Gustavo Ballvé on May 3rd, 2011
Corporate Governance, Corporate Strategy, Food for thought, Home, Industries, Insurance, Investment Themes, Mental models, Portfolio Management, Risk management

As we said in the previous post, the idea here is to provide links to the best stories we’ve found on the web about the 2011 Berkshire Hathaway annual meeting. We’ll never be “the best Warren Buffett source”, by the way, and much less the most complete – this aptly-named blog is probably the choice for that.

For background on the Dave Sokol affair – and why it could even be considered a net positive for those who already considered Buffett “human” as opposed to infallible – read our previous post on the subject. Finally, when reading the stories or watching the videos always remember to keep an open eye to the writer’s biases, experiences, leanings and incentives – as well as to your own, of course. Also keep in mind the relevant subjects discussed in the meeting that just weren’t given enough media because of the Sokol affair, such as the insurance cycle and Q1 2011 as one of the worst quarters in history for the insurance industry…

Bloomberg has a great video with Charlie Munger (as usual). We transcribe a very relevant highlight just below the video.

This highlight from the above video applies to a lot more than just the Sokol affair: “How often do we have an issue like this, once every 25 years?But it’s the nature of good enterprises that they know how to accept change – even sudden, unexpected change – and go on quite creditably, and that’s what will happen at Berkshire.” (…) “I would say that the Berkshire system, which has worked very well for 50 years – maybe we had a couple of near scandals, one every 25 years (note: Salomon and Sokol) – I think we had a good record. I don’t think human nature allows you to get a record much better than that. Our system for doing that is selecting very trustworthy people and trust them immensely. That’s worked very well for us. And people become more and more trustworthy when they’ve been trusted and successful and then trusted more and are successful and so on. It’s the most efficient form of organization you can probably have – it’s a seamless web of deserved trust. And that’s what we’re trying to do, and why would we change it?”

The Financial Times’ Dan McCrum had a pair of interesting stories. The larger one is a comprehensive account of the meeting’s Q&A session, but the second one is interesting in giving voice to shareholders’ impressions about Berkshire, Buffett, his handling of the Sokol affair and so on. One of the shareholders confesses to attending the meeting as a networking event, which it truly is – in fact, it’s hard to find another place where 40,000 value investors gather for 3 days of festivities…

This very good piece by the Wall Street Journal’s Deal Journal blog interviews some fund managers and financial commentators about their opinion of the meeting. The very fact that 100% of them were satisfied with the handling of the Sokol affair – as were we – can mean two things: either we’re all biased or they really did nail it. Probably both.

The NYT’s Dealbook by Andrew Ross Sorkin – who is one of the three journalists who select questions for the meeting – published a more Sokol-focused account, which is also useful to show that the legal battle, unfortunately, is only just beginning. They also published the full statement by Sokol’s lawyer issued after the meeting.

This very quick CNBC story, almost immediately after the meeting, says that Buffett mentioned currently looking at two deals potentially as big as Lubrizol. Also says that he would have liked Johnson & Johnson’s acquisition of Synthes if they had used cash instead of shares – absolutely right.

Video: After the meeting, a quick chat with Becky Quik of CNBC. Good questions, good answers (4:45). The next video, while longer, focuses on a lot more and serves as a kind of “meeting summary”.

This is the must-watch video. Over 13 minutes long, and the Sokol affair is just the beginning – much more discussed here. Who said CNBC isn’t of use? Check out this page for more Berkshire-related videos.

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