2021 Berkshire Hathaway Annual Shareholders Meeting: Key Takeaways & Insights from a TIGER 21 Member
A Q&A with Steven Check, Founder of Check Capital, Inc., and TIGER 21 Member on his thoughts from the Berkshire Hathaway Annual Meeting.
Steven Check is the Founder and President of the money management firm, Check Capital Management (“CCM”). CCM manages $1.6 billion of stock and option portfolios for individual investors. The firm’s investment strategy is consistent with the examples of Warren Buffett and other value investors. Berkshire Hathaway has been the largest holding of CCM clients for some time, and Mr. Check has attended Berkshire Hathaway Annual Meetings for 26 consecutive years.
1. What are the biggest takeaways from the 2021 Berkshire Hathaway Annual Shareholders Meeting?
Succession Plan for Berkshire Hathaway CEO: For the first time, a disclosure was made that Berkshire Hathaway’s Greg Abel, Vice Chairman of Berkshire Hathaway’s Non-Insurance Business Operations, will be the next CEO of Berkshire Hathaway if anything happens to Warren Buffett in the near-term. The succession plan is now more defined and Abel’s presence along with Ajit Jain, Vice Chairman of Berkshire Hathaway’s Insurance Operations, are a symbol of the company’s future. It is clear that Abel is a great choice, but no one will replace 90-year-old Buffett.
Record Earnings and Buybacks: Berkshire Hathaway has reported a 20% increase in Q1 2021 operating profit and earnings of over $7 billion – the second highest quarter in terms of operating earnings in company history. Over the last year, nearly all of their operating earnings were used to buy back their stock. Stock repurchases are probably about the last thing Buffett wants to do with the cash, but now he is doing it as he believes the stock price is below Berkshire’s intrinsic value. This is huge — it is in the interest of the existing shareholder, and he would not do it otherwise.
Warren Buffett’s Investment Approach: Buffett operates in a low-risk way. He cares much more about avoiding a disastrous result than delivering a market-beating result. His cautiousness allows his investors to become rich, and perhaps more importantly stay rich.
Bitcoin: Charlie Munger criticized bitcoin and described it as a “new financial product out of thin air” that is useful for “kidnappers and extortionists” and added that its development is “contrary to the interest of civilization.” This resonated with me, and I always appreciate the perspective of what is good for civilization or the country.
2. Will you do anything differently as a result of this year’s Meeting?
I always leave the Meeting feeling even more confident in Berkshire Hathaway and the long-term durability of its business than before I came. It was a good reinforcement of what I already knew, but I feel a bit more comfortable with the investment after some of the uncertainty we saw in the markets. It is a reminder to me as a value investor to stay the course or invest a tad more.
3. This is your 26th consecutive year attending the Berkshire Hathaway Annual Shareholders Meeting. Why do you continue to attend annually and how has the experience evolved?
I always learn something new at the annual Berkshire Meeting, and I enjoy connecting with likeminded investors. The size of the Meeting has gotten a lot bigger over the years, while the trade show that goes along with it has become a lot more interesting. In recent years, it is much harder to run into Buffett over the weekend like you could in the early years. Overall, the questions and the format has evolved over the years and is better. Over the last 3 to 5 years, the analysts and the journalists have been taking turns asking questions. It is hard for an investor not to learn by going to these Meetings and it should almost be required learning for TIGER 21 Members or anyone who wants to preserve their wealth. I think attendees, including me, continually leave the Meeting more confident in Berkshire Hathaway and the long-term durability of its business than before they came.
4. What did you think of the virtual format of this year’s Meeting?
A lot is missed by not making the trip to Omaha, but virtual is better than nothing. It is less attractive relative to going to the Meeting in person and interacting with other value investors. There is a small world of investors who think the way of Buffett and Munger, and it is great to go back to school and hear from the greatest teachers.
5. How does TIGER 21 fit into your Berkshire Hathaway Meeting experience?
If we surveyed the TIGER 21 Members, Berkshire Hathaway has been a top holding, but I am not sure how many attended this year’s virtual Meeting. Members like me who did attend will go back to their TIGER 21 Group and share highlights with other Members in monthly Meetings. TIGER 21 Members benefit from hearing different perspectives from fellow Members who are an expert on a certain topic. Historically, I have brought quite a few Members to the in-person Berkshire Hathaway Meeting from many TIGER 21 Groups across the United States, and I look forward to being able to do that again in 2022.