My trip to Berkshire Hathaway started at the Nashville, TN airport, but things didn't start getting interesting until I got to Memphis, TN. It was there that I boarded the plane to Omaha, NE. One after one, people got on the plane. One guy with Graham's "Security Analysis" book, another with "The Intelligent Investor", another with "The Warren Buffett Way", and on and on. In hindsight, I think the entire flight was full of Berkshire Hathaway investors because I saw a bunch of them throughout the weekend at various events.
When the plane was landing, I was talking to a guy and his wife. He's been a Berkshire shareholder since the early 1990's and this was his seventh visit to Omaha. He said he had to thank Warren because he did a lot of great things for him.
For me, it was my first visit and the excitement of the trip only allowed me four hours of sleep the night before.
At 5:45 AM, I arrived at Qwest Center. The doors didn't open for another 75 minutes, but there were already 200 people in line and I showed up at the perfect time - any later and the line got really, really long. The building is impressive and the people in line were very nice. We chatted about stocks and the real estate market for about an hour. Once again, people were negative on the real estate market.
A camera crew came up to me an interviewed me for five minutes. It was kinda funny. One question they asked me was, "If you could ask Warren Buffett one question, what would you ask him?" I thought about it for a second, then said, "I'd ask him what's the next stock he's going to buy". hehe
It was cold standing outside, even in a thick long-sleeve shirt. People from Justin's Boots were out passing cups of coffee. When a couple thousand people were in line, a couple anti-abortion protesters came out in full force showing huge pictures of aborted fetuses - it was kinda gross at 6:30 in the morning.
When 7:00 AM came around, the doors opened up, and people started running inside. They ran, and ran, and ran, down a hallway and up a flight of stairs to get into the meeting area. Once inside, they started reserving their seats. It was a madhouse. Luckily, I got a front row seat on the side: Sec 121, Row A, Seat 5.
I was talking to the guy next to me. He's been there several times. He said they issued 61,000 passes in 2005 and 77,000 passes in 2006 for the event. The place only seats about 20,000 people.
A couple minutes before the movie begins, a bunch of bodyguards come walking out Warren Buffett and he takes a seat to watch the movie. He was only 20 feet away from me. It was amazing and I was smiling from ear to ear. One guy asked a bodyguard if he could talk to Buffett and the bodyguard said, "No".
The meeting starts out with what felt like an hour-long movie. It was produced by Susie Buffett - Warren's daughter. It was a comedy which had numerous clips: a cartoon about Warren, Charlie, and the See's Candy CEO, as judges in an American Idol spoof called "Omaha Idol". The cartoon featured the likeness of Steve Jobs, Snoop Dogg, Oprah Windfrey, Bill Gates, Arnold Schwarzenegger, and other people.
Then, they show a clip of Warren Buffett who's calling Charlie Munger to tell him to "Buy Internet Stocks!"....ahhahaa... In real-life, Warren wouldn't do that because it's outside his circle of competance. Charlie's on the other end of the phone, saying "No! No! No!". Then Warren calls Jamie Lee Curtis, who's sitting in bed, talking to Warren on the phone. Warren convinces her to call Charlie up and convince him to buy Internet stocks. Jamie calls Charlie up, and Charlie says something like, "I think Warren must have misunderstood me. I agree, we should buy Internet Stocks". It was funny to hear them talk about that.
Then Ellen DeGeneres gave a tour of the See's Candy manufacturing facility and had a little too much fun with the candy.
Interwined with the comedy clips were advertisements of several of the businesses that Berkshire owns: Dairy Queen, Coke, Geico, and many others.
The funniest part of the movie is when they had the four girls from Desperate Housewives sitting around a card table talking about the man they want to marry. They were trying to decide whether they'd marry for love or for money. Three of the girls would rather marry for love, but Nicollette Sheridan said, "Why marry a Millionaire, when you can have a Billionaire?" She pulls out Charlie Munger and he's sitting around the table with them. It was hilarious because Charlie's like 80 years old and he's got really thick glasses.
Later, Buffett was joking about how she pulled an Anna Nicole Smith move and that, "When choosing between old rich guys, pick the older one."
The movie also featured a clip from Buffett's congressional testimony about Solomon Brothers and how if one of the 8,000 employees loses money for the company, that's OK, but to lose a shred of reputation it's unacceptable.
After the movie, Buffett and Munger introduced the Board of Directors. Bill Gates was sitting front and center. Buffett then preceded to answer questions from the audience.
I'm just going to highlight some of the things Buffett said:
Buffett is pumped up and excited about his recent purchase of Iscar Metalworking for about $5 Billion. He kept saying that shareholders should be rewarded in five to ten years down the road.
Buffett is going to Israel in September to look at similar businesses to buy.
Buffett also talked about how not all businesses are attractive to him. That the owners of some businesses have big heads and want big dollars. He said he's in the middle of one such deal, and he think it's a mismatch and he will walk away, but he wants to talk to this guy so he can learn all he can from him. It was an interesting comment because it's almost as if he's an alien who walks around and sucks out the brains of everyone he speaks to.
Buffett talked about the Forest River CEO's annual letters. I think the guy wrote a book and it's recommended reading.
Warren says he's not interested in Internet stocks because he doesn't have good visibility of what an Internet company would look like in 5-10 years. He says he likes companies that will look a good bit the same 5-10 years down the road as they do now.
Buffett says there's no question that ethanol usage will grow. Munger says he doesn't like ethanol because it takes more energy to make ethanol than what you get out of it.
They both talked about how copper has gone from 70 cents to $3.50 and how oil has gone from $10 to $70.
Buffett said, "It begins with fundamentals and then it turns into speculation. What the wise man does in the beginning, the fool does in the end."
Buffett said once people get envious about something that is hot (like commodities and housing), nobody can determine the peak because it's unknown how
outrageous the prices can go.
Buffett said $45/sq ft is a good price to pay for a home. I ran the math on my own home and came out with $62.50, so I guess I overpaid. hehe
Buffett said Berkshire has 400,000 shareholders. I thought that was kinda high and it might be an error.
One person asked if it's a good time to buy Berkshire Hathaway stock. Buffett said, "No". They don't just go out and buy stocks of companies they love. They Will only buy stock when the price is right.
Around that time, I was getting tired. I had 4 hours sleep the past two days, so I went to the shopping area where all the companies feature their products - some are selling stuff and others are not.