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Omaha diary

Warren Buffett describes the meeting of shareholders of Berkshire Hathaway held in the beginning of May each year as ‘Woodstock* for Capitalists’. In a way the description is apt. Just like the crazed music lovers who descended for the original Woodstock, faithful investors numbering to about 40,000 land up in the mid-western American town of Omaha to listen to the jugalbandi of Warren Buffett and his partner Charlie Munger.

* Woodstock was an open air music festival held over three days in 1969 which attracted a crowd of 500,000 enthusiasts.

Woodstock for capitalists

Picture of a section of the Qwest Center hall before the start of the meeting

For any serious investor especially from the value investing school, this is a must do thing at least one time. I had an opportunity to attend the meeting this year and it was an amazing experience.

For me, there was a huge scare before the meeting. After having flown a distance of more than 12,500 kilometres from Mumbai to New York, I almost missed attending the meeting in Omaha. I was booked on a flight from New York to Omaha (via a connecting flight in Milwaukee) for Friday, April 29 which was supposed to reach Omaha at 10:21 am on Friday. The meeting was to happen on Saturday and I thought I had plenty of margin of safety.

However I was not aware of the fickle weather, messed up airlines in the US and did not fully anticipate the Mohali kind of situation in Omaha.  There was a tornado on the eastern US coast on Thursday and hence all early morning flights on Friday were disrupted. The New York – Milwaukee flight was delayed by 3 hours and I would surely miss the connecting flight and just like there were no vacant seats to Mohali on the day before the India Pakistan match, there were no vacant seats on any flight to Omaha on that day. I was told that I could only reach Omaha on Saturday afternoon.

Luckily for me, Buffett has mentioned an alternative (a cost cutting tip) in his annual letter which turned out to be handy in this emergency situation. He had given an alternative of flying into Kansas City instead of Omaha and driving to Omaha (a 3 hour drive). That is what I did to reach well in time on Friday.

A shareholders reception on the Friday before the meeting is held at Borsheim’s with cocktails and dinner. I gave this a pass for numerous reasons. I was tired after the journey from Kansas City and  I had to collect my meeting credentials from the counter at the Qwest Center (my meeting credentials reached India after the meeting was over on account of postal delays!) . I also wanted to sleep early for the hectic Saturday that I anticipated.

There are annual meetings of companies and then there are some exceptional annual meetings. There are of course companies in India with a large shareholder base. Reliance for example has held its AGMs in cricket stadiums. These meetings are events held over the span of a few hours where the shareholders are interested in big bang announcements and meal vouchers.

The Berkshire meeting is however different from the normal meetings. For one it spans over three days and if one adds unofficial events it goes beyond a week.

People start queuing up at the venue (Qwest Center) from 10:30 pm on Friday for a meeting that is to be held on a Saturday (the venue is a basketball and hockey stadium when it is not hosting the Berkshire meet). I joined this queue at 5 am on Saturday morning and was about 50th in the queue (there are about 10 parallel queues, so about 500 people were already there). The crowd rapidly builds up from 6 am onwards as that is the time when the shuttles from various hotels start arriving.

The gates to the venue open at 7 am. The people who are first in line, wait about eight and half hours in order to be at the front of the queue. The struggle does not end there because there are about 10 parallel lines to enter. When the gates open at 7 am there is a lot of running which has to be done from the gate to the stadium in order to get the best seats. Here the novice is at a disadvantage. Since there are many gates to the stadium, the novice does not know which gate to take and even if he is in front of the line, he may end up with a not so good seat. Luckily for me, just in front of me there was a group of Australian investors. There were some who had made numerous trips to the meet in the past and were well versed with where to go. I tagged along behind them.

The meeting starts at 8:30 am with a movie which is specially made for the meeting and is not shown elsewhere. This year the movie had an animation segment where the good Buffett teams up with Arnold Schwarzenegger to beat an evil empire of a rating agency headed by evil Buffett  (in a double role). The movie ran for about an hour and overall it was quite entertaining. Its a pity that one cannot get to see the movies of earlier meetings and also that people who do not attend the meet miss out on all the fun.

The question and answer session starts at 9:30 after the movie and goes on for a marathon 6 hours with a lunch break thrown in. The ‘official’ business of discussing and passing resolutions takes just about 30 minutes after that. The transcript of this year’s question and answer session can be found here http://www.scribd.com/doc/54473847/Berkshire-Hathaway-Annual-Meeting-2011

Although I have read transcripts of previous year meetings, they do not fully capture the wit and energy of Buffett and Munger and also the politically incorrect Munger. It was quite a sight to see Munger chomping away on cookies through the meeting and dozing when he found the long winding speech of a shareholder / activist too boring at the time of discussing the resolutions.

For those who find it difficult to sit in one place and listen to the marathon question and answer session, there are exhibit halls of about 200,000 square feet were the products and services of various Berkshire Hathaway companies are displayed and special shareholder discounts are given. Here one can shop for an inexpensive item like ice-cream or splurge on buying fractional ownership of a private jet. The meeting is also telecast on giant screens in the exhibition area for those with an inclination for multi tasking.

There is a picnic in the evening on Saturday at the Nebraska Furniture Mart after the meeting and there are various dinner meets that happen on the Saturday after the meeting. Being a vegetarian, a trip to Gorat’s steak house was out of question for me. I was biding my time for Sunday when I anticipated a close encounter with Buffett.

A lot of people fly out of Omaha either on Saturday evening or on Sunday morning. Hence the crowd at the brunch hosted for shareholders at Borsheim’s was not very large.  Shareholders can have food and beverages, listen to live music our splurge on buying jewellery at the store. There is also an opportunity for shareholders to play chess and bridge games with champions and celebrities like Patrick Wolff, Sharon Osberg, Bill Gates and Warren Buffett.

Bill Gates arrived before Buffett and immediately got going with a game of bridge.

Bill Gates at Borsheim's

Bill Gates playing bridge with shareholders at Borsheim's

Elsewhere Patrick Wolff was playing chess blindfolded with ten opponents simultaneously.

Patrick Wolff plays chess blindfolded simultaneously with ten players

Grandmaster and two times US Chess Champion Patrick Wolff plays chess blindfolded simultaneously with ten players

This year there was also some jewellery selling thrown in between where one could get convinced by Buffett himself to purchase some really expensive jewellery from a Berkshire Hathaway company. It is here that I could get to see Buffett from close quarters, got a chance to be clicked with him in the same picture and my daughter got to shake hands with him.

Buffett the salesman

Warren Buffett convincing someone (not me!) to buy a really expensive watch

Apart from the investing lessons learnt at the meeting and all the fun and games in the other shareholder events, I got to see Buffett’s home and office building. I was struck by the sheer simplicity of his lifestyle and how he spends little time commuting since his office and residence are so close (about 15 blocks away).

Buffett Residence at Farnham Street Omaha

Buffett's residence. Notice the lack of a gate

Berkshire's office is located in this building. Nothing visibly remarkable about it. Understated like most things associated with Buffett.

We left Omaha on Monday morning with a lot of lessons in investing and in living one’s life and with memories to last a lifetime.

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5 Responses to “Omaha diary”

  1. MHAISALE Says:

    Please share some pearls of wisdom that you may have picked up at the Berkshire Meeting.

  2. Rajeev Thakkar Says:

    For a detailed account of the Q&A, a link is given in the blog post.

    In my view the most significant thing discussed was the approach that Buffett and Munger would take if they were younger. Both are fascinated by technology (meaning IT as opposed to biotech or chemical engineering etc. as per my interpretation of the discussions) and alternate energy (as opposed to conventional oil). They feel that the the winners in these fields will do far better than the other businesses.

    Partly this can be seen in their investment in BYD where the company manufactures batteries for cars (and also electric cars). In a post oil world, there will be a need to power cars and regardless of how electricity is generated, batteries will be required. We have also seen their interest in Canadian Oil Sands at the time of the last spike in oil prices.

    Buffett and Munger are also fascinated by Google and they do a poor job of hiding their fascination with the company (despite being friends and co-directors with Bill Gates). It meets almost all the criteria that they have for investments. High return on equity, competent management, loads of cash and no debt, huge entry barriers and a big economic moat. The only thing missing is that they cannot arrive at a multi decade prediction as to how technology will look say 20 years from now.

  3. Janak Merchant Says:

    Dear Rajiv,

    It was nice to meet you during Warren Buffett event in Delhi and you are lucky that you met God again.

    Good to see in your Diary.

    Hope to read about your newly found wisdom after meeting God.

    Best wishes,

    JM

  4. Janak Merchant Says:

    Dear Rajiv,

    It was nice to meet you during Warren Buffett event in Delhi and you are lucky that you met God again.

    Good to read your Diary n see the photographs of Warren.

    Hope to read about your newly found wisdom after meeting God.

    Best wishes,

    JM

  5. Prasad K Says:

    Nice write-up and photos. Thanks for sharing.

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