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Warren Buffett Says U.S. Economy’s Unexpected Strength Benefits Berkshire

“It did the job,” Buffett said. “This economy, right now, 85% of it is running in super high gear.”

Buffett lamented how an influx of so-called special purpose acquisition companies and inexperienced investors hoping for quick riches have made markets feel like a casino, making it hard for Berkshire to deploy more of its $145.4 billion cash hoard.

But the 90-year-old retained his optimism for the future of the company he has run since 1965, including after he’s gone.

“We’ve seen some strange things happen in the world in the last year, 15 months,” Buffett said. “It has reinforced our desire to figure out everything possible to make sure that Berkshire is, 50 or 100 years from now, every bit the organization and then some that it is now.”

REINFORCEMENTS

The annual meeting was held in Los Angeles, where Buffett joined Berkshire’s 97-year-old vice chairman Charlie Munger, to answer more than three hours of shareholder questions.

Greg Abel and Ajit Jain, Berkshire’s other vice chairmen and potentially successors to Buffett as chief executive, also fielded several questions.

Asked about their rapport, Jain said that they don’t interact as much as Munger and Buffett, but they talk every quarter about businesses they oversee.

Berkshire scrapped for a second year its annual shareholder weekend in its Omaha, Nebraska, hometown, an extravaganza that normally attracts around 40,000 shareholders.

But Saturday’s meeting, broadcast online on Yahoo Finance, was “kind of what you come to love about Berkshire,” said Steve Haberstroh, a partner at CastleKeep Investment Advisors in Westport, Connecticut. “It’s a little bit less about learning new things and more about being reminded about the old things.”

Many of Berkshire’s dozens of operating units, which include Geico car insurance and the BNSF railroad, have been rebounding as anxiety over COVID-19 lessens, more people get vaccinated, stimulus checks are spent, business restrictions are eased and confidence about the economy grows.

Gross domestic product grew at an annualized 6.4% rate from January to March, according to an advance government estimate. Some economists project the economy will grow in 2021 at the fastest clip in nearly four decades.

Buffett conceded that the recovery made his decision last year to exit stakes in the four major U.S. airlines — American, Delta, Southwest and United — appear ill-timed.

Munger, meanwhile, downplayed concern that Congress and the White House might raise the corporate tax rate to 25% or 28%, saying it wouldn’t be “the end of the world” for Berkshire.

Shareholders rejected proposals requiring Berkshire to disclose more about its efforts to address climate change and promote diversity and inclusion in its workforce.

But both proposals received about one-quarter of the votes cast, suggesting greater discontent than Berkshire shareholders historically demonstrate. Buffett, who controls nearly one-third of Berkshire’s voting power, opposed both proposals.

Saturday’s meeting came after Berkshire said first-quarter operating profit rose 20% to about $7 billion, while net income including investments totaled $11.7 billion..


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