In Omaha for the Berkshire Hathaway Annual Shareholders Meeting

In Omaha for the Berkshire Hathaway Annual Shareholders Meeting

‘Meeting’ Warren Buffett: My trek to “The Woodstock of Capitalism”

 

It’s called the Woodstock of Capitalism. Others say it’s a gathering of Warren Buffett fans, wannabes, value investors and other finance professionals. However you want to describe it, the Berkshire Hathaway annual general meeting lies somewhere at the intersection. For me, attending was a bucket list event. I recall when I first discovered Warren Buffett. It was off Investopedia, during a college internship at Vetiva Capital, in Nigeria, subsequent to which my father bought me my first book on him – Warren Buffett Wealth by Robert P. Miles. Then, I was 17 years old.

Visiting Omaha was not a reason for attending London Business School (LBS) but I planned to cross it off my bucket list at some point in this life. It was my selection as part of a group of 5 out of 50 applicants to participate in Matthias Riechert’s value investing forum, that inspired me to make the 12-hr trip down. Arriving Omaha on a warm Thursday evening, after hours reading Seth Klarman’s Margin of Safety, all I could do was help myself to a good meal at one of Omaha’s legendary restaurants after visiting Buffett’s impressive house since 1958. Considering the  number of visitors to Omaha for this event (35-40k) represents almost 10% of this quiet town’s population, Air BnB and Uber were in very high demand.

Warren Buffett's house since 1958

Warren Buffett’s house since 1958

On Friday, I met up with Davide Conti, LBS MBA2017, who was attending the meeting with a few students from his exchange school, Wharton. We kicked the day off meeting with renowned hedge fund manager, Whitney Tilson. He spoke about the importance of studying failure as much as we study success, somewhat in echo of Charlie Munger’s saying: “All I want to know is where I’m going to die, so I’ll never go there”. Sooner than later, he delved into the topic of marriage and divorce. We discussed the importance of accepting and dealing with our mistakes. He gave the example of how after taking the plunge and recommending an investment, he had to sell within weeks after a friend validly challenged his thesis. The ongoing disruption of industries was a topical issue (even throughout the trip), which follows on one of the major themes discussed at the recent GenerationE conference hosted by the LBS Tech & Media Club. We also discussed the role of incentives and compliance in controlling risk taking, when discussing Wells Fargo’s problems, as well as the importance of knowing and expanding one’s circle of competence.

After our meeting with billionaire Mario Gabelli, hedge fund manager Whitney Tilson and Wharton MBA students

After our meeting with billionaire Mario Gabelli, hedge fund manager Whitney Tilson and Wharton MBA students

We left for Centurylink Center, venue of the big meeting, to do some shopping, and unfortunately missed Warren when he swung by. We subsequently attended an investor briefing hosted by billionaire Mario Gabelli’s company, Gabelli & Company, and he had Q&A with us afterwards. Our next stop was the famous Yellow BRKers event, a gathering of long time Omaha visitors. To cap this day, we caught up with a big group of LBS EMBA alumni, many of which took the value investing courses at LBS and Columbia. We sought to spot Bill Gates and Charlie Munger at a far out location but to no avail. Nonetheless, it was a good evening, meeting more value investors and discussing their motivations to keep attending. We called it a night by 1:30am but needed to be up in 3 hours for the big day.

With LBS students (Davide {top right}) and alumni (Matthias Riechert {top middle}, Ninad, Konstantin, Melinda etc.)

With LBS students (Davide {top right}) and alumni (Matthias Riechert {top middle}, Ninad, Konstantin, Melinda etc.)

5:20am and we were alreaady on queue at Centurylink. Unexpectedly joined by a former colleague, we patiently waited for just over an hour to get in before sprinting across the hall to get seats on the lower ground. Suffice to say, organizers of the The Investors Podcast, Preston Pysh & Co., had shared a video recording of the sprint route to get the best seats. There were also strategic ways to game the Q&A session, with the hope of getting called upon.

With my 5am line-up crew (Davide Conti & Ildar Davletshin) outside the meeting venue

With my 5am line-up crew (Davide Conti & Ildar Davletshin) outside the meeting venue

Before the official programme kicked off with the funny video, I went to the shopping hall to watch Buffett throw newspapers with Bill Gates. While I couldn’t get close enough for a selfie, the Financial Times featured pictures of me in the crowd on its live event blog (see below). Overall, between Charlie and Warren, they answered over 50 questions from analysts, journalists and the audience. It was impressive to see the duo, who met at 35 and 29 respectively and are now 93 and 86, answer questions with such brilliance and humor. It was an endless flow of business, investing and life principles, some of which @LBSAfricaClub shared on its twitter page.

Caught on camera by the FT blog with Warren Buffett and Bill Gates

Caught on camera by the FT blog with Warren Buffett and Bill Gates

During the lunch break, we had drinks with the team from Robotti & Co, where we met even more value investors. After the Berkshire Hathaway meeting, we met up with another group of value investors (partly organized by Shai Darshati and his team at Manual of Ideas), then met up with LBS Value Investing Professor, Eddie Ransden, and ended the night at drinks with former Berkshire Hathaway employee and now investor, Ian Jacobs. As you can imagine by now, the quality of the network was truly impressive and I must say that for most people I asked, this is partly what keeps them repeating the yearly pilgrimage.

By Sunday, one could see that the Berkshire Hathaway annual meeting is quite a big deal to Omaha. As people departed, the town gradually lost its buzz. Even at the peak of activities on Saturday, there was barely traffic anywhere. On the day, we first attended the annual meeting organized by Markel Corporation, an investing group structured similar to Berkshire but more willing to invest in areas Berkshire might consider risky. We then met with a diverse group of people partly attracted to the meeting by The Investors Podcast, and then debriefed with a group of LBS alumni including my value investing forum teacher, Matthias Riechert.

With founder of The Investors Podcast, Preston Pysh

With founder of The Investors Podcast, Preston Pysh

As I wrap this up, I’m on my way back to London, reflecting on what was nothing short of an impressive weekend. Some of my key takeaways from multiple discussions include:

1) Most value investors don’t use CAPM in establishing a hurdle rate for their investments. As Matthias puts it, “no billionaire ever got rich using CAPM”.

2) Reading and research diligence are absolutely critical to one’s success as a value investor. In today’s noisy world, independence of thought is necessary. As many, including Buffett, put it, a good investor shouldn’t delegate his research responsibilities.

3) In as much as companies trade at different PE valuations, growth rates should play a key part in making sense of the multiple while still seeking a margin of safety. As the debate around investing in companies such as Google and Amazon continues, it appears to me that the platformization of businesses will remain a disruptive force across many industries.

4) My best quote was from Charlie Munger: “fish where the fishes are”. Focus on the areas within your circle of competence as all you need to be financially well off are a few good companies that will compound beautifully for you over time. Value investing is simple but the diligence required lies beyond many’s reach.

Amidst all the interesting things I’ve done at LBS, some of which I’ve blogged about, attending the Berkshire Hathaway annual meeting was indeed one of the most impactful. Although I unfortunately didn’t get to meet Warren Buffett personally, this trip brought to life for me our famous hashtag – #whyiloveLBS.

Outside CenturyLink Center, venue of the Berkshire Hathaway annual meeting

Outside CenturyLink Center, venue of the Berkshire Hathaway annual meeting

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