Multibillionaire investor Warren Buffett hosted Berkshire’s highly-anticipated annual shareholder meeting on May 2, 2020. And it was conducted exclusively online for the first time in the company’s history, due to stay-at-home orders related to the spread of Covid-19. Among the top takeaways: Buffett, who is Berkshire’s chairman and chief executive, expressed faith in the U.S. economy in the face of the virus, but nevertheless announced Berkshire had sold off its entire portfolio of airline stocks, worth billions of dollars. 

Here are the biggest takeaways from the meeting: 

• Berkshire Hathaway sold its entire holdings in airline stocks. The company reportedly owned 10% of Southwest, Delta, American, and United Airlines, jointly worth about $6 billion. Buffett said that it would likely take years for the airline industry to recover from the steep decline in air travel, down about 95% for the year. 
• The sale added to Berkshire’s liquidity. The company holds $137.3 billion in cash.
• Despite the company’s growing cash pile, Berkshire Hathaway hasn’t made any big acquisitions recently. While Buffett didn’t rule out making any big deals in the future, he said that the company hasn’t encountered any deals it wants to pursue..  
• Berkshire Hathaway reported a record net loss of nearly $50 billion for the first quarter of 2020, compared to the $21.7 billion of profit in the first quarter of 2019. In light of the health and financial impacts of the coronavirus, Buffett appeared to demonstrate optimism. Buffett compared the pandemic to past problems such as 9/11, World War II, and the 2008 recession that the U.S. has encountered and overcome, and he said he put his faith behind the “American miracle” to recover from the effects of the virus.
• Buffett also discussed the insurance industry, where Berkshire has a large presence. He said he expects insurance companies to face lawsuits from customers over losses caused by the pandemic. Berkshire Hathaway owns the home and car insurance company Geico, as well various underwriting and indemnity companies. 
• Buffett said once again, as he did in his February, 2020 letter, that he and Berkshire Vice Chairman Charlie Munger are both in good health. Munger is 96 years old and Buffet is 89 years old.

More on Warren Buffett and Berkshire Hathaway

Buffett started out small, working a paper route as a boy in Nebraska, and holding various odd jobs, until he eventually bought a struggling Massachusetts cloth mill called Berkshire Hathaway in 1962.

Much of Berkshire Hathaway’s success has been based on Buffett himself, who built the company from a struggling cloth spinning company, to its current gargantuan size. Buffett is currently worth $87.5 billion.

Berkshire Hathaway owns many well-known companies including: 

*Source: Berkshire Hathaway

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If you’re inspired by Warren Buffett, you can get started investing with any amount on Stash.

And remember that even in times of market volatility and uncertainty, it’s best to follow the Stash Way, if you’re able to, by investing small amounts regularly in a diversified portfolio.

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On February 22, 2020, Buffett delivered his annual letter in which he discusses the annual performance of his company Berkshire Hathaway and its future. Buffett also urged investors to pay closer attention to company operations and less on short-term earnings. Here are highlights from the letter. 

The new accounting rule

Berkshire Hathaway earned $81.4 billion in 2019, which includes $53.7 billion in net unrealized capital gains in the stocks owned by the company. However, Buffett warned against a new accounting rule which requires companies to disclose unrealized capital gains and losses. 

An unrealized gain is when an investor owns stock in a company whose stock rises, but does not sell that stock. In contrast, a realized gain is when the stock rises and the investor sells, thereby locking in his gains. An unrealized loss occurs when a stock falls, and the investor doesn’t sell. 

Rather than focus on earnings that include unrealized gains and losses, Buffett urged shareholders to focus on operating earnings. Operating profit is the profit a company makes, excluding income from investments and derivatives, which are contracts between buyers and sellers based on an underlying stock, bond, or some other asset. Berkshire Hathaway saw $24 billion in operating earnings in 2019. 

The rules of buying a business

Buffett also explained that an important part of his approach to business is investing in and acquiring other businesses. The CEO revealed the three qualifications he seeks in a company when he considers purchasing it.

• The business must earn “good returns” on the money it requires to function.
• The business must be run by “able and honest managers.”
• The business must be reasonably priced.

Buffett said that it is rare for a company to meet all those standards. Berkshire Hathaway did not buy a major company for the third year in a row, according to Business Insider. 

In addition to companies that Berkshire owns outright, it is a major shareholder in Apple, American Express, and Delta:

Source: Berkshire Hathaway

You can loosely follow Buffett’s rules when you’re researching stocks and ETFs in which you want to invest.

Company leadership

On what makes a good board of directors, Buffett emphasized the importance of business experience, and emphasized his own directorship at 21 different companies over the course of his career. While Buffett celebrated the increased presence of women in boardrooms since the 1960s, he also said that this advancement remains a “work in progress.”

Buffett also explained the challenges of finding the right people to sit on a board of directors. He wrote: “we will continue to look for business-savvy directors who are owner-oriented and arrive with a strong specific interest in our company.”

Buffett also mentioned that different directors can bring different skills to the table, joking that he would never participate in Dancing with the Stars.

The future and potential successors

Finally, Buffet broached the subject of his age and the age of his business partner Charlie Munger and potential successors. Buffett is 89 years old and Munger is 96 years old. 

The CEO assured shareholders that Berkshire Hathaway has a plan for life after Buffett and Munger and that he trusts company leadership to lead the company when he decides to step down from his position. 

Buffett also alluded to a couple of different possible successors, including Ajit Jain and Greg Abel.

More background on Warren Buffett and Berkshire Hathaway

Buffett started out small, working a paper route as a boy in Nebraska, and holding various odd jobs, until he eventually bought a struggling Massachusetts cloth mill called Berkshire Hathaway in 1962.

Much of Berkshire Hathaway’s success has been based on Buffett himself, who built the company from a struggling cloth spinning company, to its current gargantuan size. Buffett is currently worth $87.5 billion.

Berkshire Hathaway owns many well-known companies including: 

*Source: Berkshire Hathaway

If you’re inspired by Warren Buffett, you can get started investing with any amount on Stash. 

With Stash, you can purchase fractional shares of stock in companies including Berkshire Hathaway.

You can learn more about all of the ETFs and single stocks that Stash offers.

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