Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) released first quarter earnings on Friday and held its annual shareholders’ meeting over the weekend. Although Berkshire Hathaway is one of the largest public companies in the United States, its name is seldom recognized by the general public and even many investors; and when it comes to knowing what Berkshire Hathaway does, their level of knowledge drops further.
The company is actually best known for its CEO, legendary investor and pithy commentator Warren Buffet. Buffet has been in the news lately for his advocacy of the so-called “Buffet Rule”, which says that a billionaire like himself shouldn’t have a lower tax rate than his secretary. According to a New York Times article on the annual meeting, Mr. Buffett stated that for at least three years he was paying the lowest tax rate in the Berkshire Hathaway offices, even though he was earning anywhere from $25 million to $65 million per year.
So for those readers who are unfamiliar with the company, or have not followed recent reports, here is a quick update.
First of all, Berkshire Hathaway’s first quarter earnings were excellent with net income at more than twice the same quarter last year.
As to what the company does: Berkshire Hathaway, located in the mid-west city of Omaha Nebraska, is a holding company, or as some would call it a conglomerate. Its investee companies are engaged in a wide range of diverse business activities. Broadly speaking, these businesses are involved in: insurance and reinsurance; railroads, utilities and energy; manufacturing; services; retailing; and finance and financial products. The actual number of goods and services provided by Berkshire Hathaway investees is vast.
Berkshire Hathaway regularly appears near or at the top of most admired companies lists. Mr. Buffett himself is one of the most admired business persons in the world.
But a very interesting aspect of the company is its annual shareholders’ meeting which is unique, at least on this scale, among American business. It is part festival, part shopping event, part celebrity spotting – and of course the annual shareholders’ meeting. This year’s event was reportedly attended by some 30,000 people.
Many of Berkshire Hathaway’s investee companies set up booths or even take over large spaces, and many of these companies sell their products at a discount. A furniture subsidiary of the company reportedly sold over $6 million dollars’ worth of furniture at the event. A jewelry retailer apparently did booming business.
Individual attendees included Bono and Bill Gates (who is a director). A film produced for the event included either in person or by voice Roger Federer, Little Richard, Billie Jean King, Herman Cain, Jimmy Buffet and the cast of Glee – with whom Buffett played his ukulele.
But the main event was five or six hours of Buffett and his long time business partner Charlie Munger answering questions. Unlike the highly-scripted, controlled annual shareholders’ meetings of most other large companies, Buffett and Munger let shareholders ask question after question – none pre-screened.
And that’s a quick snapshot of Berkshire Hathaway and some of its recent news and activities.