Pilgrimage to the biz gurus

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It may appear as if the Free Press's Geoff Kirbyson has his arm around Warren Buffett but it's not so. Those who would like a picture with him pose at the Fruit of the Loom exhibit with a piece of cardboard where Buffett would be and his image is photoshopped in. (HANDOUT)

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Warren Buffett (right) and Microsoft's Bill Gates play doubles against ping-pong protege Ariel Hsing in Omaha, Neb., Sunday. (NATI HARNIK / THE ASSOCIATED PRESS )

Omaha, NEB. -- If you're making the pilgrimage to hear the world's greatest investor, it's only fitting that you get there in a $15-million private jet. Then again, maybe not.

More than a dozen business owners and financial industry players from Winnipeg flew down to Omaha, Neb., over the weekend to take in the annual meeting of Berkshire Hathaway, the company Warren Buffett runs. Still more Winnipeggers made the nine-hour drive to hear the Oracle of Omaha.

More than 18,000 people crammed into the CenturyLink Center in downtown Omaha -- with nearly as many watching on big screens in adjoining rooms -- to hear the musings of Buffett, the CEO and chairman, and his right-hand man, Charlie Munger, the company's vice-chairman.

Together, they oversee an international empire that made $10.3 billion in profits last year through its holdings in companies such as Coca-Cola, Dairy Queen, IBM, Geico, Wal-Mart, Kraft Foods, Ginsu, Johnson & Johnson and Fruit of the Loom.

It is an annual meeting like no other, starting off with a 30-minute video that featured a ukulele-playing Buffett auditioning for Glee, a distressed Buffett getting psychological advice from singer Jimmy Buffett and an ignored Buffett answering the phones at Berkshire while his secretary, Debbie Bosanek, is on the other line with Oprah Winfrey.

When Buffett told her U.S. President Barack Obama was on the line for her, she said she was too busy to take the call.

"Tell him to text me," she said.

The octogenarians -- Buffett is 81 and Munger is 88 -- have been business partners for more than 50 years. They fielded about 60 questions from shareholders and analysts during the marathon seven-hour session, pontificating on their investment strategies, the need for higher taxation for the ultra-rich and of course, Buffett's health.

Just days ago, Buffett revealed he had been diagnosed with prostate cancer but early detection has made it a non-issue in his mind.

"I'm feeling terrific, I always feel terrific. I love what I do and I work with people I love. I seem to have a great immune system. As any fool can see, I'm eating properly," he said, taking a bite of his See's fudge (another Berkshire company) and a sip of his Cherry Coke.

The Berkshire AGM has come a long way from 1982, when a total of 15 people attended at the National Indemnity Company cafeteria.

Craig McIntosh has been bringing Buffett disciples to Omaha for the last six years. The president and CEO of Acrylon Plastics said if you hear the Buffett and Munger message enough times, it changes how you lead your life.

"It's OK to think and act independently without concern of management trends and the latest flavour of the day," he said.

Buffett practises what he preaches, living in the same two-storey house -- one that wouldn't be out of place in River Heights -- that he bought in 1955.

"He's worth $50 billion and he doesn't live in a gated estate. He and Charlie have lived the same way for 50 years even though their wealth has grown exponentially during that time. They have no trappings of wealth compared to many other rich people in the world," McIntosh said.

That's why Buffett is often referred to as the "billionaire next-door." In fact, he'll be getting a new neighbour at some point as there's a For Sale sign in front of the two-storey home next-door.

"If you tried to live next-door to Bill Gates, it wouldn't even be in the realm of possibilities," McIntosh said.

Gates, the co-founder and chairman of Microsoft and a director of Berkshire, sat in the front row at Saturday's meeting.

Pat O'Connor, president of Blackwood Wealth Planning, had heard so much about the Berkshire experience and read so much about Buffett, he figured it was time to cross the "Disneyland for business people" off his bucket list.

"Given the age of Buffett and Munger, it's not certain how many more years they'll be using the same format. You can bet the next guy who takes over won't have the same personalities or draw as those two," he said.

"It's a common-sense approach to investing. They're buying good companies and holding them forever."

geoff.kirbyson@freepress.mb.ca

Berkshire Hathaway

interesting tidbits

The Berkshire Hathaway annual general meeting might be the only event in the world where billionaires fly in on private jets worth up to $50 million and have to rush for their seats just as any other shareholder. Here are a few facts and figures about the weekend:

About 400 private jets were stored at the Omaha airport over the weekend, most of them worth between $15 million and $50 million.

One of the company's most recent investments was in the Omaha World-Herald, the local newspaper. Buffett used to deliver it as a kid.

Berkshire Hathaway's headquarters is in a 15-storey tower in downtown Omaha. The company's name does not adorn the building.

Buffett drives a red Cadillac and puts about 5,600 miles on it annually.

Berkshire Hathaway employs about 20 people. The companies in its portfolio employ more than 270,000.

Of all the employees in its head office, Buffett pays the lowest rate of tax, even below that of his secretary.

Buffett plays the ukelele and ping-pong.

Buffett's words of wealth and wisdom:

-- On gold:

"If you own an ounce of gold now and you caress it for the next 100 years, you'll still have an ounce of gold. When Berkshire started, gold was at $20 and Berkshire stock was at $15. Now gold is at $1,600 and Berkshire is at $120,000."

-- On banks:

"American banks are in a far, far better position than they were three to five years ago. The U.S. banking sector is in fine shape. The European banking system is gasping for air."

-- On tax rates for the rich and the 'Buffett rule':

"People who make large incomes should pay a tax rate around 35 per cent. The 400 largest incomes in the U.S. make $270 million each and 131 of them pay below 15 per cent in taxes. They're paying less than standard payroll taxes. It would affect very few people and it would raise a lot of money."

-- On stocks:

"The beauty of stocks is they sell at a variety of prices. That's how Charlie and I have gotten so rich. The market is a psychotic drunk and sometimes Mr. Market does very strange things. It's built into the system that stocks get mispriced. Don't behave like the psychotic drunk. The stock market is the most obliging, money-making place in the world."

-- On acquisitions:

"If we like the business that we understand, we buy it. There's always going to be good and bad news out there. We look to value. We don't look at headlines."

-- On newspapers:

"News is what you don't know but want to know. I think there is a future for newspapers where there is a sense of community. It's not as bulletproof as it was 50 years ago. I don't know of a business plan that charges significantly for one version (the physical newspaper) and it's free for the other (online version) that would work over time."

-- compiled by Geoff Kirbyson

Republished from the Winnipeg Free Press print edition May 8, 2012 A9