2013 Berkshire Hathaway Annual Meeting (Full Version) | Summary and Q&A

Summary

In this video, Warren Buffett discusses various topics related to Berkshire Hathaway and its businesses. He thanks the individuals responsible for the success of the company, introduces directors, presents the earnings for the quarter, talks about the insurance earnings and a settlement disagreement, discusses GEICO's closure rate and persistency rate, talks about the success of the railroad business, and mentions Berkshire Hathaway's position as the fifth most valuable company in the world. He also addresses questions about Berkshire's growth and book value per share, competitive advantages of Iscar over Sandvik, the goals of recent business moves, worries about succession planning, material announcements over social media, and the status of the US dollar as the world's reserve currency.

Questions & Answers

Q: What were the key accomplishments and individuals mentioned by Warren Buffett in the video?

Warren Buffett thanked Brad Underwood, who puts the movie together every year, Andy Hayward and Amy, who produced a cartoon called "Secret Millionaires Club," and Carrie Silva, who organizes the event. He also introduced the directors of Berkshire Hathaway.

Q: What were the earnings for the quarter? How did the different businesses perform?

The earnings for the quarter were good, with operating earnings of almost $3.8 billion. All of Berkshire's businesses did well, with insurance earnings being helped by a strong dollar reducing liabilities. There was also a settlement disagreement with Swiss Re that resulted in a gain of $255 million for Berkshire.

Q: What was the high point of the first quarter for Berkshire Hathaway?

The high point of the first quarter was the increase in both the closure rate and the persistency rate at GEICO. The closure rate, which measures the number of people who get a quote and go on to buy a policy, improved significantly, resulting in a gain in persistency. This increase in policyholders adds value to Berkshire's intrinsic value.

Q: How is Berkshire Hathaway's railroad business performing?

Berkshire Hathaway's railroad business is doing very well, with a gain in car loadings of 3.8 compared to the other major railroads' gain of 0.4 percent. The business has been helped by the discovery of oil near the railroad tracks, resulting in increased shipments.

Q: What is Berkshire Hathaway's position in the market?

Berkshire Hathaway is currently the fifth most valuable company in the world.

Q: What is Berkshire Hathaway's strategy for succession planning?

Berkshire Hathaway's board is focused on preserving the company's culture and finding a successor CEO who will have more brains, energy, and passion for the business than Warren Buffett. The culture of Berkshire Hathaway is considered one of a kind and is expected to continue even after Buffett's departure.

Q: What is the reasoning behind Berkshire Hathaway's recent business moves?

Berkshire Hathaway signed a portfolio underwriting arrangement with Aon and hired former AIG executives to enter the commercial insurance market. The goal is to increase market share and become a significant player in the commercial insurance business. Buffett believes they have the right people and capital to be successful in this new venture.

Q: What would be the potential effect if the US dollar loses its status as the world's reserve currency?

Warren Buffett believes it is extremely unlikely that any currency will replace the US dollar as the world's reserve currency for many decades, if ever. He views both the US and China as the global economic superpowers.

Q: What is Warren Buffett's opinion on the SEC's new position on the distribution of material information through social media?

Warren Buffett disagrees with the SEC's new position, stating that accuracy and simultaneity are crucial in disclosure. He believes that Business Wire, a unit of Berkshire Hathaway, does an excellent job of ensuring accurate and simultaneous distribution of material information.

Q: Has Berkshire Hathaway changed its approach to acquisitions recently?

While Berkshire Hathaway has paid higher prices for some recent acquisitions, Warren Buffett believes they have paid up for extraordinary businesses and that paying a premium can be justified for good businesses. He also mentioned the importance of size and the advantage it can bring in certain market conditions.

Q: How will Berkshire Hathaway perform in the future with its size and the shift towards more mature businesses?

Warren Buffett acknowledges that Berkshire Hathaway cannot achieve the same level of growth as it did in the past due to its size. However, he believes that even with some diminution in returns, they can still achieve satisfactory results. He also mentioned that Berkshire Hathaway owns multiple businesses that would individually be on the Fortune 500 list, and they are actively seeking more acquisitions.

Takeaways

In summary, Berkshire Hathaway's performance for the quarter was good, with all businesses performing well. Warren Buffett discussed the settlement of a disagreement with Swiss Re, the success of GEICO's closure rate and persistency rate, the positive performance of the railroad business, and Berkshire Hathaway's position as the fifth most valuable company in the world. He addressed concerns about succession planning, the SEC's new position on material information distribution, the status of the US dollar, and the company's move towards more mature businesses. Overall, Berkshire Hathaway's strategy remains focused on finding good businesses, preserving its culture, and achieving satisfactory returns despite its size.