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Warren Buffett is ready to ponder how Berkshire is doing after the pandemic

(Bloomberg) – A year after Warren Buffett announced he was dumping airline shares during the pandemic, Berkshire Hathaway Inc. shareholders are excited to see what happens to the conglomerate as more Americans emerge from the lockdown . On Saturday, Berkshire’s chief executive officer will videoconference with shareholders to ensure compliance with health guidelines and scrap for a second year an arena event in Omaha, Nebraska, which typically drew thousands of enthusiastic fans. He will likely share how the global crisis affected some of the company’s far-reaching businesses and strengthened others. Investors will get a glimpse of the pulse of the US economy from Buffett, whose company owns and has an interest in BNSF Railroad at Pilot Travel Centers of the Truck Stop chain: “The first thing we’ll look for is a Behavior on his part that should reflect a higher level of confidence and visibility in relation to the effects of the pandemic, ”said Cathy Seifert, analyst at CFRA Research, said in an interview. At last year’s meeting, when uncertainty continued to plague businesses and markets, Seifert “felt that he was really scared,” she said. A Berkshire representative declined to speak ahead of the meeting. Last year’s event was a humble affair with Buffett Amid the uncertainty of the pandemic, his tone was muted as he sat on stage apart from his deputy Greg Abel. The 90-year-old Buffett moved the meeting to Los Angeles this year, where longtime business partner and Berkshire Vice Chairman Charlie Munger, 97, lives. While the billionaire investor was able to offer a unique perspective on economic development, recently investors have been largely in the dark about how he sees the aftermath of the Covid-19 crisis. The pandemic was mentioned only once in his 15-page annual letter in February: one of his furniture companies had to close for a while because of the virus, as the billionaire stated on page 9. But some of his other companies also felt the strain. The pandemic weighed on sales at retailers like See’s Candies and party supplies company Oriental Trading Co.Precision Castparts, a maker of aerospace and energy equipment, largely lagged behind Berkshire’s $ 11 billion write-off last year Year booked when the virus reduced demand for flights. However, Geico reported lower losses as downtime reduced the driving behavior of U.S. kitchen supplier Pampered Chef in 2020. “There are many opportunities for him to probably give some really interesting insight into the pandemic,” said Jim Shanahan. An analyst at Edward D. Jones & Co. said in an interview. “He could probably talk about parts of the country that have recovered more robustly by this point and parts of the country that are lagging behind in ways that some executives cannot.” Whatever the comment, Berkshire has shaken things since last year’s meeting among its investments. The company, which dumped airline shares including stakes in Delta Air Lines Inc. and Southwest Airlines Co. as a pandemic crushed travel in early 2020, cut its bank holdings in a significant shift for a portfolio of around 41 shares last year% of fair value were concentrated on banks, insurers and financial companies at the end of 2019. Turning to shareholders, another potential topic could be how companies adapt as the recovery progresses: With the introduction of vaccines, large companies are reviewing everything from customer demand to their return-to-office plans. JPMorgan Chase & Co. said this week that U.S. workers are expected to take turns returning in July. Other companies, including Mitsubishi UFJ Financial Group Inc., are considering ways to reduce the real estate footprint in regions like America. Other topics the meeting might cover include: Spending CashBerkshire spent more than $ 138 billion in cash through 2020, even after spending a record $ 24.7 billion in buybacks last year. The steadily growing pile has weighed on the conglomerate’s stocks. Berkshire Class A shares have not made the 102% gain on the S&P 500 in the past five years. “We assume that capital management will again be a central topic at this year’s annual conference. UBS Group AG analysts, led by Brian Meredith, said in a statement to clients on April 26th. They estimated that Berkshire bought back around $ 5 billion of its stock in the first quarter. Buffett’s desire to buy even more of Berkshire’s own stock has given the billionaire investor another way to deploy capital, especially since the popularity of special-purpose acquisition companies is polluting for takeovers to be even more competitive. Saturday’s result should give investors an idea of ​​how much money he spent on buybacks in the first three months of the year. Berkshire was able to close a few deals over the past year. The company invested in five Japanese trading houses and bought some natural gas assets from Dominion Energy Inc. However, the conglomerate was foiled at the start of the pandemic when the federal government stepped in to help companies that otherwise might have turned to Berkshire as a safe haven, “It will also give some questions about it, because if anything, there is as much or more marginal capital in competition with him than before, “Shanahan said, referring to Berkshire’s dealmaking. “The SPACs were kind of a new fold.” Biden EraBuffett has been careful over the past few years to treat political issues lightly. While he has fought for candidates in the past, he has mostly spoken out about last year’s elections. With President Joe Biden’s newly released tax plan and infrastructure proposal now making the rounds, Buffett could weigh up its potential impact on both the economy and Berkshire, particularly climate change. DiversityBerkshire faces two shareholder proposals at this year’s meeting, one on climate change and one on diversity and inclusion. Both are trying to get the company to release more information about its efforts on these fronts. The board advises investors to vote against the proposals, while recognizing that managing climate risks and addressing diversity are important issues. Buffett has long said that Berkshire’s decentralized approach, with each subsidiary running its own business with very few functions for the conglomerate, makes it difficult to produce multiple comprehensive reports or find ways to report data consistently for such diverse companies. According to Buffett, each unit should address these risks individually. The company is also struggling with action from two proxy consulting firms. Glass Lewis recommended holding back votes or voting against the election of the Audit Committee Chairman Thomas Murphy, citing the lack of disclosure of the risk to climate change. Institutional Shareholder Services has recommended that four board members be withheld due to ineffective control of compensation. “I don’t remember ever having a problem with any of the proxy advertising companies violating a list of directors,” said Seifert. On the specific issues of climate change and diversity: “If Berkshire has to turn a deaf ear and turn a blind eye for me, it looks deaf to me at best.” Given his age and tenure, SuccessionBuffett is routinely faced with succession issues. However, in 2018, he took a step to address the matter by promoting Greg Abel and Ajit Jain to vice-chair alongside Munger. Both Abel and Jain will attend the meeting. One remaining question is Todd Combs’ role as lead geico. Combs, a portfolio manager alongside Ted Weschler, took on the role as manager of the auto insurer in a move that Buffett described as temporary. Any update of his responsibilities could be crucial, Shanahan said. Many investors attend Buffett’s annual gatherings to hear his thoughts on the stock market. This year he has new topics that he may bring up after trading with GameStop Corp. and the drama gone crazy with Robinhood Markets Inc. Munger has criticized online brokers who attract inexperienced retail investors, stating that they essentially offer gambling services. His comments in February also touched on companies offering commission-free trading, which he described as one of the “most disgusting” lies. “Robinhood trades are not free,” said Munger. “When you pay for the order flow, you are likely charging your customers more and pretending to be free. It’s a very dishonorable, inferior way of talking. And nobody should believe that Robinhood’s trades are free. “You can find more articles like this at bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

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