At Berkshire annual meeting, Warren Buffett hosts cautious investors

At Berkshire Hathaway’s 2015 annual meeting, it’s a weekend of Warren Buffett, and worry.

Nearly 45,000 people are expected to attend the shareholder meeting of Buffett’s insurance and investing conglomerate, which is taking place at the CenturyLink Center in downtown Omaha, Neb. The annual lovefest to the world’s most famous investor always draws a large crowd. But this year, which marks the 50th year since Buffett took control of Berkshire Hathaway, is supposed to be larger than usual. The main event of every year’s meeting is an all-day session in which Buffett and his long-time partner Charlie Munger answer questions in front of a packed arena.

Buffett is expected to field questions about the economy and the performance of his company, which, on Friday, Berkshire Hathaway (BRK.A) reported that its earnings from the first quarter of 2015 rose 20%. He also is likely to make comments on politics and anything else that crosses his mind. And as usual for the last few years, the 84-year-old investor is likely to face questions about who will take over the conglomerate when Buffett leaves the company.

Each year, there is always some controversy at the event. Last year, it was about CEO compensation. Buffett was pressed on why he didn’t object to the pay package of Muhtar Kent, the CEO of Coca-Cola, which many considered excessive. This year, Buffett may face questions about Clayton Homes, a mobile home manufacturer owned by Berkshire Hathaway that was recently the focus of an investigation of its lending practices by The Seattle Times and the Center for Public Integrity.

The suddenly solid-looking economy serves as the backdrop for this year’s meeting. At the same time, the professional investors attending Berkshire’s annual meeting are concerned that, after a number of very good years for the market, stocks could be set for a fall. At an event the night before the meeting, Jean-Marie Eveillard, a senior advisor to First Eagle funds and a prominent value investor, said he thought the market was overvalued. Eveillard said he’s most worried about the Federal Reserve, which has spent the past few years stimulating the economy and pumping money into the market. Those stimulus efforts are now coming to an end and Eveillard says investors don’t seem to be factoring that in. “Either everyone is thinking I will just keep dancing until the music stops, or they don’t see the risks that I do,” he said.

John Rogers, who runs the Ariel Funds in Chicago and was in Omaha for the Berkshire meeting, said he has 15% of his portfolio in cash, up from a typical 5%. “I am growing more and more concerned about the market,” said Rogers. “I am interested [in] what Buffett will say.”

Ryan Devitt, a credit analyst at a middle market lender who has been attending Berkshire’s annual meeting for the past five years, said “frothy” is a word he has been hearing among attendees this year. He also said that he has been hearing far fewer investment pitches from other attendees this year.
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The doors for the event opened at 8 a.m. But attendees came creeping out of their hotels from all over Omaha in the pre-dawn hours to line up to make their way inside the arena. In the press and staff parking lot at just before 6 a.m., a marching band was practicing. The Berkshire meeting features a conference hall with booths dedicated to the many companies that the conglomerate owns or has invested in. Shareholders could test their wits against IBM’s supercomputer Watson, and take a picture with the Wells Fargo stagecoach.

The meeting kicked off with a movie that included a news clip on Berkshire’s meeting from 25 years ago. In the clip, the newscaster said anyone can be an investor in Buffett’s company Berkshire, but it would cost you as much as $7,000, which got a laugh. The stock now trades at $215,800.

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