Pay a dividend: Mr. Buffett has long opposed paying a dividend over the years, arguing that he could generate better returns for shareholders through investments. And he has warned that if Berkshire ever did decide to pay a dividend, its stock would fall because it would indicate that Mr. Buffett had ran out of good investing ideas. But when asked about returning cash to shareholders at Berkshire’s annual meeting two years ago, Mr. Buffett floated paying a dividend as a possibility.
What to expect
The meeting kicks off at 9:30 a.m. with a movie. Mr. Buffett and Mr. Munger will take the stage around 10:15 a.m. (Mr. Buffett often opens the meeting with some version of his standard joke: “I’m Warren, he’s Charlie. He can hear, and I can see. We work well together.”)
Roughly over the next six hours, including a one-hour lunch break, the pair will answer questions.
Some will be asked by a panel of journalists — DealBook’s Andrew Ross Sorkin, Becky Quick of CNBC and Carol Loomis, a former Fortune writer — who have sifted through emailed questions from shareholders. The rest of the questions will come from the financial analysts on the panel and the investors in attendance.
What to Watch
Wells Fargo: For three years, the bank has struggled to recover from a series of self-inflicted scandals over fake customer accounts, unwanted products and unwarranted fees. In late March, Tim Sloan, a 31-year veteran of the bank who was promoted to chief executive in 2016 to clean up the bank’s culture, stepped down. Mr. Buffett has stuck with the bank through it all. He has remained its largest shareholder and has said of its problems: “Wells Fargo is a company that proved the efficacy of incentives and it’s just that they had the wrong incentives.”
Kraft Heinz and 3G Capital: Mr. Buffett has repeatedly faced questions about Berkshire’s relationship with 3G Capital. The Brazilian private investment group is known for its cost-cutting skills, and Berkshire shareholders have often asked whether its management style is in step with Berkshire’s. The partnership is likely to face renewed scrutiny this year. Berkshire and 3G teamed up to buy Heinz in 2013 and then merged it with Kraft in 2015. Berkshire holds a 27 percent stake in the combined company. But Kraft Heinz stumbled badly last year as 3G’s strict cost-cutting strategy showed diminishing returns. That weighed on Berkshire’s 2018 results.
Buybacks: Over the years, Mr. Buffett has mostly avoided repurchasing Berkshire’s shares, arguing that he could generate better returns for shareholders through investments. But as the price to acquire big companies has risen the past few years, Mr. Buffett has begun to reconsider. Berkshire’s board approved a stock repurchase program in 2011. Last summer, Berkshire loosened the requirements on when Berkshire’s stock could be bought back, and the company repurchased a modest $1.3 billion of its own stock over the final six months of 2018. But that’s likely to increase in the years to come. “It is likely that — over time — Berkshire will be a significant repurchaser of its shares,” Mr. Buffett wrote in his letter to shareholders in February. This week, he told the Financial Times that “the time may come when the company buys back as much as $100 billion of its shares.”
Deal Making: Mr. Buffett wants to do big deals. He has talked for years of his “elephant gun” being loaded and his “trigger finger” being “itchy.” Yet Berkshire hasn’t announced any big acquisitions in recent years and its cash pile keeps growing — $114 billion at the end of the first quarter. That’s a problem. Acquisitions are a key component to its growth, and given Berkshire’s current size, it needs to be big to move the needle. The dearth of deal-making, though, is likely to persist. In his annual letter in February, Mr. Buffett wrote: “In the years ahead, we hope to move much of our excess liquidity into businesses that Berkshire will permanently own. The immediate prospects for that, however, are not good: Prices are sky-high for businesses possessing decent long-term prospects. That disappointing reality means that 2019 will likely see us again expanding our holdings of marketable equities. We continue, nevertheless, to hope for an elephant-sized acquisition.”