The Berkshire Hathaway faithful will be gathering in Omaha, Nebraska, this Saturday to hear the words of the master and his sidekick. Yes, it’s time for “Woodstock for Capitalists,” where the stars of the show are Warren Buffett and Charlie Munger, two octogenarians who will appear to let it all hang out for the 35,000 or so faithful.
“People like it a lot,” says Meyer Shields, an analyst at Stifel & Nicolaus. What’s really remarkable is that they like it even though Berkshire stock has underperformed the stock market by a long shot over the past three years — losing 8.9% versus a 0.8% drop in the S&P 500. Buffett’s reputation even withstood the scandal and resignation surrounding heir-apparent David Sokol.
Let the critics eat Dairy Queen. In this world of fickle investing, Berkshire is the rare company that shareholders stick with through thick and thin — and with love. Of course, Berkshire has earned that devotion. Since 2000, it’s outpaced the S&P 500 by a factor of nearly four-to-one.
Shields credits the shareholder devotion to Buffett’s shrewd marketing — although many investors would probably be shocked to hear that the avuncular and outspoken persona is anything less than spontaneous. “The marketing approach has created a group of investors that accepts volatility” in the stock price, says Shields. “They view it as just short-term noise.” That’s a pretty rare attitude in today’s markets.
The annual meeting is indeed a show (get your program here). Buffett usually whips out his ukulele. And there are all kind of events to heighten the excitement: In 2010 and 2011, the Wall Street Journal recalls, Ted Wechsler paid $2.6 million to dine with Buffett and ended up with a job that will probably leave him as the chief of Berkshire’s investment portfolios. This year, a charity tried to auction a dinner at Buffett’s former home — but no one bid for the $6,000 meal on eBay. No Buffett, no bidders.
In recent years Buffett has invited journalists to lead the interrogations on stage. This year, three research analysts (all with “buy” ratings on Berkshire) will be on stage as well as three journalists. Mix things up a bit. But don’t expect too much substance, says Shields. Buffett gets so much publicity that attendees are unlikely to learn anything new. But they will get to ask questions and get a sense of the man face to face. Here are some things that Shields, who rates Berkshire a hold, says will likely be on the minds of shareholders:
- Buffett’s health. Just last month, the 81-year-old CEO revealed that he has prostate cancer. The prognosis is good, but shareholders will probably want to hear more from the man himself.
- Hints on the next successor. Buffett has been adamant about keeping secret the identity of the person he has selected to lead Berkshire Hathaway when he steps down. Even the chosen heir supposedly doesn’t know that he (or she) is the one. But you can be sure investors will be listening for clues.
- Investment ideas. Investors will like to hear more about any new ideas Buffett has up his sleeve. Last November he spent $10 billion on IBM. He also called a bottom to the housing market — too soon. He’s acknowledged this but says he is looking for a slow recovery. But don’t be disappointed if Buffett and Munger decline to discuss what they are selling. The program warns in advance that they will not.
- Obama and the Buffett rule. Buffett has been vocal in his support for the President and the need to raise taxes for the wealthy.
- Insights on current businesses. Berkshire made big purchases in recent years — Burlington Northern Railroad and Lubrizol, paying big premiums. There may be questions about first quarter earnings, due out today, and the stock price.
If you can’t make it to the meeting, don’t despair. You can still take part in the Berkshire Hathaway fanfare and pick up memorabilia here. My personal favorite: The 2012 Stars and Stripes money clip, featuring the cartoon mugs of Warren and Charlie. Seems appropriate. After all, Omaha may be one of the few places left in the U.S. where investors who got rich alongside Buffett and Munger need not feel ashamed — or worried that Occupy Wall Street will spoil the fun.