Berkshire Hathaway's (BRK.A, Financial) (BRK.B, Financial) annual meeting will take place over the weekend of May 1. After conducting the meeting alone last year, this year Warren Buffett (Trades, Portfolio) will be re-joined by his right-hand man, Charlie Munger (Trades, Portfolio). The two legendary investors will also be joined by Vice Chairmen Gregory Abel and Ajit Jain.
This will be the first time that Buffett has visibly opened up the management of Berkshire and provided some insight into how the conglomerate will look without him at the helm. Ahead of the meeting, here are three things investors should look out for in Buffett's comments.
Thoughts on share repurchases
According to Berkshire's reports, the group repurchased $25 billion of its own stock in 2020. A recent article by Barron's suggests that the business has continued to buy back stock at a frantic pace in 2021. The financial magazine estimated that Buffett's company had repurchased $5 billion worth of stock in the first few months of 2021.
These comments seem to suggest that Berkshire is the Oracle of Omaha's favorite investment right now. As such, I will be looking for comments from him regarding the pace of repurchases and his thoughts on the conglomerate's current intrinsic value.
It's clear he believes the company is cheap. Otherwise, he wouldn't have authorized buybacks. However, it is unclear how cheap he thinks the stock is at this point, and hopefully, he will provide some guidance on that in the meeting.
I'm not expecting a solid number. Buffett has never provided his estimate of Berkshire's worth when he has been quizzed in the past. Instead, I think he will give some guidance on the pace of recent purchases, which may provide us with some additional insight.
Covid-19 losses
Berkshire owns some of the largest insurance and reinsurance companies in the world. The Coronavirus has been a significant loss event for insurance businesses, and Berkshire is no exception.
However, it has been difficult for many companies to accurately assess how significant the overall claims figure will be because there's so much uncertainty. As the pandemic has dragged on, claims in certain sectors have risen, but in other markets, mainly business interruption, the courts have favored the insurers.
It'll be interesting to see what, if anything, Buffett has to say about this whole situation. It will also be interesting to see if Berkshire has noticed opportunities it will be able to take advantage of as we advance, where other insurers may have pulled back or have or collapsed under the weight of losses.
Finally, it'll also be helpful if we hear from Ajit Jain, the head of Berkshire's insurance business, on this topic.
Berkshire Hathaway Energy
With the head of Berkshire Hathaway Energy (BHE) Greg Abel also on the stage, it will be intriguing to hear from the head of this division once again.
Abel spoke at the last annual meeting. He talked about how BHE approached its capital spending and the projects it was currently considering.
In his last annual letter, Buffett described BHE as one of Berkshire's four flagship business divisions. The business will be a key growth engine for the overall group over the next few decades. Investors should look out for Abel's comments on where he sees opportunities for growth at the moment and BHE's role in the green energy future.
This is only my personal speculation, but over the next few decades, I can see a scenario where, without Buffett, Berkshire is broken up into its component parts. In this scenario, BHE could become a significant enterprise in its own right. That's why I think it would be interesting to hear from Abel and Buffett about the future of the energy business in this meeting.
Disclosure: The author owns no share mention.
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