Not in the Emerald City anymore — My visit to Berkshire Hathaway’s annual meeting

Omaha is not quite like anywhere I have ever been. I arrived late Thursday from Seattle. The art in my hotel room had Warren Buffett’s name on it.  Another picture on the wall featured Omaha Steaks. I was clearly not home in the Emerald City. Dorothy from the Wizard of Oz would have liked it here.

The next day, I travelled quite early in the day to the Value Investor Conference held at Mammel Hall at the University of Nebraska Omaha. It is a beautiful building made possible by a couple who were early investors in Berkshire Hathaway. Their investment gains resulted in their ability to donate $30 million toward the construction of the school. The conference attendees were from every continent except Antarctica. The Mammels invested in the original partnership and a story was relayed by one speaker about how they once said had about as much information to go on when in vesting with Berkshire as the Madoff investors did. They just trusted Warren Buffett.

The city is about as unpretentious a place as I have ever visited. Omaha seems to still reflect something approaching a Norman Rockwell America. Or at least more so than other places.

I attended a dinner event at the Hilton hotel where my book on Charlie Munger was given as a gift to every guest. I signed a lot of books and talked to many people there. Everyone in attendance was a business school graduate and they said nice things about the book if they had read it. I did not tell anyone that I really wrote the book imagining that Charlie was talking to an ordinary investor who might own a small grocery store.

The speakers at the event were the usual suspects “talking their book” and trying to increase their assets under management. I’m really glad I don’t need to do that since I have a day job unrelated to money management. All my royalties from the book will be given to charity. I haven’t received a cent so far anyway even though it is their bestselling book this year (that’s publishing).

The Berkshire meeting itself was less of a citywide event than I had imagined. Omaha is big enough that attendees did not dominate even the downtown area. Certainly the meeting dominated the Hilton across the street from the event center, and it made hotel rooms hard to get. But Omaha is the nation's 42nd largest city with a population of about 427,000. Security was similar to a TSA screening. Snipers and policemen in patrol cars on hot standby are the new normal.

Listening to people in the crowd was interesting. I expect that many people were there because Warren is a phenomenon. It did not seem from conversations around me that anyone around me actually understood value investing or something like how checklists are used in an acquisition at a big company. Some people seemed bored. Some were listening with rapt attention. Most people there seemed like excellent candidates for a low-cost diversified portfolio of index funds.

The crowd at the Berkshire meeting cheered when something like eliminating committees and bureaucracy was mentioned. The people attending were younger than I expected. My sense was that the average attendee was about 45 years old. It was definitely not a Silver Tsunami. Lots of twenty-something business school students travelling in packs were there as well as thirty-something mutual fund managers and sell-side analysts. The average attendee seemed like they worked running a pool supply company or a few dry cleaners.

Warren is 85 and Charlie is 93. Their stamina and sharpness was amazing to see up close. Clear thinking and speaking were consistently delivered. Consistency in fact was evident in all things.

My favorite Mungerisms at the meeting were:

• "Now that I'm 92 I have a lot of ignorance left to work on"The ideal business takes no capital and yet grows. Increasing capital acts as an anchor on returns."

• "If you see the world accurately, it's bound to be humorous because it's ridiculous."

• “The rating agencies are wrong” Munger on why Berkshire doesn’t have an AAA rating A

• "Microeconomics is what we do and macroeconomics is what we put up with."

• "We try to avoid what is always the worst anchoring effect...which is our previous conclusions."

• “Microeconomics and business are the same thing; one and the same.”

• "Valeant, of course was a sewer."

• "I have all the enemies can afford at the moment."

• "We don't think we can predict commodity prices."

The two best quotes from Buffett:

• "We are not going to try to out-Bezos Bezos, by a long shot."

• "The nature of capitalism is that someone is always trying to take your business away from you."

 

Tren Griffin is author of Charlie Munger: The Complete Investor. He works for Microsoft. He was previously a partner at the private equity firm Eagle River.