Monday, May 04, 2009
SUZANNE PRATT: More Berkshire Hathaway shareholders than ever before were in Omaha this weekend to hear from Chairman Warren Buffett. The billionaire investor talked frankly about the big hit the stock has taken and his take on the U.S. economy. NIGHTLY BUSINESS REPORT's Susie Gharib was there and found out what's on the mind of the Oracle of Omaha and Berkshire investors.
PETER KENNER, FOUNDER, TIVOLI PARTNERS: Hey Greg, it's Peter. I'm right next to net jets. I'm looking for you.
GHARIB: For 25 years Peter Kenner has been coming to Omaha for the Berkshire Hathaway annual meeting. Most of his personal portfolio is invested in Berkshire stock and it's a top holding in his investment firm Tivoli Partners. He's enjoyed watching Berkshire grow for years, but not this year. The stock's down 40 percent from its high in September when it hit $147,000.
KENNER: I was a bit surprised. But I'm a believer and I'm in it for the long term and I believe it will come back and be even stronger. But it's you know, it doesn't mean you don't feel the pain.
GHARIB: And like Kenner many Berkshire shareholders feel the same way. They waited hours for a good seat at the Berkshire meeting because they still believe in the money-making skills of Warren Buffett. Thirty five thousand people attended this year, a record. But the mood was more serious than I've seen in past years, not just because of the stock, but because Berkshire's debt has lost its triple-A status for the first time ever. Moody's and Fitch have downgraded Berkshire, citing economic pressures on the company. And Standard & Poor's has revised its outlook to "negative" from "stable," showing that even the Oracle of Omaha has been touched by the financial crisis. But Buffett still put on a good face.
WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: I want people to have a good time. That's the idea.
GHARIB: He was all smiles as he mingled with shareholders.
BUFFETT: Hi, how are ya?
GHARIB: But Buffett turned serious when it came to defending Berkshire's stock.
BUFFETT: I don' have the faintest idea whether Berkshire's going up or down next week or next month or next year even. I do think if the country does fine over time, we'll do fine over time.
GHARIB: Has the loss of Berkshire's triple A rating affected the way you do business?
BUFFETT: No it really hasn't. It wounded my ego a little bit, but whether we're triple A or some terrible rating, we're always going to have a lot of cash. We do not want to depend on the kindness of strangers and a lot of people have seen the problems with that in the last year. So we will always have plenty of cash.
GHARIB: You like investing when times are tough.
BUFFETT: Sure, yeah.
GHARIB: Where are you seeing the opportunities?
BUFFETT: Well, you have to see opportunities now. Things are just a lot cheaper than they were a few years ago. I mean, if you go out and buy some hamburger today, you like it if prices are down.
GHARIB: You've hinted that you're interested in utility companies. Will you looking to buy a utility company?
BUFFETT: We've always looked into that field and we always will look into that field. Ten years from now I'll give you the same answer on that. It's just a great place to park money and the nice thing about utilities is that they're big generally, so we can put a lot of money to work when the time comes.
GHARIB: Buffett is also interested in banks. He told shareholders he would love to buy all of US Bancorp and Wells Fargo, if regulators would let him. Berkshire owns substantial stakes in both banks. One big unknown weighing on Berkshire is the economy. Because so many of its businesses are cyclical, what happens with the economy is key to the company's future. But Buffett has yet to see signs that his customers are feeling more confident.
BUFFETT: In terms of the general consumer, in terms of business activity, it's still on its back.
GHARIB: How does the economy look to you right now?
BUFFETT: The situation has calmed down enormously in financial markets and that's a very important factor. And that gives us the background for the economy generally getting better, but it hasn't happened yet.
GHARIB: What about housing, any signs of recovery?
BUFFETT: There's been some improvement in the movement in residential real estate in parts of the country, including California so there's more activity. The prices haven't moved up but the activities have picked up quite a bit.
GHARIB: Most shareholders felt good about what they heard at the meeting.
UNIDENTIFIED MALE: I came with a good attitude and I'm leaving with an even better one.
UNIDENTIFIED FEMALE: He's very reassuring and I think he, a lot of what he says is common sense.
UNIDENTIFIED MALE: No matter what the times are, listening to him I always feel more confident.
GHARIB: Hedge fund manager Whitney Tilson also came away confident. He believes the price of Berkshire stock could go up 20 percent this year.
WHITNEY TILSON, MANAGING PARTNER, T2 PARTNERS: We think it's a great company. Fortress like balance sheet in very treacherous economic environments and it's run by the world's greatest investors who treat shareholders wonderfully and we think long term this is still a growth company.
GHARIB: And what about Peter Kenner?
KENNER: I'm a stockholder for the long term and I really believe that these guys, these two great managers are making the right decisions for the long term.
GHARIB: Kenner says he'll be back here again next year. And most likely so will Berkshire's other shareholders, because when the going gets tough, they say they'd rather rely on Warren Buffett than anyone else. Susie Gharib, NIGHTLY BUSINESS REPORT, Omaha.
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