Buffett, 'Oracle of Omaha,' comments on Berkshire results

Donna Miller
May 6, 2018

At Berkshire Hathaway Inc's annual shareholder meeting, Buffett credited Apple with developing "extremely sticky" products to which consumers become attached and endorsed Apple's decision to buy back its own stock, saying it was the technology company's most productive use of cash.

Shortly before the meeting, Berkshire ended its more than year-long stretch of falling operating profit, while a new accounting rule caused the conglomerate chaired by Warren Buffett to suffer an overall net loss.

People's Daily said the talks "laid solid foundation for further talks on trade and economic cooperation, and for ultimately achieving benefits (to both countries) and win-win results". "We both (US and China) may do things that are mildly foolish from time to time".

Several years ago, Berkshire held small investments in Visa and MasterCard along with its long-time major stake in American Express.

This could be the time to acquire something in China, Buffett said.

The comments come after US President Donald Trump's recent trade attacks on China including proposed tariffs on US$50 billion worth of Chinese goods and tariffs on imports of steel and aluminium.

Berkshire Vice Chairman Charlie Munger says he's also optimistic that the two countries will find a way to resolve their trade disagreements without creating lasting ill will toward each other.

During the traditional Q&A session at Berkshire Hathaway's annual meeting, a shareholder challenged Buffett on his refusal to pressure Berkshire subsidiaries to divest from gun-related businesses.

A delegation made up of representatives from the Trump administration spent Thursday and Friday in China negotiating possible changes to the US-China trade relationship.

Berkshire investors are also eager to see how Buffett might spend the company's $116 billion in cash and short-term investments.

"We want our employees to get better medical services at lower cost", he said.

Tesla's Elon Musk defends comments during earnings call
Tesla stock did rise a bit on Friday, getting a 3.82 percent bump to $295.31 per share at the time of publishing. Tesla posted a record $709.6 million net loss in the first quarter, which amounts to a loss of $4.19 per share.

Buffett said the bank had committed the "cardinal sin" of incentivizing employees into "kind of insane conduct".

Wells Fargo had been trying to fix its reputation after admitting in 2016 that employees opened as many as 2 million accounts without getting customers' permission to meet aggressive sales targets.

"Wells Fargo is a company that proved the efficacy of incentives, and it's just that they just had the wrong incentives", said Buffett.

Berkshire owns $25.2bn of Wells Fargo stock as of March 31, down from $29.3bn three months earlier.

But he maintained that the bank was not "inferior", as an investment or morally, to its main rivals.

Some in America are wondering if Berkshire Hathaway will remain such a bellwether once Buffett is gone.

Buffett and Munger both said little has changed because Berkshire's businesses largely run themselves day-to-day. "Now, for somebody that cares about a business we absolutely are the first call and will continue to be the first call", he said.

If Buffett invests in a company, many people take it as a sign that you can trust the future of that firm.

The questions at the meeting always include a few focused more on life lessons than investing.

"There's a chance, which no one can quantify, that we can do something significant", Buffett said on Saturday.

Buffett doesn't plan to retire, but he likely invited more discussion of his eventual replacement earlier this year when he promoted Greg Abel and Ajit Jain to vice chairmen and expanded their responsibilities.

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