after Ael presented a state of the business update.

0:49 Abel has just called a break and he also

0:52 told shareholders that Becky Quick will interview chairman Warren Buffett.

0:55 That will kick off in less than an hour right here on cnbc.com.

1:00 We have a big halftime show for you.

1:02 Becky Quick is heading back over here to join

1:04 us and we'll speak with Accidental Petroleum CEO Vicky Hollib,

1:08 Bergkshire's Brooks running CEO Dan Sheridan, and former Activision Blizzard CEO

1:12 and longtime Bergkshire shareholder Bobby Kodic.

1:14 While this morning was the start of a new era with Greg Ael running things,

1:18 Warren Buffett stole the show to start off.

1:21 Uh he began with uh it began with Greg

1:23 Ael thanking Warren for his 60 years running

1:26 Bergkshire and raising a Buffett banner to the rafters

1:29 of the arena symbolically retiring his number 60 jersey.

1:33 The crowd wildly cheering this moment.

1:42 After that Abel turned over the mic to Warren

1:45 Buffett himself who was seated on the floor.

1:47 Buffett started out by saying how happy he is with his decision to turn

1:50 Bergkshire over to Greg Ael saying we couldn't have made a better decision,

1:54 adding that Greg is the right person.

1:57 Buffett then trumpeted Bergkshire's biggest holding of course that is Apple.

2:02 10 years ago, we made a commitment uh to essentially

2:10 move 10% of the resources of Berkshire Half away.

2:17 uh we turned it over to another a person

2:22 who was not that well known at the time.

2:27 And we did that uh by spending uh roughly$

2:36 35 billion uh buying uh stock in Apple Corp.

2:44 add uh and we were going to have that uh under the management.

2:55 We're we're turning that money over

2:57 to the management essentially of Apple to make Berkshire

3:02 look good and without any work by us which is our preferred way of operating.

3:08 And I would like to report that 10 years later several things are happening.

3:17 One is the 35 billion uh counting dividends, realized appreciation,

3:27 unrealized appreciation, but that has turned into 185 billion uh tax.

3:41 and uh and I didn't have to do a damn thing.

3:46 Buffett also took a moment to recognize CEO Tim

3:49 Cook as he gets ready to step down this fall.

3:53 Tim has announced that he's uh retiring as well.

4:00 That's that's an announcement that's just been made in the last couple of years.

4:04 And so I think it's appropriate if if Tim would take a bow

4:10 and our shareholders would say thanks to him that Tim is right by me.

4:21 Warren did not uh you know make mention of the fact that Tim

4:24 Cook is retiring at an age 30 years younger than than Warren himself did.

4:28 He's at 65 right now.

4:30 Now following all that Greg Ael then went into the business update.

4:34 One of the things that struck out was uh AI and the need for Bergkshire

4:37 to build out its own tech infrastructure to work across all of its businesses.

4:43 First and foremost, we recognized we were going to become

4:46 a builder of technology rather than just a buyer of technology.

4:53 And that meant that instead of we had a number

4:57 of systems and we often bought the related applications or software

5:03 that came with it and yes it's it's a valued

5:06 uh application but it was disconnected from all our systems.

5:10 Obviously, we didn't have that ability to then

5:13 use the information, get to the data.

5:15 And what they started to talk about is simplifying the infrastructure,

5:19 making sure we would build what we needed ourselves and deliver solutions

5:24 back to our customers and we would have clear access to the data.

5:29 All things that make a lot of sense,

5:30 but a massive challenge and it doesn't happen overnight.

5:34 So we've started down that journey and one of the first things

5:38 you have to do is say okay we need a different resource base.

5:42 So now we're hiring engineers we hire developers in our technology group

5:50 that help us start to build the solutions we need for these businesses.

5:55 So that was Greg talking about the need

5:57 for uh you know cross investment across AI.

6:00 AI a little bit of a sub theme of course in the morning in various ways.

6:04 Yeah.

6:04 I I mean I think what's so different about this meeting I don't know

6:06 what you said before I got back here is just the amount of information

6:10 that Greg and then a Jeep kind of unloaded on the investors about

6:15 the businesses that they own on the shareholders

6:17 about these businesses that they own.

6:20 The only thing I'll say as somebody who sat here

6:21 for a long time and had a lot of questions from shareholders

6:24 I was checking off questions left and right that he was

6:26 answering before we even got to on some of these things.

6:28 So he he went pretty deep into this and I think if

6:31 you're a shareholder you probably feel

6:32 a lot more comfortable kind of understanding

6:35 a not only a lot about these businesses but also realizing b Greg

6:39 knows an awful lot and very deep on all of these businesses too.

6:44 Definitely conveyed um sort of the breadth of his grasp

6:47 without a doubt there was a density of the information.

6:49 Also I think Warren and and Charlie while he was here they sort

6:53 of assumed a level of familiarity with the broad outlines of the business.

6:57 um not having to explain necessarily

6:59 the insurance float and how much flows through.

7:01 But I do think there's value in bringing people up to that point.

7:04 And also I I detected even though he's never going

7:07 to have any kind of corny corporate speak about synergy.

7:10 Yeah.

7:10 He was drawing connections.

7:11 He was talking about there's a metals business within the industrial

7:15 businesses that all sort of have a connection to each other.

7:19 Yeah.

7:19 And they whether they were customer of the other.

7:21 Um, and so it's not to say

7:22 that the conglomerate magic works because everything fits together, right?

7:26 But it's not Randy, right?

7:28 And and and again on the AI on touching

7:30 on the idea that you have these centralized off office operations.

7:34 I've still got to go back and look through some of these questions

7:36 to see which ones still apply on all of those levels.

7:39 Is this still a decentralized kind of minimally oversight?

7:43 and he said we're not going to have bureaucracy,

7:45 but it sounds like it's a lot more centralized,

7:48 at least in notion, than it has been to this point.

7:52 And there's certainly a lot more attention coming on operations.

7:54 He refers to operational excellence.

7:56 It seems like it's a kind of an internal catchphrase.

8:00 And that means something means, you know,

8:01 attention to margins or maybe some compensation uh things.

8:05 Maybe just, you know, a closer eye on some.

8:07 The other thing I'll say from this when Ajit sat down with him

8:12 the two of them kind of going back and forth

8:14 that was a more comfortable conversation

8:16 and a more um philosophical philosophical philosophical

8:22 conversation I should say than I've heard in the past with those two.

8:25 And it was a little more reminiscent of

8:28 Charlie and Warren sitting on stage together where they

8:30 kind of riff off each other a little bit.

8:31 not not on the same level,

8:32 but there was a a new level of comfort

8:35 and a new level of kind of stepping into their roles

8:38 and not worrying about looking over their shoulders about

8:40 what anybody else was paying attention to with it.

8:43 what what Ajet was just saying where he was speaking

8:45 about how they get down to the idea that you don't

8:48 want to do like the key to doing something great

8:50 in insurance is to not do anything saying no just about everything

8:53 and then to tell all of your the people that you have underneath you to make

8:57 sure that their compensation is not based on them

8:59 writing insurance for them to to get paid.

9:01 It's on making sure you're making the right choices and you're

9:04 going to have a flat a flat compensation structure no matter

9:06 what so you're not incentivized to go out and do the very

9:08 thing that's going to wind up leaving Burks on the hook.

9:10 Yeah.

9:10 the the investment discipline was was certainly a key uh a key kind

9:14 of theme that came through as well and that was one of those ways.

9:17 I totally agree with that.

9:18 I mean they were you know kind of peers within the company

9:22 for pretty long period of time running separate parts of it.

9:25 Yeah.

9:25 And it's just it's it's nice to kind of hear more from them.

9:28 Not that this like is some evolution that took place over the last 5 months.

9:32 This is obviously something that was always there,

9:34 but they're able to speak a little more

9:36 plainly and openly probably than they did before.

9:39 Um, so in the room were did people think

9:43 that the the warrant asking the question was for real or what was

9:47 No, I don't think so.

9:48 You'd already seen him on the floor, right?

9:49 Well, right.

9:50 Or that it was a straight video as opposed to an AI.

9:52 It was a deep fake.

9:53 And I and I'm glad Greg acknowledged that at the end

9:56 because I was thinking nobody thinks this is real, right?

9:58 Although there's probably a few people who might have gotten fooled otherwise.

10:01 But I mean, that's an interesting question by itself,

10:03 how good uh deep fakes are at this point.

10:06 Now you have to not, you know,

10:07 it's no longer believe half of what you read and and or half

10:11 of what you see and nothing of what you read.

10:13 It's now believe nothing of what you hear, read, or see.

10:17 Um, yeah.

10:18 Trust but verify, I guess, on everything.

10:20 Verify first, maybe trust later.

10:22 Yeah.

10:22 All right.

10:22 Berkshire is Accidental Petroleum's largest shareholder,

10:25 and earlier this year it acquired Oxy Kim.

10:28 That's a deal worth almost $10 billion.

10:31 That is thanks in part to the relationship

10:33 that was forged by CEO Vicky Halib of Accidental.

10:37 She now joins us live in Omaha.

10:39 And Vicki, first of all, welcome.

10:40 It's great to see you.

10:41 Thank you.

10:42 It's great to be here.

10:43 Uh the big news yesterday is that you announced that after 10 years as the CEO

10:47 and 40 years with Accidental that you're going to be stepping down next month.

10:52 Um that's some big news.

10:54 What brought you that to that decision?

10:56 Well, the the reality is that with a an incredible

11:00 leadership team and amazing employees and a strong board,

11:03 we have over the past 10 years accomplished everything that we

11:08 set out to do in 2016 when I took the role.

11:11 What we've done is transformed our portfolio.

11:14 We've taken it from uh um a port

11:17 a company that was 50% production in the Middle East

11:20 with a lot of risk to now geopolitically much better

11:24 where 83% of our production is in the United States.

11:28 We've taken it from um from production of 650,000

11:32 barrels a day to 1.4 million barrels a day.

11:36 We've doubled our resource more than doubled.

11:38 We've gone from 8 billion BOE of resource of oil and gas to 16.5 billion.

11:44 And we've um also been able to um

11:48 to ensure that we had sustainability along runway.

11:52 The portfolio is not just double more than double,

11:55 it's higher quality assets, so higher margin assets.

11:59 And so now we've got 30 years of runway uh

12:02 in our portfolio assuming uh activity at the current level.

12:06 But now we're not going to keep the current level.

12:09 We will take advantage of accelerating this this runway these this 16.5 billion.

12:16 We can accelerate that when the macro allows.

12:19 And what that's going to do, it's going to be a massive value creator for Oxy.

12:24 And now that we've done all that we needed to do to get the portfolio

12:28 straightened out to to get to where

12:30 we are with the assets and the sustainability,

12:34 now it's just a matter of developing it.

12:36 So now we don't we control our own destiny from that standpoint.

12:39 We don't have to depend on M&A or any future

12:42 contracts from anybody in the Middle East or in anywhere internationally.

12:47 We can decide when we want to develop and at what pace.

12:51 And so when we can, we're going to develop it.

12:53 And we're going to develop it as quickly

12:55 as we can as long as, and it won't happen

12:58 until we get that last debt payment down so

13:02 that we're down to 10 billion in debt, principal debt.

13:05 After that, we're free to um take what the macro

13:09 will give us while also um spending some of our capital,

13:13 returning it back to the shareholders

13:14 through share repurchases and dividend growth.

13:17 So um so we have the ability to to grow organically

13:23 to then grow the dividend and to to provide uh shares repurchases.

13:28 I'm so excited about it too and and the reason I'm

13:31 stepping down is we have for a long time had a great

13:34 succession planning uh process in place and while I' and I've

13:39 had the support of it as I said an amazing leadership team.

13:42 So we were able to accomplish all of this uh

13:45 and while building the culture and increasing our technical capabilities.

13:50 So we did all that.

13:50 So we've checked all those boxes,

13:52 but now we looked at our our top successor and what we need to do

13:58 now in the next 10 years and we felt like he was better to do that.

14:03 He's better he's going to be better at doing that than I would have done.

14:06 Well, what's the goal for the next 10 years?

14:08 Next 10 years is this organic growth.

14:10 Yeah.

14:10 Okay.

14:11 And so that's going to drive our stock price up,

14:14 I think, tremendously over the next three to five years.

14:17 You said, um, when the macro allows and take what the macro will give us,

14:21 that's, you know, kind of a significant when and if, I suppose.

14:25 Um, what does that look like when things clear up?

14:27 Yeah.

14:28 And and I'll point out one other thing.

14:30 While while we're going to take what the macro

14:32 gives g gives us with the um with the growth,

14:36 what we're doing now is creating incremental free cash

14:40 flow by just reducing our cost and increasing our efficiencies.

14:44 I think that we have the lowest capital intensity of anybody in our industry.

14:48 And part of that's what Richard Jackson has been

14:50 driving and to to get us to that level.

14:53 So, so now with with respect to what the macro is going to give us,

14:58 I think that this disruption uh in the world with respect to oil,

15:03 I think that's going to have a a car hangover effect that's going to carry on.

15:07 That's going to I think cause shortages

15:10 and u and probably starting by mid next year,

15:13 we're going to be in a scenario where there's going to be

15:15 a lot of places that need to start developing oil faster.

15:19 And because of our lower break even cost than anybody else,

15:22 we shouldn't be one of the ones that that are that are first to the gate

15:26 to start that process because we have a break even of lower than $40.

15:30 I

15:30 if you think that there's going to be the shortage come the middle of next year,

15:33 where do you think oil prices are going to be as a result?

15:36 I I think oil prices are a bit suppressed now because

15:39 of what's coming out of all the strategic petroleum reserves around the world.

15:43 So, I believe that by midsummer this year,

15:47 we're going to start seeing that prices without some growth starting to happen,

15:52 we'll will start to go up.

15:54 And so, I I think that, you know,

15:56 by by the time that we're ready to start our growth, and again,

16:00 that that would be when we get to the 10 billion,

16:03 that would be later this year, first of next year.

16:06 So, we'll be a part of that process to help

16:08 build back the supply of oil for the world.

16:12 uh you're undergoing a CEO transition same time Bergkshire Hathaway is.

16:15 What's your I guess the relationship with Greg and has

16:19 he bought into to the plan from here on out?

16:21 Obviously, they're very large shareholders still.

16:23 Yes.

16:23 Um and we do with uh with Greg what we do with our other

16:26 large shareholders or and then and our team does with any shareholders.

16:30 We we want our shareholders to understand what we're doing, how we're doing it.

16:35 Um, so Greg has been involved in a part of the process of um of understanding

16:41 what the business is going to look like and um I I think Greg is amazing.

16:46 He's the Oxycm deal now.

16:48 He's a tough negotiator.

16:52 Yeah.

16:51 But but he's honest and he's fair and uh so we've built a great relationship.

16:57 Explain that.

16:57 Tough negotiator as in what the Oxycm deal

17:00 or other stuff that that was going on?

17:02 Only Oxycm deal that was going on.

17:04 Let me clarify.

17:06 U so on the Oxycam deal, he he is into the details and he doesn't forget.

17:11 That's why he could sit there and talk about all those businesses.

17:14 Yeah.

17:15 He knows those businesses like the back of his hand.

17:17 And now now he knows Oxycam in the same way.

17:20 And we had great discussions around it.

17:23 That turned out to be an incredibly good win-win for us and for them

17:27 because we that debt reduction we were able to accomplish with that frees us up.

17:32 So that just right now we're at 13.8 billion in debt principle.

17:37 I believe that by the end of this year, first of next year,

17:40 we'll be down to the 10 and and then that resets everything that we

17:45 can do that that finalizes the transformation

17:48 for us and then we're off and running.

17:52 Great.

17:52 Uh Vicki, thank you very much for being with us today.

17:54 Vicky Halop, it's a pleasure seeing you and uh thanks

17:57 for talking to us about the succession planning and congratulations.

18:00 Thank you.

18:01 Appreciate it.

18:02 All right.

18:02 Well, Bergkshire Hathaway's almost 70 holding companies give it

18:05 a unique view onto the economy and the consumer.

18:08 We caught up with some of the company's CEOs here on the floor

18:12 to talk about just how the consumer is fairing right now.

18:16 I certainly have to acknowledge that the consumer

18:18 attitude is a little bit different.

18:19 I watch the University of Michigan numbers very closely.

18:21 I know exactly where it is and what I know

18:23 is our numbers are up for the year and I'm very

18:25 thankful for that because I also know the confection industry fairly

18:28 well and I don't know that others can say quite that.

18:31 It's definitely a headwind for Benjamin Moore.

18:33 Number one driver is housing churn at Benjamin Moore.

18:36 And with affordability issues, mortgage reach issues,

18:38 and confidence, it's been a strain.

18:41 There's no doubt about it.

18:43 Yeah, we've probably seen, you know,

18:45 a little bit of a a change in our trends over the last month or so.

18:49 Um, but, you know, there's a lot of factors influencing the consumer.

18:53 So, sometimes it's a little bit hard to tell, you know, what factors those are.

18:58 When we think about the consumer, it really you end up in two tiers right now.

19:02 If you are affluent and you are looking at your retirement accounts,

19:06 the market's doing really well

19:07 and those consumers are looking for new experiences.

19:11 However, if you're in a lower income uh demographic right now,

19:15 when you think about persistent inflation,

19:18 um interest rates that are still relatively high, not by historical averages,

19:21 but for recent years, um these consumers are pressed.

19:26 They're trying to manage strained family budgets.

19:30 I think that what we're trying to do at the end

19:31 of the day is just be mindful of that we do have a consumer

19:35 base that is ultimately forced to spend more money on certain other

19:39 things that they may have been had more money in their wallet before.

19:42 Gas prices are obviously rising.

19:46 Let's hear from one more Bergkshire CEO on the consumer.

19:49 Dan Sheridan, CEO of Brooks Running is right here with us.

19:52 Good to see you, Dan.

19:53 Thanks for having me.

19:53 Um, so in general been a pretty competitive environment

19:57 for a while for for running shoes and things like that.

19:59 You did report your results of pretty decent growth.

20:02 What are you seeing broadly speaking?

20:04 Yeah, customers.

20:05 We Q1 was fantastic for us.

20:07 Grew 23% globally, a very broad growth story for us,

20:11 all regions growing double digit.

20:13 Uh, our core markets really,

20:15 really strong and we're seeing the consumer be very,

20:18 very dur durable and strong right now.

20:20 So, um, we're excited about the future for for our growth

20:23 and obviously for the category we're competing in.

20:26 What do you attribute that strength to?

20:28 I mean, I guess you say the category,

20:30 it strikes me that while we talk about um a lot

20:33 of the relatively newer entrance into running shoes in particular,

20:36 there's also such a focus on the technology and on like

20:40 the new thing and how it can help performance.

20:42 Yeah.

20:42 Well, the first thing we always track is participation.

20:45 And participation in health and wellness,

20:48 specifically in run and walk, is at an all-time high.

20:51 We think there's 52 million runners in the US that run twice a week.

20:55 Globally, we think that's up to 600 million.

20:57 So, that's the the foundation of our business.

21:00 On top of that is performance matters in people's lives.

21:04 The last couple weeks in the marathon,

21:06 we've seen epic athletic achievement for under two hours.

21:11 So, what a great spotlight for our sport and uh that's driving interest as well.

21:17 The the general theme of health and wellness around the world,

21:20 though, is is a one-way street,

21:21 we think, and more people than ever are running, walking, and staying healthy.

21:25 There was a big deal about the under two hours, though.

21:28 That under two-hour marathon was wearing what was it?

21:30 Adidas shoes.

21:32 Yeah.

21:31 And and that was a big deal because

21:32 Nike had been talking about that for so long.

21:34 Obviously, you guys are shooting towards that and I

21:36 know you're hitting records in other places,

21:37 but how important is that specific mile marker and how do you compete for that?

21:43 How do you go after that?

21:45 Yeah.

21:45 Well, first off, epic athletic achievement so good for our sport.

21:50 Running is at the center of everybody talking about it.

21:53 So, we sit right in the middle of that with innovation, Becky.

21:56 And and we were talking off air about this.

21:58 The shoe matters for the athletes.

22:01 And so we have always been a company

22:03 on innovation and R&D for our athletes and everybody

22:06 that moves and and that's why we have the number

22:09 one market share here in the US in run.

22:11 Uh we just became the number one brand in Germany too.

22:14 Highly technical markets and our products and brand

22:18 is right in the center of that.

22:19 So we we love it when there's epic athletic achievement level.

22:23 You have um kind of a new subsee running your group,

22:26 the consumer products and services area of Berkshire Hathway, Adam Johnson.

22:30 What does that mean for you at this point?

22:32 Yeah.

22:32 Well, new obviously for us and and what I've been uh

22:36 talking about this week is just the consistency of leadership at Bergkshire.

22:40 We've seen it with Greg over the years.

22:42 Um but now we're seeing it with Adam and I couldn't be more

22:45 excited to to have more interaction with Adam and start to learn from him.

22:49 But consistency, this deserved trust,

22:52 empowerment that has the bedrock of of Berkshire culture is still

22:57 the same things that I'm feeling from Adam and from Greg.

23:00 You know, Dan, we were just talking about whether there are kind

23:04 of ways to cooperate with other um Bergkshire businesses and I I don't know,

23:09 Brooks is such a unique company.

23:11 I don't know if that's the case, but you tell me.

23:13 Are there You're here with the managers.

23:15 Uh I think you everybody had lunch yesterday.

23:17 I'm sure you're talking to all of your colleagues all the time on this.

23:20 What What do you learn from each other

23:22 and are there ways that you can work together?

23:24 Yeah, I think this weekend is a moment for us

23:27 to network as peers and the lunch is one way,

23:30 but what I try and do is is spend time one-on-one with some

23:35 of my peers to suck all the information I can and experience uh from them.

23:40 And so, this is a moment where we get to network and those networks,

23:44 you know, last throughout the year.

23:45 And so it's more one-on-one networking than than in groups.

23:49 And we've been fortunate to do that this weekend.

23:52 Is it about um requesting further resources or requesting the freedom

23:56 to do more of your own thing or any of those things?

23:59 Yeah, that there's not one way.

24:00 This is the the best part about Bergkshire's empowerment and decentralization.

24:05 I think all of us independently operate,

24:07 but there's access to be able to share ideas and and solve different problems.

24:12 We are we are solving very different businesses here

24:15 but there's some common themes in the macroeconomic environment

24:19 in geopolitical ways and so we do find times

24:22 to connect and and share what we're all dealing with.

24:26 That's great.

24:27 What's I was going to say what's

24:28 the the kind of frontier in terms of your technology

24:33 innovation like what's next and how tightly are

24:36 you trying to squeeze out little bits of performance?

24:39 Yeah, sounds like you're on it, Mike.

24:41 I mean this is this is the game.

24:42 Innovation in our space is just ramping both

24:45 in terms of how fast innovation is coming for runners.

24:49 Midsole compounds and weight in running right now is really the the arms race.

24:54 And so we've got uh great midsole compounds that are that are reducing weight,

24:59 still giving the runner cushioning and resiliency and rebound.

25:03 And so all of us in this category are are

25:07 in this arms race to to create performance products that improve people's lives,

25:12 which Brooks has done for 25 years.

25:14 We 25 years now we're on a 14% compounded annual growth rate.

25:19 So consistent growth over that time based in product.

25:22 So an arms race for the foot race.

25:24 That's right.

25:25 That's right.

25:25 Dan, good to talk to you.

25:26 Thank you very much.

25:28 Dan Sheridan, CEO of Brooks Running.

25:30 Let's get down to the floor here in Omaha.

25:32 CBC producer Katie Kramer is at the Oriental Trading Company's booth.

25:36 So Katie, what are this year's hot items?

25:40 I get the best assignment every year, Mike.

25:42 I get to check out what shareholders are shopping for on the exhibit hall floor.

25:46 And this year, Greg Ael is a new

25:48 character in so many different um branded items.

25:51 We've got Squishallows, we have got candy,

25:54 we've got spatulas from Pampered Chef,

25:55 and collectible ducks from Oriental Trading.

26:01 this year.

26:02 Warren Buffett, Charlie Munger,

26:04 and Greg Ael available as rubber ducks

26:06 and Oriental Trading uh CEO Steve Mendleick is here.

26:09 How fast are these selling?

26:10 Yeah, they're selling like hotcakes.

26:12 Uh Warren uh Warren obviously uh is still a feature for us,

26:16 but Greg has reached icon status uh this year.

26:20 He's on the Mount Rushmore uh with uh with Charlie and Warren here.

26:24 And uh we're selling we're selling a lot of them.

26:26 Um they're hot.

26:27 How many?

26:28 So like a thousand, I heard.

26:29 Uh yeah, we're over a thousand ducks sold so far.

26:31 So rolling.

26:33 Our top seller.

26:35 This is the liveliest that the floor has been.

26:36 I think through the shareholders meeting,

26:38 we've got crowds of people here around.

26:39 We've got Flo, the Oriental Trading Flamingo.

26:42 We've got tons of materials that people are taking home

26:44 to share to uh to enjoy their experience here in Omaha.

26:48 Are you going to sell out of the ducks, do you think?

26:51 Uh you better hurry.

26:52 If you're in if you're in the building, you better hurry.

26:56 Supplies are limited very much.

26:59 Now, you've also got Squishallows that have

27:01 got Greg Abel's face on them this year.

27:03 You've got some collaborative items with BNSF,

27:06 with NetJets, uh with Seas Candies.

27:09 These Candies has got 11 tons of chocolate over there.

27:12 So, this is the moment when shareholders really uh empty their wallets

27:17 and fill their luggage for all the great stuff they're taking home with them.

27:22 Excellent, Katie.

27:23 Thank you very much.

27:23 Looks like there's a lot of activity back there, too.

27:26 Right now, we're joined by a longtime shareholder of Bergkshire,

27:29 former Activision Blizzard CEO Bobby Kodc,

27:33 who has been coming to this meeting for how many years?

27:35 I ask you this every year.

27:36 It's more than 30, right?

27:38 More than 30 years.

27:39 More than 30 years you've been here.

27:41 Bobby, I just want to ask you as a long-term shareholder,

27:43 as a long-term Bergkshire follower, um what did you think of the meeting so far?

27:48 What What was it like sitting out there?

27:51 It was fantastic.

27:53 I have to say I Greg handled himself fantastically well.

27:59 I think Ajet adds a great dimension to the stage.

28:04 Warren's presence, especially his AI presence,

28:07 I think added special value and I think the business is in terrific shape.

28:14 If you were to think about this company and its current market value,

28:18 if you were to revalue the equity portfolio to let's

28:24 say the historic mean of the S&Ps, let's say 17 times, yeah,

28:29 that's maybe about 70 or 80 billion dollars of risk.

28:33 The operating businesses trade way below 17 times, probably closer to 10 times.

28:39 So there's a lot of upside in Berkshire.

28:41 Well, you know, that's been a question that has come up.

28:43 We haven't gotten a chance to ask live them on stage yet,

28:45 but Bergkshire has underperformed the S&P

28:47 500 pretty significantly over the last year.

28:49 S&P has been up by about 29%.

28:51 I think Bergkshire's down maybe 12% over that the same period.

28:55 Uh maybe a little less, maybe it's 9% down over that Yeah.

28:57 over that period of time.

28:59 But when you look at that, what does that tell you as a shareholder yourself?

29:04 What do you want to see?

29:04 What do you think of it all?

29:06 Well, I think it was one of the first slides.

29:08 uh they're buying stock and maybe not as much as people anticipated,

29:13 but I think we saw it today.

29:14 You know, there was a substantial amount of stock

29:17 purchased and we're sitting on $400 billion of cash.

29:22 So, I see nothing but opportunity.

29:25 I, you know, I like to buy when they like to buy.

29:28 Are you buying back shares?

29:29 Are you buying more shares of Bergkshire?

29:32 uh rather not say, but I think um you know I I like

29:38 to buy when they're buying and I think that was a vote of confidence.

29:42 Okay.

29:42 I did find it interesting.

29:43 First of all, um Gregory was at pains to say that it wasn't quite

29:46 as much cash as is portrayed in the 10Q filing million billion they still have

29:53 of a T- bill purchase that hadn't settled yet.

29:55 So there's some double counting.

29:57 So fine, $380 billion.

29:59 Um, but it seems as if some of the things that Greg said were

30:03 meant to kind of put the investment portfolio a bit off to the side, right?

30:07 He emphasizes the four very large core holdings which are kind of there forever.

30:12 Uh, as well as the Japanese businesses and the rest of it he sort of says,

30:15 well, it's not really that big and it's not all that actively managed.

30:18 Does that say to you that he's mostly

30:21 focusing his energies and attention on just the operating

30:24 businesses and what else in terms of bolt-on

30:26 acquisitions he can do as opposed to the portfolio?

30:30 No, I don't think so.

30:31 I think he's very he's very engaged with Warren on those discussions.

30:36 I think he's thinking a lot about the investment portfolio.

30:40 I think if you look at Apple and KO in particular,

30:43 they're both going through CEO transitions and they're being managed

30:48 with excellence and I think inspired a lot by the Bergkshire transition.

30:52 In fact, I talked to Tim Cook last night and that's the first thing he

30:56 said is he wants to be recognized

30:58 as the person who's managed succession better than anyone.

31:01 And I said, "Well, you've got a tough a tough comparison

31:05 on both ends, right?

31:06 when he took over for jobs and now he's handing it off again.

31:10 Crook I was joking that you know Warren was polite

31:13 enough not to say why are you retiring at 65

31:17 right?

31:16 You got 30 more years left you know

31:19 Bobby I want to talk to you that about that as a former CEO yourself

31:22 and somebody who knows uh the stresses that come

31:25 with that and the huge responsibilities with that.

31:28 We've seen a lot of executive turnover

31:30 of some very long-term well-known names, uh, big companies.

31:36 You mentioned Coca-Cola where you were board member before, too.

31:39 Uh, Tim Cook with Apple.

31:41 You've also got Bob Iger turning over.

31:44 Uh, there's Vicky Halib was just sitting here.

31:47 Uh, Doug McMillan, he stepped down.

31:48 There's just this long this big number of relatively young people

31:52 in a lot of cases that Doug McMillan was what, 60?

31:56 uh at James Quincy 60 years old too.

31:59 So you're talking about people who are young and some

32:01 of them when they've sat down with me have said look

32:02 it's it's really tough to think of what AI is

32:04 going to do and that's going to be a fiveyear transition.

32:07 How do you think that through?

32:08 Is is that what's happening here?

32:10 Is there something else?

32:11 Is it just a good time to step down?

32:12 What's your take on all of this as somebody who's been in that role?

32:16 You know I think in every one of these cases it's something different.

32:19 I think in Apple's case Tim's done this for a long time.

32:23 I think he has realized that there's

32:26 an opportunity for product innovation and somebody like John,

32:30 you know, is head of hardware engineering.

32:32 You probably couldn't pick a better person for the next

32:35 decade of Apple and the need for innovation.

32:39 I think at Coke, Enrique is a fabulous successor.

32:42 I I would have loved to have seen James stay longer,

32:45 but I think that, you know, the demands of these jobs are great,

32:48 especially a company like Coca-Cola where you're operating 204

32:51 countries around the world and you're traveling to those countries.

32:55 Um, but I think Enrique will be an excellent successor.

32:58 I think in Doug's case,

32:59 he acknowledged that the AI transition is going

33:03 to be one that probably needs different leadership.

33:06 Yeah.

33:06 And I think in a lot of these cases that you're citing,

33:09 you have CEOs who realize their limitations and the opportunities for somebody

33:16 new that's going to continue to create shareholder value for the businesses

33:19 that they've run and they're so convicted to the future success

33:24 of the company like you see at Bergkshire that they're making the right choices.

33:28 as you look at Bergkshire, I mean,

33:30 and it's understandable that would be portrayed AI could be much more

33:33 of an enhancement to a lot of what's done there as opposed to, you know,

33:36 them being disrupted by it in various businesses.

33:39 But I I was fascinated by what Ajit said

33:41 about cyber risk related to AI and how he just

33:44 has a hard time figuring out how to model

33:46 it like was was is one incursion going to proliferate?

33:50 How you going to aggregate that risk?

33:52 Well, the beauty of the AI is it will model the risks for you

33:57 or show them to you.

33:58 Yeah.

33:59 It will give you an opportunity to then assess, you know,

34:02 how right or wrong has the AI actually given you the ability to assess it.

34:07 But those AI tools are going to be incredibly useful.

34:09 Then you look at like these operating businesses,

34:12 they're run incredibly efficiently from an SGNA perspective,

34:16 but there's no question that there's optimization opportunities.

34:20 It's like just think about like risk calculation in the insurance business.

34:24 AI will be an enormous contributor to reassessment of risk,

34:28 reassessment of pricing.

34:30 I just think all these operating businesses over time are going

34:33 to have a great benefit in efficiencies and opportunities from AI.

34:37 What do you want to hear more?

34:39 What what have you not heard so far that maybe

34:40 you'd like to hear in the second Q&A session?

34:43 Asking for a friend.

34:46 Well, um, you know, I I think I they're not

34:52 they're not going to talk a lot about the macro environment,

34:55 but I would like to hear their perspectives about the macro environment.

34:59 Um, I just don't think that that's something

35:01 that historically they've spent a lot of time talking.

35:05 I think when you look at where the S&P is trading and you

35:09 think about a 26 times multiple and a 100redyear mean at 17 times,

35:18 we will regress to the meat.

35:21 Yeah.

35:20 And so, but I I almost think it's implicit

35:24 in the cash balances what they think about the opportunities going forward.

35:28 You would think I mean because Bergkshire was so somewhat early

35:32 in identifying Japan as an opportunity

35:34 for kind of rejuvenization whether he might

35:36 have a view on that if he gets a question on that because

35:39 I know that Frag was kind of close to that transaction.

35:43 Right.

35:43 I think they answered that with Tokyo Marie.

35:45 True enough.

35:45 Yeah.

35:46 Through your actions.

35:47 Yeah.

35:50 Right.

35:48 Um I I I keep going back to just the structure and how it's changed.

35:54 And I will tell you,

35:54 I've been hearing from a lot of people who have been kind of texting

35:57 me and telling me what they're thinking

35:58 from the arena while they're sitting in there.

36:01 The general impression is people were pleasantly surprised

36:07 by how much they learned in this meeting.

36:10 Structures changed, but I think they're they're looking

36:12 at it as a an evolution that, hey,

36:14 may not be what they wanted, but they they're enjoying it to this point.

36:18 I I have to say I I love I love the fact

36:22 that they're actually doing more of a deep dive into the businesses.

36:26 Yeah.

36:27 And I think that that's a great pivot.

36:29 You know, you're never going to replace the Warren Charlie dynamic.

36:33 That can never be replaced.

36:35 But for a company that's so big and so complex,

36:37 has so many operating subsidiaries,

36:40 going and actually doing a deep dive and showing

36:42 the depth of the management teams across all of these businesses.

36:47 I think that's a great pivot and not what I expected,

36:50 but something that I'm actually really enjoy.

36:53 That's great.

36:54 Bobby, I want to thank you very much

36:56 for sitting here with us and talking this through.

36:58 Uh it's been a pleasure.

37:00 Thank you for having me.

37:01 And by the way, I'm going to head out at the same time.

37:03 And we've got Warren Buffett coming up in just a little bit.

37:05 We might get the chance to ask him about some of those macro issues that you

37:08 were just referencing about what he sees happening

37:10 with the economy and stocks right now, too.

37:12 That'd be great.

37:12 Thank you.

37:13 Thank you.

37:15 All right.

37:15 Well, get on back in there.

37:16 I'll see you in a little bit.

37:18 One other newsy nugget from this morning was a question about

37:21 insurance and the current risk around shipping in the straight of moose.

37:24 Here's what vice chairman of insurance operations

37:26 Ajit Jane had to say about that.

37:30 The question is how and when can you

37:32 offer insurance to ships crossing the straight of Hormuz?

37:39 I mean the short answer is depends on the price.

37:53 Aid I uh I like your Charlie answer.

38:00 Um obviously some thought has gone

38:02 into that because there's a lot of dynamics there.

38:07 Yeah, there's a lot of chatter there's a lot of need.

38:10 Uh fortunately there's enough capacity in the industrials world today

38:16 that would like to write that risk for no other

38:20 reason but people are sitting on excess capital and they'd

38:23 like to find a way to deploy that excess capital.

38:26 uh we ourselves have taken a small participation

38:31 in a program that's put in being put

38:34 in place so as to write insurance for the ships in the in the state of Homo.

38:40 Uh we haven't written any deals as yet.

38:43 It's still being fine-tuned,

38:45 but if we can get our terms in terms of the underwriting

38:48 decisions and the fact that the US Navy will escort these ships,

38:54 we have put a price on which we will be comfortable underwriting that risk,

38:58 but nothing has happened as yet.

39:01 Greg Ael also highlighted what makes Birkshire's business special

39:04 and spelled out his ethos for running the company going forward.

39:09 How are we unique as a conglomerate?

39:12 We live by the fact that we hate bureaucracy.

39:16 We do not embrace in in in in our Thank you.

39:21 Yes, Ajit's the biggest fan.

39:26 He reminds me Consulate.

39:28 I love it.

39:28 I treasure it.

39:29 But no, we've heard many times the ABCs, the arrogance, bureaucracy,

39:34 complacency that can creep into a company will kill a company.

39:38 and we intend to uh never allow that to happen.

39:42 So we have this unique opportunity to both take the businesses we have today,

39:50 take that foundation and build upon it.

39:54 Let's get a deeper dive into this morning's Q&A session with our Yun Lee.

39:58 So uh Yun, you looked at the numbers this morning.

40:00 Of course, you were in on the session uh uh from Greg Ael this morning.

40:04 So what are your headline thoughts?

40:06 Yeah, he really spent a good chunk of time talking about the equity portfolio,

40:10 which I think a lot of shareholders really

40:12 appreciated because there were some doubts about how

40:14 he's able to be this hands-on operator

40:17 at the same time running this massive portfolio, right?

40:19 So, he talked about how he's thinking about it,

40:22 the core four, that's Apple, American Express, Coca-Cola,

40:26 and Booties and then the Japanese holdings and then some

40:30 other significant stake like Bank of America America and Google.

40:34 Yeah.

40:35 Um, so I think it's really interesting

40:37 and I think a lot of people appreciate it.

40:38 And also like you said, last quarter, um,

40:41 Berkshire Hathaway was actually a net seller of stocks once again,

40:46 selling about, you know, a net $8 billion of, uh,

40:50 stocks and, um, that's just not slight tweaking, right?

40:54 That's there's a lot of repositioning going on, right?

40:57 because it was $24 billion in growth sales and then

41:00 $16 billion in purchases netting out to to minus8 billion.

41:04 So yeah, that's that's not trivial.

41:06 Um it's interesting you he he definitely spent a lot of time

41:09 on the portfolio characterizing how he views I guess different pieces of it,

41:14 but those things that were not mentioned like all

41:16 the rest I I think it still leaves open the question

41:19 of whether he considers them either too small to matter

41:22 or maybe not worth spending a lot of time on.

41:24 Right.

41:24 That's a good question.

41:25 what happens to the rest of the stock he didn't mention and uh

41:28 also the selling we talked about a a part of it I

41:32 think is likely tied to the departure of Todd Combmes you know

41:36 the unwinding of the positions he used to run right and because he left

41:40 for JP Morgan at the end of last year and we don't know

41:44 exactly which stocks they were but uh I know he said in the past

41:48 that Lisa and Mastercard were the two first stocks he bought for Bergkshire

41:52 15 16 years ago so we'll see If those ones are still there, if they survive.

41:57 Yeah, exactly.

41:58 Um I think there was a lot a little bit of suspense

42:01 about how much uh share repurchase activity there was in the quarter.

42:05 Obviously Greg Abel had said they had restarted the job the buyback program over

42:09 200 million and then it turns out it was 235 million total in the quarter.

42:13 Obviously a pretty small amount relative to a trillion dollar market cap, right?

42:17 That's very small.

42:18 and he he still sounded very, you know,

42:21 conservative and he signaled this, you know, disciplined approach to buyback.

42:26 Um, you know, they're evaluating the intrinsic

42:28 value with Warren Buffett and uh yeah,

42:31 I I think people want to hear more more aggressive buyback approach.

42:35 Yeah, especially when you consider, you know,

42:37 all the cash that they have and now, you know,

42:39 that's obviously a cushion and it's obviously ammunition to go

42:43 and do something down the road if they want to do it.

42:46 But a lot of folks feel as if well if you

42:48 feel as if there's a positive expected return to buying your shares

42:51 at these levels maybe do more of that or they want

42:54 to just wait for a bigger discount to their estimate of intrinsic value.

42:57 Right.

42:57 Totally.

42:57 But he did sound like he's ready to buy new

43:00 uh either companies or stocks when the price is right.

43:03 Yeah.

43:04 And um just judging by how comfortable he was talking about AI and tech and you

43:09 know LLM and the def fake video we we saw um I wonder if there's a sign

43:15 that maybe Bergkshire will be more open

43:17 to technology investments going forward because as we know

43:20 Buffet was a little bit hesitant because it

43:22 was outside of his circle of competence before.

43:25 It's true.

43:25 Yeah, it is interesting especially when you consider, you know,

43:28 some of these big formerly bluechip software companies that have actually

43:32 come down so much in valuation because of AI disruption fear.

43:35 If Bergkshire would see that as a dislocated

43:38 deal that they could they could get in there.

43:40 Yeah, totally.

43:40 And to that point, they added that alphabet stake.

43:43 It was pretty significant, more than $4 billion uh last year.

43:47 Uh and then he did mention it uh in his, you know, session.

43:52 So there I think there are signs that they're getting more into technology.

43:55 You and I think we with tech being a big topic of discussion this morning,

43:59 Abel uh did take a moment to speak about

44:01 the role data centers will play in Bergkshire's energy investments.

44:04 Listen up.

44:06 If I look at our peak load, i.e.

44:08 the amount of energy being used from those data centers,

44:12 it's at 8% of their peak load.

44:14 And the only reason I highlight that 8% is when I

44:18 hear people in the industry and all the utilities around us,

44:22 a lot of states, they're talking about this great opportunity and gez

44:26 hopefully in the next 5 years they'll be from a relatively starting point.

44:31 They want to get to the five to 10%.

44:34 And we're already at eight and we see opportunities to grow

44:38 that by 50% over the next 5 years or or potentially more.

44:42 But we'll do it in a way and you're starting

44:45 to hear more and more of this across the US.

44:48 We'll do it in a way where we're not

44:51 going to impact the costs of our other customers.

44:55 These users of the i.e.

44:57 those the hyperscalers the data centers and the users

45:02 of the energy uh they have to bear their full cost.

45:07 Interesting.

45:07 He's able to portray the utility business as essentially,

45:11 you know, kind of newly a growth business,

45:13 pretty ahead of the industry in terms of data center exposure,

45:15 but able to do it in a way that's not going to harm local.

45:18 Right.

45:18 Totally.

45:19 And customers.

45:19 I think it's definitely welcome news that, you know,

45:22 he's trying to expand into data center

45:25 infrastructure buildout is such a growth area.

45:28 Yeah.

45:30 Yeah, for sure.

45:29 Um I mean I guess the other pieces of it uh at this point

45:33 uh they they highlighted some of the connections

45:35 among some of the industrial businesses.

45:37 They talk about the building products area even

45:39 though they don't want to say that this is

45:41 all meant to you know fit together like uh some kind of a top- down machine.

45:46 There are linkages between these companies.

45:48 Yeah.

45:48 And he's talking about he also talked about AI in a broader sense

45:52 and he's evaluating ways that can be

45:54 additive to Bergkshire's array of different businesses.

45:57 Right.

45:58 and um how they can be more productive and efficient.

46:01 For sure.

46:01 Yeah, for sure.

46:02 You know, that's a big part of the uh the priorities

46:04 here as well as in the insurance business with with Gun Lee.

46:07 Thank you so much.

46:08 Enjoy the uh the second part of the session.

46:10 Now, we're now awaiting uh what was just announced a little

46:14 while ago as an interview between our Becky Quick and Warren Buffett,

46:17 who of course remains chairman.

46:22 We are sitting down right now with Warren Buffett,

46:25 uh, the chairman of of Bergkshire Hathaway,

46:28 who for the first time in 60 years has been watching

46:31 all of this from the audience instead of being on stage.

46:34 And, you know, last year at this time, Warren,

46:36 you surprised everyone with the announcement that you were stepping down as CEO.

46:39 Fast forward a year and here we are.

46:41 What do you think?

46:43 Well, I think it's all working.

46:45 It's all working.

46:46 it it isn't our ideal uh surrounding area uh or environment

46:54 I should say uh in terms of deploying cash for Berkshire

47:00 uh but in terms of how we got the right management we

47:06 got the right arrangement and uh you know we can pick our spots

47:11 and and and uh nobody can tell us what to do exactly and and uh

47:19 so sometimes we're doing nothing but other other times we get quite active.

47:23 I mean you know Ajet spent some time on the stage today talking about

47:28 how one of his keys is to do nothing when it comes

47:31 to insurance when it comes to writing insurance which is the same

47:34 thing that you have always talked about with whether to invest or not.

47:38 Yeah.

47:38 The world is full of people that are offering you things

47:41 to do and then the question is to find find one that you

47:46 know makes sense and there may be 20 out there that make

47:50 sense that you don't understand and you just leave them alone.

47:53 You you said that the world or the surrounding environment is

47:57 not ideal and I guess that points to the idea that there's

47:59 almost $400 billion in cash on hand although Greg took some pains

48:03 to show it's really more like $380 billion in cash on hand.

48:07 But that there there's a lot of cash on hand and you're

48:10 still active in managing the portfolio too and looking at stocks.

48:14 You're looking around and you don't see a lot that you want to invest in.

48:19 Well, then we don't do anything.

48:21 I mean, we've been in of the 60 years I've been in the business,

48:25 uh, you know, there probably five of them been really juicy, you know,

48:31 and, uh, I think it was Tom Watson senior of IBM that, uh,

48:39 said they asked him the reason why IBM

48:43 had been so successful or something like that.

48:45 And he said, "I'm smarter than spots and I

48:48 stay around those spots." And that's that's the whole thing.

48:52 And IBM was in three different businesses including time clocks and a couple

48:58 and two of the three turned out to be no good.

49:00 But they so they just focused on the one.

49:05 What what is it when you look around that it

49:07 it's just prices are too high at this point?

49:10 I I would imagine there are Greg said this from the stage too.

49:12 There are businesses that you like just

49:15 and I would say I understand fewer of the businesses

49:21 as a percentage of the whole than I did 10 years ago.

49:25 I have not learned uh new industries uh for some years,

49:33 you know, and and so I don't kid myself on that.

49:36 I'm I'm not going to learn.

49:37 They're not going to have an edge on, you know,

49:40 a whole bunch of younger people that have actually grown up with them,

49:44 used the product, seen things, but that uh well, as I mentioned,

49:53 you know, you don't have to understand too many of them like Apple,

49:59 but looking around, um let's just get

50:01 some macro thoughts on this because I don't

50:03 know that this is something that that Greg is going to comment on per se.

50:07 Just looking at the macro stock market environment,

50:11 what does this feel like to you?

50:12 Is does it feel expensive?

50:14 Does it feel like there are opportunities in some?

50:16 Well, it feels like, you know, I' I've compared it the markets to a church

50:23 with a casino attached and and people can move between the church

50:28 and casino and and I always said there are more

50:31 people in the church and more people in the casino,

50:34 but the casino's gotten very attractive to people.

50:36 you know, if you're buying one day options or selling them,

50:42 I mean, that is uh that's not investing.

50:47 It's not speculating.

50:48 It's gambling, you know, just totally.

50:52 There's nobody that can explain why they're buying an option

50:56 for one day unless they maybe maybe the fellow

50:59 that that uh you know made the $400 and some thousand

51:03 dollars from knowing when we were going into Venzo do it.

51:07 But I mean that's and the quantity of those things is just incredible.

51:13 So we've never had people in a more gambling mood than now.

51:18 But that doesn't mean that investing is terrible.

51:21 It it does mean that uh that prices

51:25 for an awful lot of things will look very silly.

51:27 I mean they, you know,

51:28 they they had a squeeze and and then and and Avis of all things.

51:33 Well, Avis has been around for 50 years, but just this past week.

51:37 Uh uh and uh we have lots more regulation and everything now,

51:44 but uh but people spend their time figuring out how

51:48 to get around the rules rather than follow the rules.

51:51 That's just a challenge.

51:53 The type of investor you are though is is you laid it out yourself.

51:57 In the 60 years you've been doing this in the business,

52:00 you've had maybe five juicy years.

52:02 I guess that means you're always looking for the next juicy year.

52:05 What do you think it would take to make

52:08 a juicy year or a juicy opportunity for you?

52:11 It's a phone call in many in some cases.

52:14 You know, we we bought a business last year.

52:17 It wasn't It wasn't big enough to be mean meaningful.

52:21 We got a letter Bell Labs.

52:23 Yeah, Bell Labs.

52:24 And no and and uh you know and and and sometimes

52:29 there's more zeros attached to them than others

52:31 and and we're big enough to handle anything if we

52:34 can make decisions faster than anybody and our word is good.

52:38 Uh it uh there's an awful lot of people

52:42 that they're when they they're in the business

52:47 of reselling something or you know it's uh and there's

52:53 it's a lot better if you're a good salesperson.

52:56 There's no reason to be selling vacuum cleaners or you

53:00 know as we'll sell stock you'll make way more money.

53:04 It's where the money is

53:06 and there's and there's more money around than ever and it uh

53:12 but the best opportunities have probably

53:14 come when the macro environment leads to

53:16 the most likely well the most likely time to buy

53:20 things is when nobody else will answer their phones.

53:23 You know everybody else talks about

53:24 their wonderful trading departments and everything just try

53:27 them out sometime and when uh markets

53:31 are collapsing they don't answer the phones.

53:33 Right.

53:34 Right.

53:35 And and if they do, the the bids are subject

53:37 and the offers are subject and the spread is wide and then

53:41 and they'll use the information they get from you about what you

53:44 want to do to go out and kill you some other way.

53:46 I mean, it it's it's uh it's really like going to a slaughter house.

53:51 I mean, you know, you don't feel like eating hot dogs for a while.

53:56 I guess what I'm trying to get at is do you see

53:59 the circumstances building up anywhere that could

54:02 lead to a time like that again?

54:05 Any any sort of panic in the market?

54:07 Where do you see them?

54:08 Well, if you saw them and they wouldn't happen.

54:11 Okay.

54:10 I mean, you've got all kind you don't worry

54:13 about what what people are talking about can happen.

54:17 It's it's something comes out of the blue.

54:20 Huh.

54:20 But some something will come out of the blue.

54:22 Yeah.

54:22 I mean, a nuclear bomb can come out of the blue, you know.

54:30 Well, let's knock on wood on that.

54:32 Well, I It doesn't do any good to knock on wood.

54:34 That's it.

54:36 It It That's the point.

54:39 Yeah.

54:41 It was the Arch Duke getting shot, you know,

54:43 and then 1914 or something like that for World War uh one.

54:50 And it it just take everything in life and it if it if

54:58 it's something people are talking about

54:59 and thinking about it's not going to happen.

55:02 But there are things that can happen out of the blue.

55:05 And actually that's particularly true to use

55:07 that phrasiology now because the things that can

55:12 come out of the sky uh you know we don't know what can happen tomorrow.

55:19 I don't like to talk that way to people whe whether it's you or anybody else.

55:25 I mean because uh you know whether it does

55:30 you a lot of good to worry about that.

55:33 I don't think it does do any good to worry about it.

55:36 I think it's it's good to be cognizant

55:38 of it but the worrying about it is terrible.

55:41 I don't like to I don't like to even cause that belief with people.

55:46 I don't like to go around Yeah.

55:48 Yeah, tell them the end is coming.

55:49 The end is coming or something like that.

55:52 A friend told me yesterday he's recently started using the phrase,

55:54 I don't fret, I don't worry.

55:56 And that's probably a good way to go about life.

55:58 But let let's talk about some of the issues that are out there right now.

56:02 Um, inflation is up.

56:04 That's an issue.

56:05 So, how does Bergkshire how does Berkshire handle that with its businesses?

56:08 Well, we can't handle runaway inflation except not to be there in the way of it.

56:13 And if you look at the number of countries

56:17 that have had runaway inflation since World War II, you know,

56:20 in my lifetime, it's very large, you know,

56:24 it uh and uh once you create that, it it becomes a different world.

56:36 uh you know, Germany obviously experienced it after World War One

56:41 and but but but there are dozens

56:43 and dozens of countries that have experienced it.

56:46 And of course, you have you have countries

56:48 that gone bankrupt like six or seven times.

56:51 I mean, it's just amazing what people do uh in financial markets.

56:59 What about the inflation that we're dealing with right now,

57:01 which is, you know, not excessive.

57:03 It's north of 3% at this point,

57:05 but we're not even back at the levels we were during co at 8 to 9%.

57:09 So, what about just higher energy prices?

57:11 How that works through the line and how you handle it?

57:14 Well, it came close before Vulker.

57:17 I mean it was just it was cash is trash

57:20 you know and and people were losing faith in the currency

57:26 and they felt they could borrow an 12% to earn

57:30 6% on on farming or something like that and they they

57:34 had huge farmers in this state Nebraska uh collapsed because

57:41 they bought beyond the earning power or paid interest rates beyond

57:44 the earning power just because they felt that that that uh

57:49 the dollar was going to disappear and the land wouldn't disappear.

57:53 And I'm it's it's it's tragic for many people.

57:58 And and uh and if you're the best doctor in town or the best lawyer in town,

58:07 you'll always make money under any situation.

58:10 Um the best the best TV personality.

58:14 I mean it's it's but uh what not having faith in the money

58:23 does to a country it it turns it into something else.

58:29 Yeah.

58:27 And I you know I've always hope that you know US

58:31 never does it but we are not immune from it happening.

58:36 Uh, we have a lot of control over whether rates may

58:42 go up a half a point or down a half a point,

58:44 but we may have less control over whether they go up 50

58:47 points or you you've long been um a supporter of Jay Powell's.

58:54 Exactly.

58:53 He had his last FOMC meeting as chairman uh just this last week.

58:58 He did say that he's going to be sticking around, staying on the Fed,

59:01 staying in that position um for the foreseeable future

59:05 in part because of the threats that he's faced.

59:08 Um I'll feel better when he's there uh than when he's not.

59:14 I mean it uh it uh no I just I felt better when Boker was

59:21 there but you that's economists aren't the best at this sort of thing read any

59:32 old economics book from 1950 1970 was that uh Paul Paul Samuelson who was

59:40 a terrific guy and smart as hell uh he had the standard textbook for 25 years

59:47 and if you looked up you know zero interest rates in year after year after

59:54 year it was a 900page book and it wasn't an entry for it you know I

1:00:01 mean it was the most important economic

1:00:03 development I mean in terms of the impact

1:00:06 it would have and everything during the lifetime

1:00:08 of the students reading it but uh Uh,

1:00:13 it's what you don't think of that that does all the damage.

1:00:17 Yeah.

1:00:18 Let's talk a little bit about CEOs um in some of the Bergkshire Holdings.

1:00:22 You mentioned Apple's uh Tim Cook and just

1:00:25 the phenomenal job you think he's done.

1:00:29 Incredible.

1:00:29 Uh he's not the only one of your major holding CEOs who stepped down.

1:00:32 James Quincy recently stepped down from Coca-Cola, too.

1:00:35 And we just spoke with Vicky Halib who announced that she

1:00:38 is retiring and stepping down from that position at Accidental.

1:00:42 U part of what Greg's talked about is how stable that portfolio is

1:00:46 and and these holdings are companies that he

1:00:49 knows and managers that he that he knows.

1:00:51 There's going to be some new managers in some of those major holdings coming in.

1:00:53 Is that a problem?

1:00:55 Well, it was certainly a problem in Coca-Cola there

1:00:57 for good many years when I was around the company.

1:01:01 I mean, sure.

1:01:02 It's it's uh and you have the most problems

1:01:06 with with with a really good company because it'll it'll it'll it'll continue.

1:01:13 I mean, if you're selling some product that people are buying every day,

1:01:17 you can make the wrong decision for a long time.

1:01:20 Uh uh but that's one of the problems with investing that uh

1:01:27 uh Tim Cook I I I felt was very very good

1:01:34 from the start and and our most of our managers uh are very

1:01:41 good at the smaller problems like

1:01:44 they can't anticipate the the overwhelming problems.

1:01:48 That's that's my job or now Greg's job.

1:01:53 Do you feel good about those holdings still?

1:01:56 Have you met any of the new managers of those business?

1:01:59 I haven't met the old managers

1:02:03 of the new business of the new CEOs that are coming in.

1:02:06 Tim replacement Enrique at Coca-Cola.

1:02:09 I've certainly met the people that at at Bell Labs that we Yeah.

1:02:13 did, you know, and obviously I met Vick.

1:02:15 He we made the deal.

1:02:17 And so I I enjoy meeting the people

1:02:21 and uh uh but you can make mistakes with people.

1:02:26 I mean, look at the divorce rate, you know.

1:02:29 That's that's more important than whether you

1:02:31 got the right CEO or anything else.

1:02:34 And and now you've got years of trial.

1:02:36 I mean, back when I was young, I mean, you had to make the decision, you know,

1:02:40 or you didn't have to make a decision,

1:02:42 but a good many people made the decision when they were 20 or 21 now

1:02:45 to get married.

1:02:46 Yeah.

1:02:46 As they got married and now they they they

1:02:49 spend five years and they still make the same mistakes.

1:02:56 So, you think we're getting worse at our judgment?

1:02:58 Well, I don't know.

1:02:59 And maybe that people behave differently before the marriage than after.

1:03:02 Who knows exactly?

1:03:04 Yeah, I would say that almost everybody feels either their marriage is

1:03:08 better or worse than they anticipated a month after they were married,

1:03:13 but I don't know which.

1:03:16 Um, Warren, let's talk a little bit about deep fakes because the deep

1:03:19 fake Warren that popped up early in this session was pretty good.

1:03:25 Um, they had somebody standing up, you know,

1:03:27 Greg was joking about it, but, you know,

1:03:29 the first the first question went to a guy

1:03:32 from Warren up in the rafters who lives in Omaha.

1:03:36 Um, you've been concerned about some of these AI

1:03:39 deep fakes and what that means for the world.

1:03:41 Yeah, I would I would be concerned if everybody was Well, actually,

1:03:46 the worst thing would be to that have

1:03:48 a a really good imitator of any president that came along.

1:03:54 I mean, just imagine.

1:03:56 Well, yeah, we had that famous thing before way back

1:04:00 in in New Jersey where they the Martians coming and everything like that.

1:04:04 War of the Worlds with Thor and Wells.

1:04:06 What you what you can do uh well, if you convince but people lend you money

1:04:14 for they shouldn't you shouldn't be borrowing it.

1:04:17 I mean, it's it's scary.

1:04:24 And it's it's particularly scary when you have nine countries or so

1:04:28 with the nuclear weapons and and people working on something even more lit.

1:04:33 We haven't dealt with this.

1:04:35 We don't know what's going to happen.

1:04:37 Yeah.

1:04:37 Let's circle back to Bergkshire and the Bergkshire today.

1:04:41 Um I think I was speaking with you yesterday or the day before and we were

1:04:45 talking a little bit about Greg Ael and what a nice guy he is and he said

1:04:49 he's a terrific guy.

1:04:49 You said something interesting to me though um about how you

1:04:53 picked him and it wasn't because he was a nice guy.

1:04:56 Why did you pick him?

1:04:58 Well, he's very very very smart about businesses.

1:05:01 Incidentally, he's getting his Can Canadian I

1:05:04 mean he's getting his American citizenship here very

1:05:07 soon and he was going over with me all the things he had to learn about.

1:05:13 And I've actually spent a little time in the past with groups of individuals.

1:05:19 Of course, my wife did too became an American citizenship, American citizen,

1:05:24 and the things they have to learn about the Constitution and all

1:05:28 these and they're usually so proud when they become American citizens.

1:05:33 And I think I I think I detected Greg,

1:05:36 but I mean, you know, as successful he's been and everything else,

1:05:41 I mean, he is it it means something to him to become an American citizen.

1:05:48 And uh you know he sits there with his this young

1:05:53 son you know and son knows more about

1:05:56 some of the answers to the questions you know

1:05:58 that he may get asked or something about becoming a citizen.

1:06:01 It's it's really interesting and where else does that happen in the world?

1:06:06 I mean what people you know that America is special

1:06:12 and and uh it it's a miracle uh what America's accomplished.

1:06:18 I mean it's just an absolute miracle and yet the miracle

1:06:26 the division of the of of the output and everything

1:06:31 is about as inequitable as it you can come up

1:06:34 with while at the same time it's got these great attractions.

1:06:40 There is some secret sauce.

1:06:43 I've never been able to find it precisely,

1:06:45 but that uh when you run a country for 200

1:06:50 and some years and people want to come here every year,

1:06:52 I mean there's there's really something about it.

1:06:55 And what Greg Ael is very, you know,

1:06:57 is looking forward to becoming an American citizen,

1:07:02 that that means something to him.

1:07:05 And you can't buy that any place or package it or, you know,

1:07:11 won't work for a Madison Avenue approach approach, you know,

1:07:14 you know, be an American or something like that.

1:07:17 But that that that feeling just goes in my 95 years.

1:07:21 I've I've seen it, you know, it's time after time.

1:07:25 So I felt I felt good when I Greg just volunteered that in the last day or two

1:07:31 to me that he was he's up there

1:07:33 for his final exams here pretty becoming a citizen.

1:07:36 I didn't realize he wasn't a dual citizen already.

1:07:38 I knew he was Canadian, but I thought he had dual citiz.

1:07:41 He doesn't have a full whatever the complete citizenship requirement is.

1:07:45 And and you can say, why does he care?

1:07:47 I mean, he's gotten along fine with here and everything.

1:07:51 He still wants to be a citizen.

1:07:53 Yeah.

1:07:54 250 years we're celebrating our 250th anniversary.

1:07:57 Um you pointed out that you've been around for 95 of them.

1:08:01 You think we have the special sauce

1:08:02 that that will continue in this country or what

1:08:04 do we need to do to preserve that and make sure that it does continue?

1:08:08 We've got a special sauce there.

1:08:10 That's a secret sauce.

1:08:12 It's such a good secret that I don't know what exactly it it is.

1:08:16 But I do know this that that anybody that has

1:08:22 a choice would choose to be in born in America.

1:08:26 I mean, you know, you can pick some very small little country.

1:08:29 They're very happy that they're But is this is there any

1:08:33 other country that everybody's for couple hundred years wanted to immigrate to?

1:08:40 I mean it it uh and it attracted some terrible people, you know, too.

1:08:46 But but uh it worked.

1:08:51 And they had the mafias from the different groups,

1:08:54 not not just the Italian mafia,

1:08:56 but I mean it it wasn't that they were all we had

1:09:00 some system for picking out the the wonderful people from some other countries,

1:09:05 but it has it has worked.

1:09:08 But it's worked the extremes to which it works uh

1:09:14 don't seem to belong to that kind of a society.

1:09:18 I mean if you were drawing up dreams

1:09:21 for the ideal society and you would have this kind

1:09:24 of GDP per cap and everything you wouldn't design you

1:09:30 wouldn't design the you wouldn't design the inheritance of laws.

1:09:36 you wouldn't I mean you just do all kinds

1:09:39 of things differently but somehow it's worked but that doesn't mean

1:09:44 that we can't do better I mean at all you know

1:09:51 Warren there are thousands of people shareholders and partners of yours

1:09:56 for decades in some cases who are sitting out in this arena

1:09:59 right now and I just wonder if there's a message

1:10:02 you'd like to give to them um those been following

1:10:06 you for s and who've been partners of yours for years.

1:10:10 The number one rule I give them is just not give them the golden rule to others.

1:10:17 I'm not a religious guy,

1:10:18 but I mean nobody said it any better and and in in a couple

1:10:23 thousand years than that, which may be

1:10:25 why it's lasted that a certain degree, too.

1:10:28 I mean that uh you know more people are reading a 2,000-year-old

1:10:33 book about how to behave than anything that anybody's coming up with lately.

1:10:39 uh uh now it's got a lot of particularly

1:10:45 old testaments got different kinds of stories to some extent

1:10:48 but uh if the whole world lived by the golden

1:10:55 rule it would be such a more wonderful society

1:10:59 do unto others as you'd have them do unto you.

1:11:02 Yeah.

1:11:02 And that's true for everything from parenthood to being

1:11:08 a boss to being all I mean just everything in life.

1:11:12 And it doesn't cost you anything.

1:11:14 In fact, it it it's reflected in better behavior toward you.

1:11:18 So I mean it's a very selfish sort of thing in in one sense,

1:11:22 but I've never seen anybody that's unhappy that behave that way.

1:11:29 they uh uh and I've seen a lot of people

1:11:33 in a lot of different kinds of situations.

1:11:37 Warren, I want to thank you for taking this time to sit down with us today.

1:11:41 Warren Buffett, the chairman of Birkshire Hathaway.

1:11:44 Uh Greg Ael is going to be taking the stage in just

1:11:47 a moment and you will see more from him in just a moment.

1:12:01 Thanks for listening to our coverage

1:12:02 of the Berkshire Hathaway annual shareholder meeting.

1:12:05 There is more to come in a third podcast.

1:12:08 If you already follow Squawk Pod, that should be coming up right in your feed.

1:12:12 You can check out our show notes as well for links

1:12:14 to more resources and a listening guide to this podcast.

1:12:17 I'm Becky Quick.

1:12:18 Stay tuned.