Live at Berkshire’s ‘Circus’: Buffett Reigns as Ringmaster

BRK-B shareholder shares his experiences at the iconic event

   

Live at Berkshire’s ‘Circus’: Buffett Reigns as Ringmaster

If you’ve never been to Warren Buffett’s annual Berkshire Hathaway (NYSE: BRK.A, NYSE: BRK.B) shareholder meeting, you’re missing out. This is the fourth time I’ve attended, and while much of the weekend feels pretty similar from year to year, it’s always an adventure.

For example, last year, my connecting flight in Chicago was canceled so my father and I (we always go together) had to rent a car one way for $500 and drive over 400 miles to Omaha. We got two or three hours of sleep before leaving for the Qwest Center, where the meeting is held, a little after 7 a.m. This year, we took the earliest possible flight from Baltimore and fortunately arrived in Omaha without a hitch.

Though that also meant we were so exhausted we had to take a very long nap before the shareholder cocktail reception at Borsheim’s, a jewelry store owned by Berkshire Hathaway.

The cocktail reception is held each year on Friday, the night before the meeting, which always occurs on a Saturday—usually the first Saturday of May, but moved this year due to Mother’s Day.

The first thing you’ll notice when you attend the cocktail reception is that it doesn’t matter how much money people have: They still can’t resist free food and drinks. Thousands of shareholders wearing anything from regular street clothes to expensive suits and dresses line up in a queue snaking the entire length of the Regency Court mall to get free appetizers from three buffet tables. This year it took about 45 minutes to get to the food—about average. If you wait until 8:30 or 8:45, the line speeds up, but you also risk not getting any before they close shop at 9.

The food varies from year to year, but there’s always a mix of vegetables, cheese, crackers and dip as well as a few varieties of meat (meatballs, sausage, and chicken in various sauces this year). At the end of the table are rolls, condiments, and roast beef for making sandwiches.

The bar is another story. The main floor of the mall is set up with bars facing outward in a rough oval so shareholders can attack from all sides. There are no clear lines, just a mob of people thronging around hoping to find a breach in the wall. Wait times vary depending on your strategy, but you’d be wise to order whatever you can carry so you don’t have to return soon.

Outside Borsheim’s in the mall parking lot, a giant white tent is set up with a live band. This year, the band played funk music to which a fair number of (possibly) intoxicated shareholders danced, while the rest sat at tables or thronged around more bars lining the walls of the tent.

Of course, one of the purposes of the cocktail reception is to allow shareholders to socialize and share stories. At the first meeting I attended in 2007, a man standing in line next to my father and me explained that while the question and answer session with Buffett and his partner, Charlie Munger, lasts about 6 hours each year, the business meeting itself is only allotted 5 minutes. (In 2009, after one of the worst bear markets in history, that was increased to 15 minutes.)

The shareholder also told us that in 2006, he went to Borsheim’s to find out what their most expensive item was, saying he wanted to buy a gift for his girlfriend. The woman at the counter pulled out a necklace and showed him the price tag: $300,000. He said, “Nevermind, she’s not worth it.”

The woman leaned closer and whispered, “Come back tomorrow. I’ll make you a deal.”

And therein lies the genius of Warren Buffett. While most companies have a rather mundane approach to shareholder meetings, keeping it rather formal and brief, Buffett turns his not only into a weekend of entertainment (live music and free drinks galore) and education (six hours of questions and answers with the world’s greatest investor and his right-hand man), but also an opportunity for Berkshire businesses to sell their wares.

For example, in his 2010 letter to shareholders, Buffett says, “The best reason to exit [the meeting], of course, is to shop. We will help you do that by filling the 194,300-squarefoot hall that adjoins the meeting area with products from dozens of Berkshire subsidiaries. Last year, you did your part, and most locations racked up record sales. In a nine-hour period, we sold 1,053 pairs of Justin boots, 12,416 pounds of See’s candy, 8,000 Dairy Queen Blizzards and 8,800 Quikut knives (that’s 16 knives per minute). But you can do better. Remember: Anyone who says money can’t buy happiness simply hasn’t learned where to shop.”

And of course, the rest of Omaha jumps on the bandwagon, advertising “discounts” and “specials” left and right for Berkshire shareholders and welcoming them with open cash registers. Hotels downtown typically sell out the summer before. Hotels on the outskirts also often sell out, as do flights and reasonably priced rental cars. After all, with attendance growing each year—from over 25,000 in 2007 to an expected 40,000 this year—there’s only so much to go around. All in all, the annual meeting has a significant financial impact for Omaha, and I’d bet that’s a big part of why Buffett refuses to webcast it.

Of course, not everyone has a favorable opinion of the event. Last year, Alice Schroeder, author of The Snowball, a biography of Warren Buffett, said in an article on Bloomberg that the annual meeting was “overvalued” and just “one more corporate bubble,” and finally called it “a circus.”

All I can say is, if it’s a circus, it sure has one smart ringmaster.

Billy Currano owns shares of Berkshire Hathaway.


Article printed from InvestorPlace Media, http://investorplace.com/2011/04/live-at-berkshires-circus-buffett-reigns-as-ringmaster/.

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