00:00Just want to get your top line reaction to these numbers. We can talk a bit about the effort that
00:04Greg Abel is going to have to go through here to inspire some confidence in Berkshire shareholders post Buffett.
00:08But what did you make of the numbers themselves in the way that this company is doing?
00:12Yeah, so the numbers looked good. I was looking at them as I was kind of running to my to
00:17get a seat.
00:18But it looked like the operating earnings came in a little bit higher than we expected, but generally pretty close.
00:26So one of Abel's big tasks this weekend and overall is going to be to win over Buffett loyalists.
00:33How is he doing with that? What is the threshold here?
00:36And normally I would say he's going to have to do some razzle dazzle, but that's not really what made
00:41Buffett so popular.
00:42So how do you do that?
00:44Yeah, I don't think razzle dazzle is going to be his style. He's in there for about 100 days.
00:49I think he's doing a good job so far. I saw him on the floor yesterday walking around on the
00:54shareholder day.
00:56He was kind of greeting people. He was getting mobbed. He looked he looked OK, kind of stepping into Buffett's
01:01shoes there.
01:02I think it's really going to come down to the operations.
01:05I think this meeting I'm looking forward to hearing a lot more about how he's digging into the operations.
01:10And to be totally fair, the last couple of meetings with Buffett were mostly kind of stories and people asking
01:17about the past.
01:18And this meeting, I think, will have a big view of the future.
01:21And I think that's what people really actually do want to see.
01:24This is a company, a concern, a conglomerate that for so many years has bested the S&P 500 by
01:30a fairly large margin.
01:31Now we see the company shares falling more than 5 percent year to date, lagging the S&P 500's 4
01:36percent gain.
01:38How big a concern is that for Greg Abel? This is a company that does take a long term perspective.
01:43How much agitation does that lead to among Berkshire shareholders?
01:48I think it's probably more of a concern for the shareholders than for Abel.
01:52I don't think Abel or even Buffett, to be honest, worried too much about the short term fluctuations in Berkshire's
01:58share price.
01:59I think, as you said, they're long term investors. They're looking to compound over the long term.
02:05Berkshire's shares underperformed the S&P since Buffett announced he was leaving.
02:09But you have to understand that going into that announcement, they were at all time highs in terms of the
02:14actual stock price and the valuation.
02:17So it wasn't a great time for Buffett to announce that he was leaving in terms of the valuation of
02:22the shares.
02:23So you've seen that big underperformance.
02:26I'm also wondering if this dip is not necessarily reflective of the durability or viability of the company so much
02:33as you're talking about kind of a natural slump after the departure of such a legendary figure.
02:38Is this essentially what sports teams would call a building year?
02:44Yeah, I think so.
02:45I think that's a completely fair statement to call this kind of a rebuilding of maybe trust or confidence for
02:52investors in management of Berkshire.
02:55I think one of the most interesting things of the Berkshire story over the past year is investors have been
03:00favoring these kind of hard asset companies.
03:03And Berkshire is the poster child for things like that.
03:06So, you know, they've got manufacturing.
03:08They've got the railroad.
03:09They've got all these hard assets in this world of AI disruption.
03:12And it seems to be kind of a natural trade on that.
03:15But you've actually seen the shares underperform.
03:17But to your point, I think Greg Abel just needs to operate.
03:21And I think investors, they don't need to see home runs out of him for in terms of investing gains.
03:26But I think something in terms of this is how we invest in companies.
03:31These are the ones we pick.
03:33And, you know, maybe some singles or doubles versus the home runs that Buffett was accustomed to.
03:38Matt, I'm going to recap the headlines once more here.
03:40So we see this company operating earnings of eleven point three five billion dollars.
03:44BNSF, the railroad operating income, one point three eight billion dollars.
03:48Insurance investment operations income, two point six eight billion.
03:51Of course, insurance has been something that's been a drag on this company.
03:53But then the big headline, unquestionably, is the size of this cash pile hitting a record of three hundred ninety
03:59seven billion dollars.
04:01What is going to happen with that cash pile?
04:04I think it's a question that we're asking now, but we could have asked you last year, the year before
04:07that.
04:07There has been this roiling question of when is Berkshire going to deploy that that cash?
04:11And what is the answer that we hear from Greg Abel?
04:14And indeed, we heard from Warren Buffett before him.
04:18Yeah, I think the answer is, unfortunately, probably not a ton.
04:22I think what you will see and what we saw in this quarter is the company buying back their own
04:26shares.
04:27So Greg Abel announced mid this was in March, early March, that they had started buying back shares.
04:34And they had not done that for a while under Buffett.
04:37So I think you'll see some of that.
04:38I don't think you're going to see some sort of massive deal.
04:41I don't think Greg is looking to look externally for this first year.
04:45I think he's probably looking internally.
04:46You're also probably going to see and I didn't get to see it before I got here.
04:50Them actually selling a bunch of stocks.
04:52So one of the investment managers left the firm.
04:56And I have to dig into the numbers.
04:57But from what it was being reported was that Berkshire actually sold a bunch of the positions that he initiated.
05:03So you're probably going to see more selling and more cash generation before you see actually more cash deployment.
05:09And do you think we see the company investing more in things that the previous had been a little reticent
05:14to do, including more tech and AI?
05:17Do you think that's an inevitable place that this company is going to have to go?
05:20I think it's possible.
05:22I mean, you saw a position in Amazon a couple of months ago.
05:25So I don't think they're completely hesitant to get into these things.
05:30But Abel had mentioned the stocks, the core holdings, the things that they really want to be in are businesses
05:36that he completely understands.
05:39So I'm curious if you will see anything that's kind of out of his wheelhouse.
05:44All right, Matt, get to your seat.
05:46Matt Palazzola there at the annual shareholder meetings at Berkshire Hathaway in Omaha Woodstock for capitalists.
05:51This is a big deal.
05:52I've never gone.
05:53I feel quite sad about that, Christina.
05:54But I wasn't sad, but it seems kind of fun.
05:56Now I do want to go.
05:57Maybe next year Matt will come hang out with you.
05:59I think there's a lot happening.
06:00There is seized candy and Coca-Cola available for all and the other fun Berkshire related things.
06:05Matt, thank you very much.
06:05Appreciate your time.
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