No, it wasn't a chat with Warren Buffett.
That's almost impossible at the yearly "Woodstock for Capitalists," and only first-timers make the trek to Omaha, Nebraska, to see Buffett anyway. Longtime shareholders make the trip to listen to Berkshire's vice chairman, Charlie Munger.
But even speaking with the inimitable Munger, who's probably the smartest guy in U.S. business, wasn't at the top of my list.
I really wanted to see a floor model of one of Berkshire's newest acquisitions -- the BYD car.
You see, all of Berkshire's companies display their wares in the exhibition hall at the Qwest Center in Omaha, from the GEICO gecko to Fruit of the Loom, and tucked off to one side was a BYD vehicle, complete with a leather interior, an atypical option for BYD cars, which are barebones and compete on price.
Hundreds of attendees, mostly younger men, were doing the same thing I was doing -- snapping pictures of the engine with my iPhone.
BYD is a Chinese company, one that Buffett took a major stake in at Munger's behest back in 2008. Buffett sent his top scout -- a guy named David Sokol -- to China to meet with the company's CEO, who showed him BYD's electric cars and, just as important, the highly efficient car batteries the company builds.
The battery fluid in the power cells is non-toxic, and BYD's CEO Wang Chang-Fu even drinks it to demonstrate that fact. And although Sokol politely declined to take a sip, Berkshire took a 10% stake in BYD, which has since shot up in value.
The car looks like a dressed-up Saturn; tinny, plastic, and cheap. The door slam sounds like a Toyota (TM) Corolla instead of an Audi or a Cadillac, which is, incidentally, what Buffett drives. The BYD car is the opposite of the sleek and sexy all-electric Tesla (TSLA) Roadster, considered to be the must-have car among the affluent Greens.
Despite the car's frail look, the investment in BYD proves a powerful point: The auto industry is changing, although it never really stood still.
The question is: Are there companies out there poised to accelerate that rate of change and do they have what it takes to satisfy their shareholders in the process?
BYD caused such a stir in Omaha, because it shows that even the most famous investor in the world sees that U.S. car makers will not have the power they once did as new consumers around the world enter the car market for the first time.
As the Chief Strategist behind Game-Changing Stocks, I'm always on the hunt for the next big thing. I'm telling you now that major auto manufacturers such as General Motors (GM) and Ford (F) aren't the next big investment in the space.
The game-changers in the ever-changing auto industry will occur as a result of one of three reasons:
1. New technology developed by small companies. Big automakers are happy to pay for this technology to give their vehicles an edge.
Whether it's power windows, keyless entry, satellite radio, synchronized cell phones/entertainment systems or any of dozens of other options, automakers embrace new technologies quickly. Companies that develop these new systems can burgeon seemingly overnight into industrial powerhouses.
2. Small companies that profit from electric cars. A shift in automotive design has ushered in the global trend toward short-trip electric cars. These models, geared for city dwellers who drive less than 40 miles a day, are appealing to environmentally conscious consumers who are willing to pay for a gas-free lifestyle.
With strong government incentives in Europe, China, and the United States, the BYDs of the world and their suppliers that can deliver electric cars are likely to see meaningful growth. Nissan's entire 2010 production run of its Leaf electric car sold out in just a few days. Electric car makers -- or, more specifically, the suppliers that deliver critical components -- are potential game-changing stocks.
3. Companies that fit in the first two groups must also be able to go global, delivering their products to consumers or companies in markets where meaningful sales growth is still possible -- and that means India and China.
It's important to keep the sheer mathematical reality of the worldwide automotive marketplace in mind. In the next 40 years, the global fleet of passenger cars is expected to quadruple to nearly 3 billion. China, which has overtaken the United States as the world's biggest car market, could have as many cars on its roads in 2050 as there are on the planet today. India's fleet may multiply 50-fold. It's likely that new approaches to mass transit will help limit some of that growth, but there's no doubt car use is on a major upward trajectory.
Action to Take --> Even with that, I don't think the largest returns are going to come from the current major auto makers. But BYD, like a handful of other companies I've been following, has a real shot of starting at the ground floor in this huge global industry and growing exponentially in coming years.
Or at least Warren Buffett seems to also think so...