Squawk Pod: Berkshire Hathaway 2026 annual meeting: part 3 - 05/02/26 | Audio Only

0:03 Hi everyone, this is CNBC's Becky Quick in Omaha, Nebraska,

0:07 and you are listening to part three of our full

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

0:14 We pick up here with the second session of questions

0:17 and answers hosted by Bergkshire's new CEO, Greg Ael.

0:20 With him on stage was Katie Farmer, CEO of the BNSF Railroad, and Adam Johnson,

0:26 CEO of NetJets and new president

0:28 of Bergkshire's Consumer Products Service and Retailing Businesses.

0:34 Welcome back.

0:35 I hope you enjoyed the break.

0:36 Uh Becky Warren, thank you for that exceptional interview.

0:40 Appreciate that.

0:48 Well, we're very fortunate to have Katie and Adam in these leadership roles.

0:52 Again, it was a uh very purposeful to have them on stage.

0:56 We want them to have the opportunity to engage with our owners,

0:59 our shareholders, and we really do look forward to the uh the question.

1:03 So, thank you for joining us on stage again.

1:07 Yeah.

1:07 Thank you.

1:15 Becky again, great to have you back.

1:16 Thank you for that interview and uh if you'd like to start.

1:19 Thank you.

1:20 Okay, thanks Greg.

1:21 Uh this question comes from Chris Frerieded in Philadelphia,

1:24 Pennsylvania, who wants to know, "How has the current geopolitical situation

1:28 in the Middle East impacted Berkshire subsidiaries?" Sure.

1:35 Um, I'll touch on it and then I'll I'll make sure because

1:38 it it it impacts really in a variety of ways all our businesses,

1:43 but um, what I'm most proud of are our businesses.

1:47 Uh, we operate these businesses for the long run

1:51 just like we do for obviously for our shareholders.

1:54 We take a long-term approach there.

1:56 There's not many days and I used to joke when I more had Adam's role.

2:00 There wasn't a day I woke up where there

2:01 the phone the phone wasn't ringing with good news.

2:05 you know, that phone rang.

2:06 You knew you're going to have a bit of a challenge and we have that portfolio,

2:09 but but that's okay.

2:10 We'd be talking and we always worked our way through it.

2:13 And we have a team that would lean

2:16 in and we'd come through and it could be anything.

2:19 And we never tried to use that as a reason we

2:22 couldn't do something or get to the to the right place.

2:25 And what I've seen associated with the uh obviously

2:30 the the war in Iran and and the and the various conflicts

2:34 in the Middle East is again a team that is

2:37 very much taking the approach that that's the situation we're in.

2:41 We can manage our business and we we very much

2:43 quickly move to what's the best solution for our customers.

2:48 how can we deliver and continue to deliver

2:51 what we've done to them and what's their expectations

2:54 around that and and our teams will work

2:56 incredibly hard to come up with with solutions.

3:00 Um I I touched on LSBI, the drag reduction agent on the pipeline company.

3:08 Um they don't usually sell a lot of product

3:11 into the Middle East as far as moving.

3:13 It's more a domestic based product for Canada in the US.

3:16 when you think of a drag reduction agent

3:18 on pipelines literally being cargo planes of that that uh

3:23 chemical being moved in the Middle East to help free up supply and and i.e.

3:28 remove that uh some of that constraint.

3:31 So there there's so many things that go on when they

3:34 start trying to figure out how to solve uh the challenge.

3:39 Now what I would say is it doesn't

3:41 mean there's not immediate impacts to our businesses.

3:44 If you think of companies in America around the globe,

3:49 petroleum is and ga natural gas matter is

3:52 such a fundamental in input to so many products.

3:57 And the reality is if you think I

3:59 touched on our chemical group their their input

4:04 is uh generally a petroleum product and the output

4:10 is the the various products they produce.

4:12 obviously that that are byproducts of that.

4:15 But their input costs have effectively doubled in a very short period of time.

4:21 But again, we'll manage through that and that's

4:23 the the beauty of being part of Bergkshire.

4:25 They know first we'll take care of our customer.

4:29 We'll find the right answer.

4:30 We'll manage the challenges and the value creation will be there in the end.

4:34 So there's some short-term pressure on our chemical businesses.

4:37 If you looked at their first quarter profits individually,

4:41 they would be down because or flat to down because they've got some challenges.

4:45 For example, on the on the input side,

4:48 but they're delivering what the customer needs and that rebalances over a period

4:52 of time where our prices will move up pursuant to our contracts.

4:55 We'll be treated fairly in the end in that they'll

4:58 reset and then may unwind a little bit slower.

5:01 But the point is um unfortunate situation and and we've got you

5:07 know men of service and women of service over there and and putting

5:10 themselves at risk and and and and and that in itself is

5:15 uh scary because a lot of our employees are are have family involved.

5:19 But you know as far as running our businesses, it's really heads down.

5:26 We'll get through this and we'll keep operating everything for the long run.

5:30 And and again, it includes how we'll operate our assets.

5:34 We're not going to put the asset at risk to try to get

5:36 to a short-term outcome because a petroleum

5:39 prices higher or petrol petroleum prices are higher.

5:42 It's very much continuing to take that that long-term perspective.

5:46 Katie, um obviously it it can impact demand

5:51 and what's being brought in on the on the coast.

5:55 Are you seeing that or what else are your observations?

5:58 Yeah, it's interesting and and Warren has said this in the past before.

6:01 You know, the railroad is a really

6:03 good reflection of what's happening in the industrial

6:05 and the consumer economies because our loadings

6:08 really cut across all the various commodities.

6:11 You know, we touch agricultural products, we touch coal,

6:15 the industrial commodities like cement and steel and aggregates.

6:20 You know, certainly our interotal business which is such a big

6:23 part of our business reflects what's going on with the consumer.

6:26 And so we're seeing the impact from the conflict

6:29 in the Middle East in a couple of different ways.

6:32 First of all, I would say that if you look across our various commodities,

6:36 it's created an opportunity for some of those commodities

6:40 just because of the disruption in the supply chain.

6:43 In addition to that, you know, we see commodities like aggregates and steel,

6:49 things like that that that are that are

6:51 favorable and we're seeing an increase in those.

6:53 But then some of the commodity areas that use energy in the manufacturing

6:58 of those commodities are certainly being impacted by the increasing fuel prices.

7:04 The largest segment of our business, as I mentioned, is interotal.

7:07 And so as fuel prices increase, our intermoal business becomes more competitive.

7:12 And so we're seeing an increase there

7:14 relative to what's happening in the Middle East.

7:18 I would say in general though as we think

7:20 about it if fuel prices stay too high for too

7:24 long it has an impact on consumer demand and when

7:28 that happens that cuts across all of our businesses

7:31 and have you started to see that yet that obviously when you think of I

7:36 touched on it being an input to many of our companies but really globally

7:40 it's an input to so many things and as that price pressure pressure pressure

7:43 moves up obviously the the demand side

7:47 is challenged are Are you seeing that yet?

7:49 Yeah, we're seeing some uh we are starting

7:51 to see that impact some of the businesses.

7:54 I would also say Greg as we talk

7:56 to some of our our large interotal customers what

7:59 they are telling us some of the big retailers

8:01 are the customers are having to make choices now.

8:03 So as fuel prices go up they make choices about what they're buying.

8:08 And so that's where I get back to if

8:10 if it is a prolonged higher fuel price environment,

8:14 I do do believe that we will see that customer impact across our businesses.

8:20 Thank you, Adam.

8:22 Uh across your businesses, um what are what are you seeing?

8:26 What are you what are you feeling?

8:27 Yeah, I mean certainly, you know,

8:29 when you see um when you when you see the increases that have occurred

8:34 in the in the instant spikes in some

8:36 cases that occurred certainly on the consumer product side,

8:38 on the real uh retail side,

8:41 um it it has affected some of the demand on that side.

8:44 I would um I would also tell you that we have also faced multiple

8:49 times at NetJets with a hundred you know dollars a gall $100 a barrel pricing.

8:55 We see those spikes.

8:56 We see the demand.

8:57 haven't seen it on the netjet side.

8:59 We went from uh really the last two years from about five to 540 a gallon.

9:05 We're seeing spikes up to 7 a gallon.

9:08 I would tell you if I see that kind of sitting at 7 and a4 750

9:11 a gallon then you'll see it start impacting even

9:13 in the higher end side on the net side.

9:16 So we're feeling it.

9:17 Um it's you know it's not the first time we've had to deal with this.

9:20 you know, we're prepared to deal with those things and make

9:22 adjustments where we need to, but this certainly is affecting,

9:25 I would say, some of the retail

9:27 businesses and some of the consumer product businesses.

9:30 Great.

9:30 Thank you, Adam, and thank you, Becky, for the question.

9:35 We'll now move to station five.

9:39 Good afternoon, Mjab Singh from MountainHouse, California.

9:45 Warren has spoken very highly of of both you, Greg and Katie.

9:51 So, I'm grateful to have you both leading our company.

9:55 And I'd like to ask each of you a question.

10:00 Greg, as you know, the Bergkshire system relies on decentralization.

10:06 Each manager runs their own subsidiary.

10:10 As CEO, which operating units do you think need more

10:16 oversight and how will Yuyu handle a manager who underperforms?

10:23 And Katie, as Greg highlighted, the NSF's profitability lags its competitors.

10:32 With eventual technology advancements and autonomous driving,

10:37 trucking costs will continue to to drop.

10:41 How will BNSSA maintain its competitive

10:46 advantage from competitors and new new technology?

10:52 Great.

10:52 Thank you.

10:55 So associated with the letter I wrote to all of you as owners,

10:59 I highlighted some important um as I've touched on values.

11:04 One of them was our decentralized model.

11:08 I also touched on risk discipline,

11:11 capital allocation and when we think of our businesses,

11:16 we have an exceptional group of leaders in businesses and yes,

11:20 they do own their businesses as Katie touched on it

11:24 in her video as Adam's alluded to it and talked about it.

11:28 Um there is a great deal of ownership in each

11:30 of our across each of our subsidiaries and that's absolutely

11:35 how we'll continue to operate and see it

11:38 as a as an extremely effective model that they're closest to their customers.

11:43 They understand what needs to be done and if they think like

11:47 an owner we get very good outcomes across the group of companies.

11:53 I I would highlight though that with a decentralized model

11:58 we we do not um uh take responsibility and I

12:04 was one of those I ran BHE it's it's

12:06 a great set of responsibilities where Bergkshire Hathway Energy shouldn't

12:11 be abbreviating sorry but when I ran it that that autonomy

12:15 meant you meant you embraced it and there was

12:18 a great amount of uh accountability that came with it

12:22 and sheer pride that you wanted to do things right.

12:26 We've got a clear set of uh when we talk about integrity and how I started it,

12:31 we have a lot of expectations and that's where

12:35 both on the uh on the integrity how they approach

12:40 managing their business and and servicing their customers and I've

12:43 said there's a lot of external factors we we

12:46 we can we can observe but our primary engagement

12:50 is with their are they managing the risk and risk

12:53 and foremost do they do they see themselves

12:56 as that chief risk officer you've heard us discuss many times

13:01 are they good allocators of capital with the capital

13:03 they have there because even capital you have to manage

13:06 your operating expense as well I view everything you

13:09 know that that when we're spending money on a uh

13:12 it may be a capital expenditure it can be

13:14 an operating expenditure you're deploying our our our shareholders capital

13:19 are are we doing that well and we focus

13:22 on that so that's part of that equation of allocation Apple.

13:25 And the reality is if if we're seeing um a situation

13:30 where we're underperforming or we're

13:33 or we're seeing some potentially poor decisions,

13:36 that's where we engage and have a discussion.

13:38 And usually it's relative, and I touched a bit on this with Katie,

13:42 it's relative to what we see externally and just really trying

13:46 to understand um where our performance gaps are and and then

13:51 it quickly moves to how and and we have we don't

13:55 have the people at corporate to go in and quote help.

13:58 So, it's not like we send in an army,

14:01 but there's generally some people within our subsidiaries

14:04 or maybe someone we know that could help

14:06 them with that with that performance gap because

14:08 we do treasure um continuous improvement and strongly,

14:13 as you've heard, believe in operational excellence.

14:16 And there's, as I've said,

14:17 there's room for us to to get better and that's how we would

14:19 approach the situations where we see the gap and need to close it.

14:23 Katie, maybe you can probably touch on both.

14:27 Um, absolutely.

14:28 So, thank you for the question and as I said,

14:31 we absolutely know that it's critically important

14:34 that we continue to drive an efficient operation,

14:37 that we continue to have a competitive cost structure,

14:40 and that we continue to close the gap

14:42 with our competitor relative to our profitability.

14:45 There's a couple of specific things that we're working

14:48 on and it's really about operationalizing the improvement that we

14:52 saw in two two in 2025 into the first quarter

14:56 of 2026 and making sure that we're really institutionalizing that.

15:00 So the first thing that we really focused on in 2025 was

15:04 we knew that we needed to improve our single car operational efficiency.

15:10 And when I say single car unit operational efficiency,

15:13 we run a couple of different networks.

15:15 We run our intermoal network.

15:18 We run our agricultural and our coal network, our boat networks.

15:23 And then the balance of it is what we

15:25 call our carload network or our single car network.

15:27 And that's where we we have non-unit train.

15:30 It takes a a lot of operational focus.

15:33 It takes a a lot of work effort and it consumes a lot of resources.

15:38 And so anything you do to improve that single

15:41 car network is good for all of your customers.

15:46 It frees up resources.

15:47 It creates capacity.

15:49 It allows you to handle the same amount of volume if not more with fewer assets.

15:54 And that translates through then to the improvement

15:56 that you're seeing in the profitability.

15:59 An example of that is in in the first quarter of this year,

16:02 we handled more volume than we did in the first quarter of last year,

16:06 but we did it with 260 fewer locomotives.

16:10 That translates into a more consistent service product

16:13 for our customers and it also translates into better financial results,

16:17 which is what you saw in the first quarter of 2026.

16:21 So we we're spending a lot of time ensuring that we

16:24 have operational excellence not in all not in just all

16:26 those other networks but in the network that frees up resources

16:30 and drives improvement and operational excellence for all of our customers.

16:34 The second area and you heard Greg talk

16:37 about this earlier was around our technological transformation.

16:42 We really believe that in addition to driving that operational

16:45 discipline that you saw in 2025 and into 2026

16:49 that working with the the new BNSF tech

16:53 organization to drive that next step level of improvement.

16:59 And so you you saw units dwell in our terminals less

17:04 time that translated through to the financial results that I talked about.

17:07 You saw velocity improve as well.

17:10 And so how do we leverage technology

17:13 then to take the next step level improvement?

17:16 So I'm excited about what we're doing there.

17:18 We're literally attracting data scientists, operations research folks,

17:24 and we're putting them alongside

17:26 of our operators in our network operations center.

17:30 We're looking at things like uh digital twins,

17:34 which gives us the opportunity to model how we

17:36 run the railroad before we actually run the railroad.

17:40 We're looking at opportunities to do predictive ETAs for our customers,

17:44 which allows our customers to have a better product.

17:48 It allows us to turn the assets faster.

17:51 And then last, what I would say is that we're just it's

17:55 good oldfashioned going to work

17:56 on on attacking the largest structural cost buckets.

18:00 We had a record for the first quarter in our fuel efficiency.

18:06 That's the kind of thing we want

18:07 to do because it makes us competitive with trucks.

18:11 It is good for the environment and it's good for our financials.

18:16 So those are the things we're doing to close the gap relative to profitability.

18:20 Now your question about competing with trucks.

18:23 I would say a couple of things with that.

18:25 First of all, we have the largest interotal franchise of all of the railroads.

18:31 We have a unique relationship with JB Hunt and we

18:35 have been extremely successful in converting over the road freight.

18:39 We've done more of that than anybody.

18:41 So, we know how to compete with trucks.

18:43 But your question about technology is a good one.

18:46 And I would say that we in the past have

18:49 invested in a in a system called positive train control,

18:52 which is a safety overlay that allows us to operate the railroad efficiently.

18:57 As you know, we operate in a closed circuit.

19:00 And so we have the ability to your point ultimately

19:04 to run the train with fewer people than we operate with today.

19:07 And in fact, if you go way back in time,

19:09 we used to operate the trains with five people on the train.

19:13 Now we're down to two people on most of our trains.

19:16 So the technology will continue just like most industries will continue

19:20 to evolve and we're continuing to look at that as well.

19:25 The last point I would say with that though

19:28 is that we also have to be allowed to innovate

19:31 and so we need regulation that supports the ability

19:34 for railroads to be able to compete with trucks.

19:38 As you said, we know that there are trucks out

19:40 there running today in our state in Texas along I45.

19:45 We just there was just a pilot with autonomous trucks.

19:50 what we have to be able to do is to be

19:52 able to con compete with that and to be able to innovate.

19:55 And so we're going to need regulations that allow

19:57 the railroads to be able to do that.

19:59 So that's how I think about competing,

20:02 ensuring that we're closing the gap as well

20:04 as maintaining our competitive advantage with trucks.

20:08 Thank you, Katie.

20:15 Adam, on that on that point and Katie's point, um, you know,

20:19 you came literally Adam had left for a very brief stint 10 10 years ago, uh,

20:26 and and and had a very senior role

20:28 in in that jets and had been effectively been recruited

20:32 to be a CEO of another business that was

20:34 going public and we were fortunate enough to uh,

20:37 convince Adam to come back, but he came back to a challenging situation.

20:41 The asset was underperforming.

20:43 We had billions of dollars of debt like back to ourselves to the parent company,

20:48 but it was debt that had been incurred and some real challenges.

20:53 Um when when you think about how we address underperformance

20:58 and how do we get a business back on track?

21:01 Um may maybe you just want to touch on that period of time

21:05 and and and that bringing the business back

21:07 and and and how how you achieved that.

21:11 Uh yeah.

21:11 Well, I one I will tell you um you know the one of the I

21:16 came back on June 1st of 2015 and that Monday Monday afternoon and and many

21:22 of the team that's up here today we got in a room and I asked

21:25 a question about how many people really

21:28 understand sort of the bookends of our business.

21:30 Uh NetJets is complicated.

21:32 We're ad hoc.

21:32 We're unscheduled.

21:34 We fly to thousands of airports.

21:36 Commercial airlines will fly to 50 to 100 airports.

21:40 uh we fought 150 countries around so it's a very complicated business and I

21:44 asked the question to the team um how many people do you think really understand

21:47 the book ends of our business and I didn't like the answer I won't tell

21:50 you what the answer was but it was too few and it sort of started there

21:54 and what we did was we we really said you know to build this culture

21:58 the way we want it if I understand

21:59 what you're doing you understand what I'm doing

22:01 at at deeper and wider levels we're going to do good things together so it

22:04 sort of started on that Monday afternoon

22:06 and when we we started building that back Um,

22:09 I will tell you it was also a reinforcement from probably from Greg.

22:13 I remember my first board meeting prep and I

22:15 was excited and we were starting to kind

22:17 of move and and I was talking about uh growth and we're going to get this right.

22:21 We're going to grow and Greg pulled me aside in a very kind way and he said,

22:25 "Why don't you pay $1 back to Warren and work

22:28 on getting your debt down?" That was a teaching lesson.

22:33 Uh, I took that to heart.

22:34 I heard it clearly.

22:35 I actually already knew that.

22:37 And so we just started really putting our blinders

22:39 on and we said safety and service, safety and service.

22:41 B Warren bought NetJets after becoming a customer in 1995.

22:46 Bought NetJets uh in 1998 and he did a video for us that we still use.

22:50 And he said, "I want safety and I want service." And we've

22:53 been really focused on making sure everybody stays in that alleyway.

22:58 That in large part plus a lot of hard work

23:00 um is why we we're able to pay our debt back.

23:04 um we're able to pay uh cash back to Bergkshire Hathaway and move our way,

23:10 as I said in the video, out of the other comm and be first

23:13 in the service business and I'm proud of that.

23:15 So great.

23:18 Yep.

23:16 Thank you, Adam.

23:17 Thank you, Katie.

23:26 Becky.

23:26 Okay, this kind this comes from Brian Simpkins in San Diego, California.

23:31 The question is, has Berkshire Hathaway considered seeking any tariff relief

23:35 or reimbursement programs for its whollyowned

23:38 operating businesses exposed to import costs?

23:42 And how significant is that impact across the portfolio?

23:47 Uh let me let me start with the impact across

23:50 our portfolio because it's it it's very close to uh

23:55 discussing the the situation in the Middle East in that yes

24:00 there were there was the the tariffs and each

24:02 business may have fallen under a different uh tariff

24:06 or what they were importing and and we'd gone through

24:10 it once already in the in the first term

24:12 of the administ administration and there there were lessons learned there.

24:17 So we were both better better prepared in how to manage

24:19 through it and had realigned a certain amount of our our input.

24:24 So it you know that was valuable.

24:27 The second thing was it's as I described with the with the conflict.

24:32 It was heads down and we'll just manage ourselves through it.

24:36 You know listen there there's some cost pressures here.

24:39 We'll figure out how we're going to continue to serve the customer.

24:42 we'll work through on on delivering what they need.

24:45 And there has to be some reasonable

24:46 expectations on the other side that we'd recover

24:49 those tears from our from through the uh

24:52 either through a direct contract with them

24:55 or through the product we're creating and and and that was a good approach

25:00 in that we just um held our course and wanted to continue to service them.

25:05 So they yes there is financial impacts but our team

25:09 did a a really remarkable job of addressing

25:11 it and and really minimizing the impact any

25:14 of our businesses um as far as recovering it.

25:19 Um that would definitely be at our operating level.

25:24 They would be making such a decision.

25:27 But but overall right now our perspective has been there's

25:30 a there's a lot to sort out when it comes to refunds.

25:35 uh what we're eligible for and and so at this point in time,

25:39 we're very much taking an approach that um uh if it's appropriate,

25:44 our teams will evaluate it and and and again,

25:47 it'll be a discussion with our customers and and with a number of them.

25:50 So, it it's it's an operating subsidiary decision,

25:54 but we're not naive to it and that we're encouraging them.

25:57 It's there's a lot to be sorted out at this moment

26:00 in time and and and we're not pursuing them.

26:02 that doesn't mean we may not have a a subsidiary and I I'll look

26:05 to our our team on stage here that may be uh pursuing one or seeking one.

26:11 Uh Katie, anything on uh not as far as the the reimbursement,

26:16 but I would say just as far as the impact

26:18 of the tariffs and what we're seeing with our customers.

26:21 Um you know, I I would say that in early 2025,

26:25 we saw several of our our customers pulling

26:28 forward shipments in advance in advance of the tariffs.

26:32 And um you know we we certainly saw our volumes ramp up at the beginning

26:36 of 2025 because people were were trying

26:38 to get ahead of the implementation of the tariffs.

26:41 So we did see uh you know an increase in volumes through early 2025.

26:46 That really stabilized then in the back part of 2025 and then into 2026.

26:51 I would say that our customers have have really

26:54 adapted to the tariffs and adjusted to the tariffs.

26:58 With that said, it it does cause some uncertainty and I

27:01 think where we see that really showing up is, you know,

27:05 it's very difficult for our customers from a planning perspective and I

27:09 I think it's keeping some capital on the sidelines as far

27:12 as investment in manufacturing facilities and it's just really the uncertainty

27:16 of the tariffs that that really is

27:18 what we're seeing reflected with our customers.

27:21 Thank you, Adam.

27:23 Yeah, I mean I would echo both those points.

27:25 one um I would probably use uh you know Bergkshire Hathaway auto automotive

27:30 Jeff Rocker who is an excellent you know CEO of that division um you

27:35 know his the new and used sales are you know slightly down

27:38 in in Q1 of this year compared to last year and part of that is

27:42 this is sort of that same effect from uh the terrifying that occurred

27:45 a year ago to to to today um I had to smile because

27:49 we were collecting okay it's just it's changed every day as we know

27:52 and you managed through that and just

27:54 understanding the tariff bouncing ball was, you know, a job in itself.

27:58 But I I had to smile because I was actually

27:59 calling our our CEOs just to get their take on it.

28:02 And the 32 companies in the portfolio, consumer product,

28:06 services, and retail, it's a stat that I love.

28:09 They've actually been around on average 88 years.

28:13 And only.5% of American businesses have been around uh more than 80 years.

28:18 Our average in that sector from a founding standpoint is 88 years.

28:22 and several of the uh five of the companies specifically companies that were

28:26 founded in the 1800s and when I called those CEOs they said we've

28:30 been dealing with tariffs for 100 years you know kind of thing

28:33 and so not being dispensive at all of tariffs the point is I look

28:37 at the whole tariff conversation as you're always going to have a curve

28:41 block I think of the CEOs in the last you know seven eight

28:45 years we've had to deal with a global pandemic the highest inflation four

28:48 years and now this thing uh you know the bouncing ball of tariffs So,

28:52 the businesses have done an excellent job of managing through that.

28:56 Um, I wouldn't put it in the fun department of the things we have to deal

28:59 with, but we're learning it and um I think

29:03 we're in a pretty decent spot um moving forward.

29:06 So, thank you, Adam.

29:10 We'll move to station six.

29:16 Good afternoon.

29:18 My name is Amir Rahani from Vancouver, Canada.

29:21 Uh, thank you for hosting us and thanks

29:24 to everyone at headquarters that makes this weekend possible.

29:28 Um, Berkshire's investments in the five Japanese trading houses was passive.

29:33 Good businesses at good prices financed by GPN.

29:39 Uh, your Tokyo Marine deal is fundamentally different.

29:43 A 10-year joint M&A and reinsurance partnership.

29:48 That's a level of operational

29:50 integration Bergkshire has never done internationally.

29:54 What does that look like in practice?

29:56 And does it signal a broader shift

29:59 toward active international partnerships under your leadership?

30:03 And to put you on the spot, Greg,

30:06 Canada versus USA and hockey, who are you cheering for?

30:10 Sorry.

30:11 Sorry.

30:14 Now I'm in trouble.

30:18 Um yeah, Azie did an exceptional job of of discussing

30:23 Tokyo Marine and and I'll I'll touch on it,

30:27 but um what and I and I teed it up a bit

30:31 in saying it is a strategic relationship less than a uh financial transaction.

30:38 Yes, we like the 2 and a half% investment into Tokyo

30:42 Marine and and that will be a long-term uh um investment.

30:48 It's the type of investment we put with our other five investments in in Japan.

30:53 We really think of those as forever

30:55 because it goes beyond the investment and it's

30:57 very much around the relationships we want

30:59 to build there and you'll continue to see that.

31:02 Um Ajit expanded on the underwriting opportunity that we do jointly participate

31:10 in their their their risk and rewards associated with effectively also 2

31:15 and a half% of their book there now and and that's again part

31:19 of the uh financial transaction but there's also great deal of faith there.

31:25 We we as Ajit said and really Ajit says and I take his word

31:30 for that but it's you know it's an exceptional

31:34 company and and and their performance has been remarkable.

31:38 So we're we're thrilled to have them.

31:40 And then the third thing that was touched

31:42 on was the the the partnership highlighted a variety

31:46 of things we how we would like

31:48 the relationship to develop and that's not defined yet.

31:53 So we'll continue to let that take its proper form.

31:57 They're the type of partner that has the same culture, same values as us.

32:01 So there's little question it's going to be exceptional for many years to come.

32:05 Uh but as far as pursuing an absolute acquisition in in in insurance

32:11 or something like that that'll evolve with time and that would be

32:15 obviously the discussions Ajit and the senior team at Tokyo Marine would be

32:19 having and and if such an opportunity materializes we'd be thrilled with it.

32:24 Now to the really tough question Canada versus US in hockey.

32:30 Um h I I did find a way and it's it can cause a lot of angst in my own family.

32:38 So, um I remember waking up that morning and Canada was playing the the men,

32:44 but I'd already decided a little bit earlier that uh

32:48 when it came to the Canadian men versus the US men,

32:51 Conor McDavid plays for Edmonton and uh therefore

32:56 I was going to cheer because being from Edmonton,

32:58 I would I would cheer for the Canadian men's team and I've always followed

33:03 the US women and I love what a program the US hockey and I

33:07 I love USA hockey and how they approach the coaching and the and the development

33:12 of the youth and I think they've done a great job there.

33:14 So I chose to cheer for the US women and it was the the perfect outcome for me.

33:19 So a little selfish in finding that type of outcome.

33:24 I I I will say Greg Greg and I had an Oilers stars bet last year.

33:29 Yes.

33:29 True.

33:30 And we the losing person had to wear the jersey

33:32 of the other and I now own Oilers gear.

33:35 Yeah.

33:35 Kitty owns some Oilers jersey and and unfortunately

33:39 this year neither of us got that.

33:42 They're both on the sidelines very quickly,

33:44 but um uh thank you for that question.

33:48 Uh Becky,

33:51 this question comes from a shareholder who didn't want to be identified,

33:54 but it's a variation of a question that I got from several shareholders.

33:58 Is there any future circumstance that you could

34:01 inver envision Berkshire devesting businesses or being broken up?

34:06 If so, what are those circumstances?

34:09 The shareholder also writes, note,

34:11 I don't want this to happen, but it's a commonly discussed.

34:14 It's commonly discussed among followers of the company.

34:19 Yes.

34:19 So the so um when we think of the question and I think it's a good one because

34:25 uh we've always highlighted there's certain circumstances that we

34:30 may not be the best owner of a business.

34:33 We've touched on if there's labor issues that we cannot resolve.

34:40 I would uh take it to the point then further

34:43 in my letter I touched on if there's reputational risk that we're

34:46 not willing to to ever have our owners or shareholders or Berkshire

34:52 experience and that we have to maybe the business has evolved

34:55 the customers have evolved but if we're if there's that type

34:59 of situation um then then it that company does not belong

35:06 in the in the Birkshire family and and it may be it

35:09 may be a fine business that can be owned by someone else,

35:11 but it may mean we don't own it.

35:13 Um, I would then take it a little bit further.

35:16 I touched on um a couple things or or one other

35:21 thing before I jump to that would be we've often talked

35:23 that if we have a business that is unsustainable it

35:27 and and and no longer generating uh operating cash for our shareholders,

35:33 we have to make some serious decisions around that.

35:36 If there's someone else who could operate it and make it

35:38 be more successful both for the customer and for uh our employees

35:43 then we have to consider that otherwise that business is unfortunately

35:48 in a place where uh we can't just bund it and experience losses.

35:52 We would wind it down over a period of time

35:54 but we'd look for a better solution for our customers employees.

35:57 So that's always been the ca well that that at least from my perspective

36:02 has always been the case and how we'll continue to do it.

36:06 I would say we're taking it uh we take the the obligation

36:10 and and making sure capital is properly deployed obviously very seriously.

36:14 I touched on the regulatoratory compacted energy

36:18 and that that has to exist and we

36:22 have to be if we have capital deployed there we have to get a fair return.

36:27 we have a a situation where we've actually

36:29 announced we're selling a portion of Pacific Corp,

36:32 our our Washington state utility.

36:35 Um, and and that's really a function of the fact

36:39 that we have a multi-state process in Pacific Corp.

36:43 There's six different states and each

36:46 each customer is impacted in different ways.

36:49 And I've already said there's we we very much focus on what's

36:53 the needs of our each state and how can we best service them.

36:58 And unfortunately we were in a situation in Washington where

37:02 they clearly had policy that they wanted from Pacific Corp.

37:06 And it was having a significant impact on the costs of our other states.

37:10 And as much as we would have liked

37:12 to seen what we call a multi-state compact i.e.

37:16 How do they balance all that?

37:18 It wasn't occurring and our other states were bearing costs that they

37:22 felt were not theirs that were being imposed by another state.

37:25 So, we consciously said this isn't working for the six states and the one

37:31 state who had very specific policies and wanted

37:34 them implemented uh we chose to exit.

37:37 we found a very good purchaser uh who very much

37:42 supported and and could implement what was required at that state.

37:46 So there we there we have evolved and it's a situation where it

37:51 just didn't make make sense for Bergkshire to be an owner of that asset

37:54 or our owners to be an owner of that asset and it'll

37:59 be I believe a better outcome for the state and for their customers.

38:03 So there are those situations where we would uh we would divest and we

38:08 we we will always approach things that when we buy something it's forever.

38:13 When we acquire a a utility we tell the regulators it's forever.

38:20 But it has to be a relationship that works and if

38:23 it's broken we'll find a better path both for the company,

38:28 the employees, customers and and obviously for for Birkshire.

38:32 Yeah, Kate.

38:33 Yeah, Greg, there's a the second part of that question though that gets

38:37 at is there is there a point where some of the parts

38:40 or something is there a point where it doesn't make sense

38:42 for Bergkshire to be a conglomerate where you would break up the company?

38:47 Yeah.

38:47 So, to the second part of the question, um, absolutely not.

38:51 We we I touched on it early.

38:53 We we we are a conglomerate.

38:55 Um, but we are an efficient conglomerate.

38:58 We we don't have layers of management.

39:01 We don't have a bunch of committees telling our businesses how to run,

39:05 how they're going to um you know manage their customer relationships.

39:12 We try to at the odd time create frameworks so there's value shared across

39:16 the businesses so they're aware of what

39:17 our other businesses are doing and and technologies.

39:21 That's one of them.

39:21 We like our framework now.

39:23 We think it's it it it's become

39:25 it's very effective across three of our businesses.

39:28 So of course we want them to understand it but we don't create layers.

39:33 Uh I remember when Adam took on the role I nicely said you know there

39:38 there'll be no corporate group supporting you

39:42 either in Omaha or amongst your own team.

39:45 We we he's got folks in netjets

39:47 and they always step up and take more responsibility

39:50 including when I was uh in that role or in the the the vice chairman role.

39:56 So we but the one thing we don't do is create layers

39:59 of bureaucracy or uh other decision trees around it and I think so

40:06 many conglomerates end up with with layers and layers of costs that don't

40:10 add value in in in in to the to the overall corporation.

40:15 I'm I'm even careful when I talk about

40:17 our metals group and our chemicals group because because

40:21 they're a group in in call it maybe uh

40:25 in my vision I they I see similar opportunities.

40:28 I want them to work together but they don't have a corporate

40:32 group on top of them or anybody directing them on what to do.

40:35 They find ways to work together because they have a lot

40:37 of the can have the same challenges can have the same customers.

40:41 So we see our conglomerate structure working without

40:46 the bureaucracy and and and and bloated costs.

40:50 We see a great opportunity to continue to move

40:53 capital across those different groups in a very taxefficient way.

40:58 Other people can't say I want to move capital um BNSF's a great example.

41:04 Um yes they they have a strong operating uh results and they they

41:09 generate they're in a a cycle in their their uh uh business cycle

41:14 right now where there's certain amount of capital we have to deploy

41:17 into it but we also receive substantial dividends from BNSF on an annual basis.

41:23 we can take that capital and decide is it needed in a different

41:26 operating business or do we see opportunities in equities and if

41:31 we don't see those opportunities we're happy to not happy but we

41:36 understand the logical home right now is US treasuries we we

41:40 think that's a good asset we prefer to see that deployed

41:44 but uh in a different fashion yes when the opportunity presents itself

41:48 but it allows us to really move that capital across the group

41:52 So I actually uh the answer to the conglomerate is uh yes,

41:58 we understand we're one.

41:59 We see it operates very effectively and we do not see ourselves

42:04 uh divesting of subsidiaries for that reason or ever breaking off a group.

42:10 Thank you.

42:19 Okay.

42:19 Uh, station station seven.

42:27 Hi, Greg.

42:30 Hi.

42:29 Hi, Greg.

42:30 Katie and Adam.

42:32 My name is Bori Wong.

42:34 I'm here from Chundu, China.

42:37 On behalf of myself and my investment partner, Shui.

42:42 Thank you very much for this opportunity and congratulations,

42:47 Greg, on surviving your first year as CEO.

42:51 Thank you.

42:52 I'm sure the sea feels a bit warmer than it used to be.

42:59 As you lead Bergkshire into this new chapter,

43:03 what would you say is the most significant evolution in your personal

43:08 framework for assessing cash flow certainty

43:12 and margin of safety compared to Warren's?

43:15 And specifically, are you more inclined towards technology

43:20 companies that exhibits the same robust cash flows?

43:24 Thank you for continuing the legacy of Mr.

43:27 Warren Buffett and Mr.

43:29 Charlie Mer.

43:31 Thank you.

43:37 So I I think I'll start with the important part of that question.

43:41 I mean as far as how Burk how Warren thought about it,

43:45 how Bergkshire thought around approaching investments quote our margin

43:50 of safety around investments and how we how we approach it.

43:55 Um we're we're absolutely aligned there and I and and that starts

43:59 with our culture and values and how we've approached everything over the years.

44:03 Um so if I go back to looking at opportunities and energy

44:09 and it may have been an acquisition or we're deploying significant capital,

44:14 it quickly went to yes, we understood the opportunity but Warren

44:20 and and I'd want to have this conversation.

44:23 um where's the risk and do we really understand the risk associated

44:28 with this and I have a I have a really great example

44:33 is that we were acquiring NV Energy in the um uh had

44:39 the opportunity to acquire it and Warren was actually coming back from China

44:44 and and had been over there and I was waiting for him

44:46 to arrive and land in Seattle and give him an update

44:49 that we had this potential opportunity And I very much knew the occu

44:54 the uh the opportunity and what the uh the value proposition was.

45:00 I'd clearly had three significant risks

45:03 in my mind that um was anxious to discuss

45:08 with Warren and in in Warren landed and I had a a short presentation.

45:15 So I'm asking him to just give me a call.

45:17 It was literally one page but just to really trigger it.

45:20 can we have this conversation?

45:22 And the immediate conversation we had was, yeah, the economics,

45:26 you'll you couldn't agree more, understood them, went right to the biggest risk.

45:31 And I was just getting ready to walk him through the two or three risks I'd

45:35 seen and and wanted to make sure we

45:37 understood it and were comfortable and wanted his input.

45:39 And the risk was fundamentally rooftop solar and how

45:42 would it disrupt that business and disrupt our customer.

45:46 We discussed it.

45:47 We understood it was a a challenge.

45:51 I remember saying to Warren, well,

45:53 that's part of the reason I'm sure we're we have this opportunity

45:56 to acquire this public company that there is certain amount of risk

45:59 in the public and the board and the and the management team had

46:03 decided uh uh that they they didn't see the same opportunity we did.

46:08 But Warren went right to it.

46:10 It was all around the risk and and that risk

46:13 did surface 12 months later, 18 months.

46:15 We managed our way through it.

46:17 Um, our team did a great job.

46:18 But so I don't see there being

46:21 incremental margins or we think of risk differently.

46:24 We think of them as in the Bergkshire mindset that the the we're

46:28 going to understand the economic prospects of of this opportunity.

46:32 And as I said, we really go to that 10-year window potentially and say,

46:36 what's the business look like 10 years from now?

46:40 And that and is there enough safety margin 10 years from now?

46:42 is is what we see it the outcome do do we see

46:46 an outcome and if we don't understand what that looks like 10

46:49 years from now I know Warren would would say this I would

46:53 say it then we don't do it there's no safety margin or maybe

46:57 we can um adjust some numbers or there'll be synergies or something

47:01 of that like we have to have a vision of what that's going

47:04 to feel like and look like and that and that really is

47:08 the the how how we approach it now touching on techn technology companies.

47:14 Um we are not going to ever say geez this is

47:18 a a specific sector for us or we need to be in it.

47:21 If there's something in the technology sector or in that group

47:26 of companies and we understand one of those companies to understand again what

47:31 their uh opportunities are and what we view as the economic prospects

47:36 for it and we have an understanding of what those risks are.

47:40 that doesn't preclude us just because it's in a technology sector or that but it

47:45 would start with back to the fundamentals of do we understand it do we both

47:50 the opportunities and the risks and and then is it and then is it uh

47:56 fairly valued relative to that and that's

47:59 all that's always going to be the approach.

48:01 So thank you for your excellent question.

48:10 Now, uh, Becky, if this is okay, uh, we're going to and and so please pick,

48:16 uh, your toughest question, but, um, we're we're beyond 1:00 now.

48:21 This will be our last question for today.

48:25 So, we look forward to it and, uh,

48:27 and then I'll I'll have some, uh, conclusionary thoughts and comments.

48:30 But, uh, thank you, Becky.

48:34 Uh this question comes from Joseph Matas

48:38 and he said Warren had Charlie's partnership for most of his tenure as CEO which

48:42 naturally reduce the risk of subpar investment decisions.

48:46 Who will serve as the Charlie for Greg and there

48:58 and there they're a reason why they're in the rafters together.

49:02 That was an incredible partnership and and one

49:04 that uh you know you you can't replicate.

49:08 But what what I would start with is that very fortunate to still have Warren

49:14 as our our chairman and and that's very important

49:17 and it's and it makes for an excellent transition.

49:21 have a an exceptional board of directors that I'm comfortable reaching out

49:25 to any of them in individually depending

49:29 on the circumstances and either the risk

49:32 we're dealing with or an opportunity that may be present in uh

49:37 any of our businesses or or one that may be coming our way.

49:41 So, we're fortunate to have that exceptional group in place.

49:45 And and then it really comes back to our team that's in place.

49:50 And I said this when I was answering to um Warren from Omaha um that we want

49:57 Bergkshire to endure and that means yes I want

50:02 to lead Bergkshire and I'll be a strong leader.

50:05 I strongly believe that and and I'll I'll take Berkshire forward.

50:08 But it it will be um as a as a you always

50:13 need a single leader and I I think we strongly understand that.

50:17 But you surround yourself with great people and they're already here.

50:19 I've been fortunate on the non-insurance operation

50:22 to to operate with the with with Adam's

50:27 32 and the 18 that I still get to interact with a lot.

50:31 Those 50 uh including Adam and and Katie obviously

50:36 have an exceptional working relationship with Ajit and fortunate

50:41 with that and would seek counsel uh regularly

50:45 even even as vice chairmans we would constantly have

50:48 a conversation around he he may be making

50:51 a an insurance decision or I was making a decision

50:56 around one of our non-operating businesses and the first

50:59 thing we'd cross check is how's it impact your group.

51:03 So have an amazing uh relationship and a val

51:09 and someone I val immensely value the input and then across

51:14 our CEOs we're so fortunate to have a great group

51:17 that I would reach out to any of them on a specific

51:20 circumstance and ask them for their input and I generally

51:25 know where they've dealt with a challenge or a significant opportunity

51:29 and I'd be the first to seek it out and say

51:32 let's talk about it and figure out our path forward.

51:36 And it may be that it was someone on their team that really

51:40 dealt with it and then I'd want to be talking to their team.

51:42 So, fortunately, because of Bergkshire and the way we're created, again,

51:47 it is a a unique structure,

51:49 but we have an immense amount of resources around us.

51:53 And then we have our our team in Omaha who supported Warren for all those years.

51:57 They're remarkable folks.

51:59 There's there's not a lot of them, but they are good.

52:02 and they're and they're exceptional and and we're

52:04 fortunate to have them as part of the team.

52:06 So I it will be such that uh Bergkshire endures and will

52:12 endure u uh as a as a team but clearly with um leadership.

52:19 So thank you Becky for that last question.

52:22 Thank you.

52:30 So, as we as we wrap up today, obviously,

52:35 I can't help but thank everyone for joining us this morning and early afternoon,

52:39 both as our long-term shareholders are or uh those that are are

52:44 our our newer shareholders and all again

52:46 all of you that came for the experience.

52:48 It's it's greatly appreciated.

52:50 We enjoy this engagement.

52:52 It all comes together because there's a an individual Warren has highlighted

52:57 in the in the past pulls together

52:59 the exhibit hall pulls together everything here.

53:03 I'd like to acknowledge her Melissa Shapiro.

53:06 Thank you.

53:19 And then uh the the light was over on that table.

53:23 But we do have um and we made this announcement in December.

53:27 Our longstanding CFO Mark Hamburg is retiring in June of this year.

53:33 We're very fortunate that then he will stay on for an incremental year

53:38 as an adviser to our incoming CFO as a a personal friend adviser to myself.

53:44 We we'll have Mark's knowledge resource

53:47 and and it's immense when it comes to Birkshire.

53:51 I like to Yes.

54:02 Mark has been our our CFO for 34 years.

54:06 It's this not this June, the the following June when he when he truly retires,

54:10 it'll be 40 years with Bergkshire.

54:12 And it's been such an incredible career and and has

54:15 worn so he wears so many hats in this organization.

54:20 I mean, he's he's helping Melissa.

54:23 Uh Melissa's organizing and doing all, but when she has a question,

54:26 she went to Mark to look for the answer around be at the annual meeting.

54:31 He's our corporate secretary.

54:33 I I like to say and I uh to to replace Mark,

54:37 we we hired a CFO, but we also hired a general counsel.

54:42 uh it took it took two to replace him and and and more than that.

54:46 So Mark, thank you for your incredible contributions to Berkshire.

54:52 Warren has highlighted those and I can only echo all that.

54:55 Thank you so much.

55:10 Now lastly, again, thank you for this remarkable uh

55:16 experience for all of all of us at Bergkshire.

55:19 We we treasure what we call owner's day.

55:22 that opportunity to communicate around what's going

55:27 on in Berkshire because we're so proud of it,

55:30 absolutely committed to it and and passionately believe in Bergkshire,

55:34 but equally the engagement of all you throughout

55:38 the day yesterday into this afternoon just uh greatly appreciated.

55:44 Thank you and look forward to seeing you next May.

55:48 Thank you.

56:03 There you have it.

56:04 The 61st Berkshire Hathaway annual meeting is in the books.

56:07 That was Greg Ael's first time running the show,

56:10 but he did get a little help from the chairman, Warren Buffett.

56:13 Buffett sat down with Becky ahead of the afternoon

56:15 session and delivered a number of newsy comments.

56:19 uh we'll kick things off.

56:20 He kicked things off by saying that he

56:21 is staying cautious with his own investments.

56:25 I think it's all working.

56:27 It's all working.

56:28 It it isn't our ideal uh surrounding area uh or environment

56:36 I should say uh in terms of deploying cash for Birkshire.

56:40 Okay.

56:40 Uh but in terms of how we got the right management,

56:47 we got the right arrangement and uh you know we

56:52 can pick our spots and and and uh nobody can tell

56:57 us what to do exactly and and uh so sometimes

57:02 we're doing nothing but other other times we get quite active.

57:07 But with stocks sitting at record highs and at elevated valuations,

57:10 Becky pressed him on the overall valuation

57:12 picture and whether he sees opportunities anywhere.

57:15 Here's what he said.

57:18 That's compared to the markets to a church with a casino

57:22 attached and and people can move between the church

57:26 and casino and and I always said there are more

57:30 people in the church and more people in the casino.

57:32 But the casino's gotten very attractive to people.

57:34 you know, if you're buying one day options or selling them,

57:38 I mean, that is uh that's not investing.

57:43 It's not speculating.

57:44 It's gambling, you know, just totally.

57:48 There's nobody that can explain why they're buying an option

57:53 for one day unless they have maybe maybe the fellow

57:56 that that uh you know made the $400 and some thousands

58:00 from knowing when we were going into Venezuela could do it.

58:04 But I mean that's fre and the quantity of those things is just incredible.

58:09 So we've never had people in a more gambling mood than now.

58:14 But that doesn't mean that investing is terrible.

58:19 That's of course been a persistent theme of Warren

58:21 Buffett for a very long period of time.

58:23 He's always been skeptical of short-term traders ability

58:26 to to outperform the market or certainly outperform a longerterm shareholder,

58:30 the church attached to the casino

58:32 and the p the the attendance varies between those.

58:36 So when asked about the impacts just to get

58:38 to Greg Abel's Q&A of the Iran war on Bergkshire,

58:41 Abel said, "While it impacts businesses in a variety

58:44 of ways," he echoed Buffett's emphasis on long-term thinking.

58:49 It impacts really in a variety of ways all our businesses,

58:53 but um what I'm most proud of are our businesses.

58:57 Uh we operate these businesses for the long run,

59:01 just like we do for obviously for our shareholders.

59:04 We take a long-term approach.

59:05 There there's not many days and I used to joke when I more had Adam's role.

59:10 There wasn't a day I woke up where there

59:12 the phone the phone wasn't ringing with good news.

59:15 You know that phone rang.

59:16 You knew you're going to have a bit of a challenge and we have that portfolio.

59:20 But but that's okay.

59:21 We'd be talking and we always worked our way through it and we have

59:24 a team that would lean in and we'd come through and it could be anything.

59:29 And we never tried to use that as a reason we

59:32 couldn't do something or get to the to the right place.

59:35 And what I've seen associated with the uh obviously

59:40 the the war in Iran and and the and the various conflicts

59:45 in the Middle East is again a team that is

59:47 very much taking the approach that that's the situation we're in.

59:51 We can manage our business and we we very much

59:54 quickly move to what's the best solution for our customers?

59:58 how can we deliver and continue to deliver

1:00:01 what we've done to them and what's their expectations

1:00:04 around that and and our teams will work

1:00:06 incredibly hard to come up with with solutions.

1:00:11 Abel was also asked uh about his willingness to divest holding companies

1:00:16 invest subsidiary companies and whether Bergkshire

1:00:19 will remain a conglomerate under his leadership.

1:00:23 We are a conglomerate um but we are an efficient conglomerate.

1:00:27 We we don't have layers of management.

1:00:30 We don't have a bunch of committees telling our businesses how to run,

1:00:34 how they're going to um you know manage their customer relationships.

1:00:41 We try to at the odd time create frameworks so there's value shared across

1:00:45 the businesses so they're aware of what

1:00:47 our other businesses are doing and and technologies.

1:00:50 That's one of them.

1:00:50 We like our framework now.

1:00:52 We think it's it it it's become

1:00:54 it's very effective across three of our businesses.

1:00:57 But the one thing we don't do is create

1:00:59 layers of bureaucracy or uh other decision trees around it.

1:01:05 And I think so many conglomerates end up with with layers and layers

1:01:09 of costs that don't add value in in in to the to the overall corporation.

1:01:15 So I actually uh the answer to the conglomerate is uh yes,

1:01:20 we understand we're one.

1:01:22 We see it operates very effectively and we do not see ourselves

1:01:27 uh divesting of subsidiaries for that reason or ever breaking off a group.

1:01:33 Thank you.

1:01:38 As you can see, our Becky Quick is back with us.

1:01:41 Um, you know, I thought that was an interesting

1:01:43 answer and you you pressed him on this idea.

1:01:45 Do you envision down the road there'll be any kind of a breakup,

1:01:48 some kind of a big spin-off or something like that.

1:01:50 Pretty much swatted that away.

1:01:51 However, before that, he did express a willingness

1:01:54 under some circumstances to sell some businesses.

1:01:57 It seemed pretty narrow in terms of what it would take,

1:01:59 but I did think that was relevant.

1:02:00 He seemed to want to get on the record with that.

1:02:02 Yeah.

1:02:02 I I because I think in some ways he said, "Look,

1:02:05 this is the same way I've been looking at things

1:02:06 for a while." That's not necessarily the way it was seen,

1:02:10 I think, under Warren and Charlie originally.

1:02:12 The deal was if we buy you, we buy you.

1:02:14 You're forever.

1:02:15 And that was something that brought you in.

1:02:16 Back again to the idea of Greg's roots as an operator.

1:02:20 If a business is losing money, uh we're not going to continue to sustain that.

1:02:24 If we can find somebody else who can

1:02:26 run that business better, we'll sell it off.

1:02:28 We're going to do what's best for our shareholders,

1:02:30 also for the employees of that company,

1:02:32 as he said, to not want to wind something down.

1:02:34 But he said if we have to, we'll wind something down.

1:02:36 Yeah.

1:02:36 I mean, as the questioner said,

1:02:38 I get this from a lot of investors in Bergkshire that the curiosity around that.

1:02:43 Now, on one level, it's like, what are you going to do?

1:02:45 Sell a business for cash and just add

1:02:46 to the cash you're not doing anything with.

1:02:48 But in the in the, you know, I I guess in just a general capital allocation,

1:02:52 you don't want capital to be eroded on one end of the business,

1:02:55 even if it's, you know, relatively small.

1:02:57 It's the definition of capitalism, right?

1:02:58 That that the idea of a profit motive.

1:03:01 That is what drives things to be more efficient.

1:03:04 And he's basically saying, "We're capitalists.

1:03:06 We believe in that idea when it comes to it." I I think the question

1:03:09 of the conglomerate was an important one though because it's a question that I

1:03:13 got several times in the shareholder questions

1:03:16 that were sent in and you probably

1:03:17 get this all the time too just in talking to people who follow the company.

1:03:20 That's that's the question.

1:03:21 Will the conglomerate make sense?

1:03:23 Because conglomerates over time don't tend to make sense.

1:03:26 Um Bergkshire has been the standout that says

1:03:28 we're going to stand alone on this.

1:03:29 There's always been the question is will

1:03:31 there be some sort of activist who tries

1:03:32 to come in and break things up and tries to say is it more valuable

1:03:36 if you break these things apart than the sum of the parts by putting them

1:03:38 together and that's part of the reason I wanted that answer on the record too.

1:03:41 Yeah.

1:03:41 Exactly.

1:03:42 And I you know his characterization of it's

1:03:44 an efficient conglomerate or an effective conglomerate.

1:03:47 And what Warren and Charlie always said was well we let the businesses run.

1:03:50 They have to be profitable.

1:03:51 they give us the cash because we have a great

1:03:54 track record of actually getting returns on newly invested cash

1:03:59 that works really well even if there's no supposed coherent

1:04:02 strategy as to why these businesses should be under one roof

1:04:06 right and and and Greg laid that out again the idea that this is a really

1:04:10 taxefficient way of taking capital from one

1:04:12 business and putting it in other businesses now

1:04:15 I in the past under Warren Buffett that's

1:04:17 always meant that you can take that money

1:04:19 and invest it in stocks because he was such a stake a great stock picker.

1:04:22 I think the evolving idea of this company is you could take

1:04:24 that money and use it to do huge capex in, you know,

1:04:29 maybe Bergkshire Hathway Energy, maybe if you're looking to do something,

1:04:32 maybe it's with the railroad, maybe it's one of the other businesses,

1:04:34 you can buy and acquire other bolt-on businesses

1:04:36 for some of those and let them expand, increase your operations.

1:04:39 So, I think we have to look at that idea of capital allocation

1:04:43 more broadly and and differently than we have under Warren Buffett as the CEO.

1:04:47 And there was that other question from the room that gave

1:04:50 Greg the opportunity to create any differentiation between his approach.

1:04:55 Yeah.

1:04:55 To capital allocation and what kind of emergence and safety you look

1:04:58 for and the cash flow metrics and would you look at technology more closely.

1:05:02 Right.

1:05:03 He declined the opportunity to point to any

1:05:06 daylight between him and Warren on that.

1:05:07 Basically there's a Birkshire Hathaway way and that's

1:05:09 the way we're going to keep going.

1:05:11 Very thin layers.

1:05:12 Kept coming back to the idea of we're

1:05:13 not building a bureaucracy with a lot of layers.

1:05:15 We want to make sure that we operate

1:05:16 efficiently and that's why this conglomerate works versus others.

1:05:20 Yeah.

1:05:20 Uh and then the question of who is your Charlie was kind of fun at the end.

1:05:24 No individual yet appointed to that role.

1:05:26 A lot of people.

1:05:27 But I will say again back to that idea

1:05:29 of when he and a G were on stage together.

1:05:31 It was a very natural flow to watch some of those things happening too.

1:05:34 But the reason that you're seeing people like Katie

1:05:36 Farmer and Adam Johnson who's now running 32 companies

1:05:39 is because he's relying more heavily on on someone

1:05:41 like Adam to do a lot of that lifting.

1:05:43 Fascinating nugget.

1:05:44 Adam highlighted which is that the average age of the companies now under

1:05:47 his purview is 88 years and that's 30ome you know consumer companies right

1:05:52 uh quite remarkable and they and they use that as a way

1:05:55 of downplaying these kind of near-term challenges

1:05:58 like tariffs and like the Iran war

1:06:00 like we've we've seen this before kind of the idea that comes through

1:06:03 somewhere in the culture we've seen this before

1:06:05 even if we personally haven't seen it before.

1:06:07 Yeah.

1:06:08 Right.

1:06:08 Um what about Warren's comments?

1:06:09 anything what what most struck you about uh those

1:06:12 you know the the idea I think you guys

1:06:14 played some I I didn't hear the sound because

1:06:15 I was walking back from the stage but I

1:06:17 think he played some of the ideas of he's

1:06:19 still looking around and things don't look all

1:06:21 that cheap in the market not huge opportunities

1:06:23 and by the way he's looking you know like

1:06:25 he comes to the office 5 days a week he's

1:06:28 still pretty involved in that he told us

1:06:29 when we last sat down with them last month

1:06:32 that u yeah he had made a small purchase

1:06:34 at that point so he's still playing every day looking

1:06:37 for these things and they're active but I

1:06:39 think he and Greg both would love to get a phone call at any point if if there's

1:06:42 a a seller of a business they might be interested.

1:06:45 Even a year ago when he first announced that he was going

1:06:47 to be stepping down as CEO at the end of this year,

1:06:49 you could you could actually perceive

1:06:51 his eagerness to get that call over the course of the next year

1:06:55 or so while he was still going to be dayto-day involved as he still is.

1:06:58 Right.

1:06:58 Anyway, that uh concludes things for CNBC's

1:07:02 coverage of Bircher's 61st annual shareholder meeting.

1:07:05 Mike, it's been a pleasure.

1:07:06 Been great hanging out here with you.

1:07:08 Got lots more to come.

1:07:09 Mike and I are going to be reunited on Monday morning, in fact, on Squawkbox.

1:07:13 I'll still be on the ground here in Omaha,

1:07:14 and we'll be bringing you more information

1:07:16 from what we've been learning all weekend.

1:07:18 Mike and Melissa Lee are going to be holding down the fort back at the NASDAQ.

1:07:21 That program starts, of course, at 6:00 a.m.

1:07:23 Eastern time.

1:07:24 Don't miss it.

1:07:26 Bye, everybody.

1:07:26 That does it for us.

1:07:38 Thanks for listening to our coverage

1:07:39 of the Berkshire Hathaway annual shareholder meeting.

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1:07:52 Check out our show notes for links to more

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1:07:59 I'm on X at the handlebeckyqu or you can write a brief review on Apple Podcast.

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