By Jonathan Stempel and Koh Gui Qing
OMAHA, Nebraska (Reuters) -Warren Buffett assured shareholders on Saturday that the executives expected to succeed him at Berkshire Hathaway were ready for the job and heaped praise on Apple even though Berkshire recently trimmed its position in the iPhone maker.
Speaking at Berkshire’s annual meeting, the legendary investor also paid tribute to his late business partner Charlie Munger and said he expected the conglomerate’s cash pile, which reached a record $189 billion last quarter, to continue growing.
The meeting was the 60th for Buffett, who took over Berkshire in 1965 and turned it into an expansive company valued at $862 billion owning BNSF railroad, Geico car insurance, Dairy Queen and other businesses. It was also the first since Munger, Buffett’s longtime friend and foil, died in November at age 99.
In a downtown Omaha arena, Buffett, 93, was joined on stage by Vice Chairmen Greg Abel, who was designated Buffett’s successor as chief executive in 2021, and Ajit Jain.
Abel, 61, and Jain, 72 have had direct oversight of Berkshire’s dozens of operating subsidiaries since 2018, freeing Buffett and, before his death, Munger to focus on capital allocation. Buffett said he was happy with that arrangement.
“When you’ve got somebody like Greg and Ajit, why settle for me?” he said. “It has worked out extremely well.”
When Abel eventually becomes CEO, Buffett said he would want him to have final say on decisions regarding Berkshire’s portfolio of public stocks.
“He understands businesses extremely well, and if you understand businesses you understand common stocks,” Buffett said.
Investors have long considered Todd Combs and Ted Weschler, who manage part of Berkshire’s $335.9 billion equity portfolio, leading candidates to manage more or all of it.
Buffett gave no sign he plans to step aside, telling shareholders, “I feel fine,” while joking he shouldn’t take on four-year employment contracts.
Before the meeting, Berkshire announced first-quarter results, including a 39% jump in operating profit to a record $11.2 billion.
DECREASING APPLE STAKE, GROWING CASH
In a surprise move, the conglomerate also reported it had sold about 13% of its Apple shares, reducing the value of its stake to $135.4 billion from $174.3 billion. Apple’s stock price fell 11% in the quarter.
The sale was the main cause for Berkshire’s cash hoard to soar. Buffett said cash might grow from $189 billion last quarter to $200 billion this quarter, reflecting the risks from high stock market valuations and geopolitical conflicts.
Despite decreasing Berkshire’s stake in Apple, Buffett praised the tech company, saying it was “an even better business” than two of Berkshire’s oldest investments, American Express and Coca-Cola.
The iPhone was “one of the greatest products, and it may be the greatest product, of all time,” Buffett said with Apple Chief Executive Tim Cook in the audience.
Berkshire invested in Apple in 2016, and the normally tech-phobic Buffett came to view it as a consumer goods company with strong pricing power and devoted customers.
While some investors have expressed concern that Apple represented too much of Berkshire’s equity portfolio, Buffett said Apple would remain the company’s biggest investment, barring unforeseen events.
Buffett added that he expects the U.S. government to increase taxes to tackle a widening fiscal deficit rather than reduce spending.
Abel, meanwhile, pledged to fight lawsuits seeking tens of billions of dollars from Berkshire’s PacifiCorp utility unit over Oregon wildfires in 2020, but called them a substantial challenge.
At the start of the meeting, shareholders watched a video tribute to Munger, including scenes of Omaha from 1924 when he was born and clips of Buffett and Munger through the years.
Munger had been a fixture on stage with Buffett at the meetings, known for laconic and acerbic comebacks to Buffett’s musings about Berkshire, the economy, Wall Street and life.
He was the “architect of today’s Berkshire,” Buffett said.
Berkshire’s stock is up 23% over the last year. While that lags the Standard & Poor’s 500’s 25% gain, Berkshire has risen 218% over the last decade versus the S&P’s 172% gain.
‘WOODSTOCK FOR CAPITALISTS’
Before the meeting, thousands lined up early outside the arena in raw, rainy weather. When the doors opened at 7 a.m., many ran for the best seats.
The shareholder weekend, which Buffett calls “Woodstock for Capitalists,” also featured an exhibit hall for shareholders to buy goodies such as Berkshire T-shirts and Squishmallows toys at exhibits by Berkshire-owned companies.
Serena Lam, 32, an investment manager who traveled with 40 others from Hong Kong, said she arrived at 2:30 a.m. “I want to see Warren Buffett. I want to get his perspective about Japanese stocks. I flew over 25 hours for this,” Lam said.
As usual, Buffett interspersed comments on Berkshire’s portfolio with musings about life and wealth.
“I enjoy managing money for the people who trust me. I like the feeling of being trusted,” he said at the end of Saturday’s question and answer session. “If I’m lucky, I can go on for six or seven years, or it might end tomorrow.”
(Reporting by Gui Qing Koh and Jonathan Stempel; additional reporting by Scott Morgan and Davide Barbuscia; editing by Ira Iosebashvili, Megan Davies, Cynthia Osterman, Jason Neely and Diane Craft)
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