The event features Chairman & CEO Warren Buffett and Vice Chairman Charlie Munger recounting the company’s performance over the past year, along with a series of Q&As from reporters and shareholders. For the first time, they will also be joined by Vice Chairmen Gregory Abel and Ajit Jain, widely seen as possible successors at Berkshire.
Though the meeting typically takes place in Omaha, Nebraska, home to both Buffett and the company, this year’s event will be held in Los Angeles. (Due to the coronavirus pandemic, it will be closed to the public, just like last year’s meeting.)
‘Your best investment is yourself’
Berkshire Hathaway initially began as a textile company in 1839.
In 1962, Buffett began buying stock in the company and assumed control within three years. Munger came along as vice chairman in 1978 and the two investors haven’t looked back since then.
“Your best investment is yourself,” Buffett said back in 2013. “There is nothing that compares to it.”
Munger has consistently provided similar advice, telling the 2020 meeting that the best strategy for the “great mass of humanity” is to specialize in one area.
“Nobody wants to go to a doctor that’s half proctologist and half dentist, you know?” he said at the 2019 meeting. “So, the ordinary way to succeed is to narrowly specialize.”
The meetings have also included personal finance advice. Back in 2010, following the Great Recession, Buffett wrote in his letter to investors about the importance of cash.
“We pay a steep price to maintain our premier financial strength,” he said. “The $20 billion-plus of cash equivalent assets that we customarily hold is earning a pittance at present. But we sleep well.”
The Berkshire Hathaway empire
Berkshire is also a multinational holding company, meaning that it’s a conglomerate of numerous smaller companies.
These include businesses like GEICO, See’s Candies, Berkshire Hathaway Energy, Dairy Queen, Duracell, PacifiCorp, and Fruit of the Loom.
“It takes character to sit with all that cash and to do nothing,” Munger once said. “I didn’t get to be where I am by going after mediocre opportunities.”
Berkshire is famous for its management philosophy, which focuses on a decentralized, trust-based, and hands-off relationship between Buffett and other executives who work within the company.
“What we do is not beyond anyone else’s competence,” Buffett once said. “I feel the same way about managing that I do about investing: It’s just not necessary to do extraordinary things to get extraordinary results.”
Coca-Cola is the company’s oldest stock position, with 23 million shares initially purchased back in 1988.
Since then, Coca-Cola stock has been up over 2,000%, and Berkshire now holds 400 million shares.
The company previously had holdings in four of the major airlines — Delta (DAL), Southwest (LUV), United (UAL), and American Airlines (AAL) — after spending between $7 billion-$8 billion on stakes back in 2016.
However, Berkshire revealed in May 2020 that it had elected to dump all four holdings as a result of the stocks tanking due to the coronavirus pandemic.
The endeavor fizzled by the beginning of 2021.
Despite some failures, the company is one of the most successful in the history of America.
‘Berkshire shareholders need not worry: Your company is 100% prepared for our departure’
It’s still unclear who will take the reins once Buffett retires as CEO of Berkshire Hathaway.
Buffett has previously stated that his successor has already been decided on.
In his 2019 annual shareholder letter, the Oracle of Omaha wrote: “Berkshire shareholders need not worry: Your company is 100% prepared for our departure.”
Vice Chairmen Gregory Abel and Ajit Jain’s names have been floated around as potential candidates. Notably, Abel filled in for Munger during the 2020 Annual Meeting as a result of the pandemic.
Abel is an insurance expert who services as chairman at Berkshire Hathaway Energy and vice chairman for Berkshire Hathaway’s non-insurance operations.
Jain, a Harvard Business School graduate who previously worked at McKinsey, serves as vice chairman for Berkshire Hathaway’s insurance operations.
Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at firstname.lastname@example.org.