Becky QuickHeat. Heat.Heat. Heat.Good morning everybody and welcome toGood morning everybody and welcome toGood morning everybody and welcome to CNBC's special coverage of the 2026CNBC's special coverage of the 2026CNBC's special coverage of the 2026 Berkhire Hathaway Shareholder meeting.Berkhire Hathaway Shareholder meeting.Berkhire Hathaway Shareholder meeting. I'm Becky Quick joined along with MikeI'm Becky Quick joined along with MikeI'm Becky Quick joined along with Mike Sani and we are here live in Omaha,Sani and we are here live in Omaha,Sani and we are here live in Omaha, Nebraska on the floor of the Chi CenterNebraska on the floor of the Chi CenterNebraska on the floor of the Chi Center exhibit hall. It is a new day here inexhibit hall. It is a new day here inexhibit hall. It is a new day here in Omaha. After 60 years, Warren BuffettOmaha. After 60 years, Warren BuffettOmaha. After 60 years, Warren Buffett will not be answering questions fromwill not be answering questions fromwill not be answering questions from shareholders. Instead, Greg Ael will beshareholders. Instead, Greg Ael will beshareholders. Instead, Greg Ael will be taking center stage in his first meetingtaking center stage in his first meetingtaking center stage in his first meeting as the Berkshire CEO.as the Berkshire CEO.as the Berkshire CEO.
OtherHe'll start this meeting with a 1-hour>> He'll start this meeting with a 1-hour>> He'll start this meeting with a 1-hour business update, then move on to thatbusiness update, then move on to thatbusiness update, then move on to that first Q&A session, which also willfirst Q&A session, which also willfirst Q&A session, which also will include vice chair of insuranceinclude vice chair of insuranceinclude vice chair of insurance operations Ajit Jane. starts in about 15operations Ajit Jane. starts in about 15operations Ajit Jane. starts in about 15 minutes. Let's give you a look at theminutes. Let's give you a look at theminutes. Let's give you a look at the rest of the day schedule. The first Q&Arest of the day schedule. The first Q&Arest of the day schedule. The first Q&A session will be a little more than ansession will be a little more than ansession will be a little more than an hour. After that, you can catch ourhour. After that, you can catch ourhour. After that, you can catch our halftime show with big names includinghalftime show with big names including
Otherhalftime show with big names including Accidental's Vicky Hollow and Brooks running CEO Dan Sheridan. The second session starts at 12:45 with the BNSF CEO Katie Farmer and the new president of Berkshire's Consumer Products Service and Retailing and NetJet CEO Adam Johnson joining Abel on stage after another hourong break. The official shareholder meeting will start at 3 p.m. Eastern time.
QuestionerIn fact, just a few yards from here inside the arena, shareholders are starting to take their seats. This has a little bit of a different feel this morning. Um, it's quieter.
QuestionerYes, it is.
QuestionerThere are still a lot of people here. In fact, when I was walking in, the lines were kind of out around the corner to both ends of this uh arena. Right now, you see Tim Cook is uh on this on the floor kind of getting ready to take his seat. sitting with some of the
Questionerseat. sitting with some of the directors, but um the shopping here ondirectors, but um the shopping here ondirectors, but um the shopping here on the floor has been a little muted there.the floor has been a little muted there.the floor has been a little muted there. There are a lot of people here, but uhThere are a lot of people here, but uhThere are a lot of people here, but uh not as many as we've been used to seeingnot as many as we've been used to seeingnot as many as we've been used to seeing the last couple of years when you gotthe last couple of years when you gotthe last couple of years when you got 40,000 people who are crammed into this40,000 people who are crammed into this40,000 people who are crammed into this place at once.place at once.place at once.
Questioner>> Definitely a lot of curiosity about how>> Definitely a lot of curiosity about how>> Definitely a lot of curiosity about how this is going to go and how Greg's goingthis is going to go and how Greg's goingthis is going to go and how Greg's going to handle it, but it does feel a bitto handle it, but it does feel a bitto handle it, but it does feel a bit lighter. Not much of a press.lighter. Not much of a press.lighter. Not much of a press.
Questioner>> But this is a this is an evolution in>> But this is a this is an evolution in>> But this is a this is an evolution in Berkhire Hathaway. Do have some newsBerkhire Hathaway. Do have some newsBerkhire Hathaway. Do have some news this morning, too.this morning, too.this morning, too.
Questioner>> No doubt about it. Berkhire Hathaway>> No doubt about it. Berkhire Hathaway>> No doubt about it. Berkhire Hathaway also just released first quarteralso just released first quarteralso just released first quarter results. operating earnings total 11.35results. operating earnings total 11.35results. operating earnings total 11.35 billion. That's up 18% over last year.billion. That's up 18% over last year.billion. That's up 18% over last year. The big headline from the results isThe big headline from the results isThe big headline from the results is that Berkhire's cash pile jumped to athat Berkhire's cash pile jumped to athat Berkhire's cash pile jumped to a record of nearly $400 billion, about 397record of nearly $400 billion, about 397record of nearly $400 billion, about 397 billion. Uh that's in new CEO Greg Ael'sbillion. Uh that's in new CEO Greg Ael'sbillion. Uh that's in new CEO Greg Ael's first quarter as a chief executive. Of
Questionerfirst quarter as a chief executive. Of course, Berkhire, according to the filing, sold a big chunk of stock uh in the three months, just over $24 billion. The company also bought $16 billion worth. That gives you a net sale number for the quarter of $8.1 billion out of the equity portfolio, which is over $300 billion in size. Berkhire's five main stock holdings remain the same in Q1. American Express, Apple, Bank of America, Coca-Cola, and Chevron. The company also bought back a total of $235 million in its own stock, the first buyback since the second quarter of 2024. Now, Greg Gable had told you that they were restarting stock buybacks. Yeah, he said that about a month ago when he was on Squapbox with us
Questionerand they had bought 220 or something. So, there was a lot a little bit of suspense among the investors I spoke to about whether in fact they were more
Questionerabout whether in fact they were more aggressive in buying more over the the balance of the quarter. Who knows what they've done in April,
Questioner>> right? These are only numbers through March 31st. So, this was the beginning of things. But people are wondering what they're going to do with all that cash growing up to $400 billion almost. I remember when it crossed hundred billion and people thought, "Oh my gosh, what are they going to do with this hundred billion dollar cash hoorde?" That was only 2017.
Questioner>> What they're going to do is quadruple it. That was the answer.
Questioner>> Yeah.
Questioner>> And continue to grow it. Although we have talked to some of the directors here and the things that they'll point out is that that cash hoard along without is that that cash hoard along with the $300 billion stock portfolio makes up a much smaller portion of the business than it used to because the
QuestionerI mean the market cap is over a trillion. Yeah.
QuestionerUh the book value rose to like 725 billion. So the operating business accounts for a lot more than uh than it used to. though it still remains a question because if they're not buying back their own stock when they say it's below their estimate of intrinsic value, are they waiting for something in particular? By the way, it occurred to me that uh Greg Gable himself said he bought $15 million worth of groceries. So that rounds it to a nice quarter billion uh between the company and him that they picked up in the three months,
Questionerright? taking his salary as he told us about a month ago and he's going to be plowing it back in buying shares on the open market and basically out in the after tax basis putting it all back into
Becky Quickafter tax basis putting it all back into future shares so that he's aligned with shareholders as he sees this too. Now there are um some highlights about who's out in the audience. You just saw Tim Cook. He's here along with the new CEO of Apple who
Becky Quick>> John Turnis saw him last night out and about. Um I know that Bryson Dashambo is here. He's a friend of Greg Ables and he's uh in the audience as well. But we've got a long-term Berkshire shareholder with us that you'll probably recognize as well. Bill Murray is here on set with us today and obviously you know him from Catty Shack, Groundhog Day, Lost in Translation, a million other films. You probably know that he's a Berkhire shareholder just from our coverage here in past years. But Bill, I didn't even realize you bought in in the 1970s. That's way back.
Other>> Well, I didn't do it. Good morning. I I
OtherWell, I didn't do it. Good morning. I I uh I was led to a man named Sandy Goddisman in New York who I much later found out was a close friend of Warren and did a lot of work with Warren and uh he had an account for me and and uh uh many years later I I met Warren. I thought he's such a nice fellow I'd like to help him out. Maybe I'll buy some of his stock. And then I found out that I'd owned his stock for a couple of decades already. So
QuestionerWow. Uh, so but since then I've I've just emptied all the mattresses and I'm I'm I'm all in on this thing here.
QuestionerYou've been coming for about four or five years maybe to the to the Berkhire annual meeting here. What what brings you here? Why do you keep coming back?
OtherWell, the first time I came was after I met Warren and I got a kick out of it. I mean, and a real kick out of he really makes me laugh and u and like big like
Questionermakes me laugh and u and like big like body laughs. So, I get a kick out of them and I thought, well, I'll go out there and see what the Warren and Charlie show was like and it was it lived up to everything. It was really good and uh I enjoyed sitting there in the dark with all the people who were so excited to sort of be in the club, you know. I didn't even know I was in the club, you know, and so I was like, God, I could have been here in the club all this time having, you know, walking around buying marshmallows and things and candy.
OtherKind of a little pressure on the new guy. Greg Ael's going to have to make you laugh now.
QuestionerWell, you know, he I think he's much friendlier. He I I you know, I saw him yesterday and he was really friendly.
OtherCertainly friendly. Yeah.
QuestionerSo, he's very friendly. And I think uh I think he's probably done a little
Questionerthink he's probably done a little research on it. Like I know you there's a challenge to be as funny as those two characters were. You know, that was
Otherthat was big time humor. That was very funny stuff.
QuestionerPhil, I I don't mean to put you on the spot, but as a shareholder, you probably look at this and think, okay, this is a changing of the guard. What what do you want to hear? What what makes you feel comfortable with still being a Berkshire shareholder?
QuestionerWell, uh it was you had uh Sue Decker on your show the other day and she spoke of what was going to happen to the company that it was no longer going to be the way that Warren had it where you just sort of let your companies go, let them do their own thing. You don't bother, you don't interfere. that actually Berkhire was going to provide some guidance and suggestions like and set
Questionerguidance and suggestions like and set goals for them and sort of streamline operations and just sort of tighten them tighten things up and when she said that I thought oh you mean like everybody else you know maybe that should work that should work so it was told to me by I mean my head is still ringing from the pinballs of numbers that you guys were talking about there a second ago so it'll take me a second to get my thought how many billion. What's that again?
QuestionerYeah. So,
Otherit's a pretty good cushion to operate with that.
QuestionerSo, I feel comfortable knowing that, you know, it's sort of like sitting next to a guy at a poker table. They have to have $400 billion. You figure like, well, when he's broke, I'm going to be broke.
QuestionerUm the the feel is a little different and it's an evolution. And um as somebody who is a careful observer of
Questionersomebody who is a careful observer of cultural phenomenons, what what would you have to say? Because I've talked to you in the past when you've sat and listened to Warren and Charlie. And by the way, folks, if you take a look at the stage, there's Warren Buffett walking in to the floor of the Berkhire Hathaway meeting. That's his daughter, Susie Buffett, another director of the company, sitting next to him. uh but the first time in 60 years that he's going to be sitting on the floor listening to this Q&A instead of actually taking questions from the shareholders.
WarrenWell, that'll be a great experience. I I was in a show once and for some reason I came late and uh my understudy went on in the show and I got to sit and watch our show. I was the only one of us that ever got to see our show and it was fantastic. I thought, "God dang, this is really good." I was really happy to see
Otherreally good." I was really happy to see that. So, I think he's going to have that same experience of what it's like to be there as a shareholder and and and to see how the story goes down, how how Greg tells the story.
OtherAnd you know, he's going to have his own kind of wisdom reflected back onto himself because I mean, the one thing Abel's going to do is talk a lot of continuity of the culture and the discipline and everything else.
OtherYeah.
OtherYeah. And that's a great analogy to this. What What was the show? There was the national ampoon show off Broadway and I was in it with my brother Brian and Joe Flity, Harold Ramos, Gilder Rner, John Belalushi and Paul Jacobs on the piano and it was a it was outrageous show at the time. It was a great great show.
OtherIt was worth being late for.
OtherIt was I only did it once but I'm so glad I did. I was lucky.
Otherglad I did. I was lucky.
Other>> Yeah.
Other>> You know I and I didn't get in trouble because it was just those guys.
Other>> Yeah.
Other>> Right.
Other>> Well, Bill, I know you've got to make your way uh out to the floor. I get lost going through the curtains. I do. Nice to see you.
Becky Quick>> So, we are going to head out to the meeting which is taking place in just a moment. We got to get ready to start taking these questions from the shareholders. Um, again, we are just minutes away. You can see that room starting to fill up. If you've been uh watching all of this, a lot of news that's happening today
Other>> for sure. Birkshire shares are down nearly 6% since the start of the year. So, big question now is could Abel's comments today be enough to spark some enthusiasm uh for the stock? We're going to talk uh talk about that in just a moment uh with John Rogers of Aerial
Questionermoment uh with John Rogers of Aerial Investments. I would point out a couple of things about the uh the stock investment uh over the last year which is it was at a historic peak one year ago on this very day and also a historic premium uh to uh its valuation. Since then actually other insurance stocks have actually been somewhat weak uh along the way that's dragged down the perception of Geico's value and uh obviously the valuation is moderated now. So it's about 1.4s four times book value. It had been up around 1.8 times. The other thing I guess I'd say is defensive and quality stocks have not necessarily been in favor. The S&P 500 has been very difficult to keep up with. And by the way, also uh I was going to mention on a 5-year basis. The S&P 500 has just caught up to Berkhire Hathaway's performance. It's basically been uh outperforming for that entire
Questionerbeen uh outperforming for that entire period. almost every rolling five-year period you can go back to. Uh Berkhire has outperformed. John Rogers of Ariel uh is right here in the house. He's a longtime shareholder and of course friend of Berkhire. John, good to see you.
QuestionerGreat to be here.
QuestionerUm just talk about your general thoughts as you observe this transition from from Warren as CEO to Greg Ael and and I guess what you might want articulated or clarified today. Well, you know, I think that sometimes in basketball, people think about whether Michael Jordan's the greatest of all time or LeBron James. There's no doubt that Warren Buffett's the greatest investor of all time and the greatest communicator of his investment ideas of all time. So, it's huge shoes to for Greg to fill. What I'd like to find out today is whether he's
Questionerlike to find out today is whether he's optimistic about the markets or not.
Otheroptimistic about the markets or not.optimistic about the markets or not.
QuestionerIt's been a difficult market. It's beenIt's been a difficult market. It's beenIt's been a difficult market. It's been really complicated by the war andreally complicated by the war andreally complicated by the war and everything else, and I'm wondering ifeverything else, and I'm wondering ifeverything else, and I'm wondering if his confidence is still there. Do youhis confidence is still there. Do youhis confidence is still there. Do you think his um approach to the job I Ithink his um approach to the job I Ithink his um approach to the job I I it's it's interesting to me that thatit's it's interesting to me that thatit's it's interesting to me that that Warren Buffett of course created all ofWarren Buffett of course created all ofWarren Buffett of course created all of this value at least initiallythis value at least initiallythis value at least initially principally as a stock picker. He was aprincipally as a stock picker. He was aprincipally as a stock picker. He was a market junkie from a young age and thatmarket junkie from a young age and thatmarket junkie from a young age and that was sort of his window on this and thenwas sort of his window on this and thenwas sort of his window on this and then he bought whole businesses and he'she bought whole businesses and he'she bought whole businesses and he's become a massive insurance operator andbecome a massive insurance operator andbecome a massive insurance operator and all the rest of it. Whereas Greg hasall the rest of it. Whereas Greg hasall the rest of it. Whereas Greg has come from industry he's owned wholecome from industry he's owned wholecome from industry he's owned whole businesses been a CEO made acquisitionsbusinesses been a CEO made acquisitionsbusinesses been a CEO made acquisitions in that way. So, I wonder if he's stillin that way. So, I wonder if he's stillin that way. So, I wonder if he's still going to think about the the sort ofgoing to think about the the sort ofgoing to think about the the sort of public equity portfolio as a a principalpublic equity portfolio as a a principalpublic equity portfolio as a a principal driver of of value going ahead or ifdriver of of value going ahead or ifdriver of of value going ahead or if he's going to look for ways to maybe do
Questionerhe's going to look for ways to maybe do things with the operating side.
QuestionerI would think he will continue Warren's playbook and Charlie's playbook. It's worked so extraordinarily well. It's created so much wealth and the board really believes in Warren's beliefs and of course Warren is still there. So I think Greg will follow the pattern that has built all this opportunity to create real massive generational wealth.
QuestionerThere's a line of thinking that Berkhire Hathaway at a time when everybody is focusing on the types of businesses or even just you know financial balance sheets that can't be dislocated by AI or anything else that Berkhire Hathaway should come to toward the top of the list just given its asset mix and all the rest. I mean is that something that you think about in terms of you know the enduring value of the company? Well, I I do I think
Questionerof the company? Well, I I do I think there's a huge mode around Berkhire and you walk around the uh center today and you see all these marvelous businesses invested in that you would think they're so unique and so special. They really can't be replicated. So, I think there's so much value here in the portfolio and I think it's going to perform very very well coming out of this sort of downturn over the last year. Does it, you know, that there's one line of thought that almost $400 billion in cash now on the balance sheet, uh, that perhaps investors more broadly may not have as much confidence in allowing Greg to sit on that much cash because who knows how he's going to allocate it whereas people had some comfort level with Warren. But I think again, Warren's still there, the board's still there, Warren's such a presence. Greg has learned so much from Warren.
QuestionerGreg has learned so much from Warren. So, I know he'll be very careful with making those investment choices and how he uses the cash.
QuestionerAnd in general, I mean, your thoughts on the market. We have this other sort of tech concentrated uh S&P 500 run to new records, but the rest of the market, I guess, is also found some pockets of strength. There are and I've been looking at of course the leisure oriented stocks that I think are really cheap companies like Norwegian Cruise Lines and of course my favorite Madison Square Garden Entertainment that owns the Garden and is going to benefit from the Knicks run to the World Championship.
QuestionerNo doubt about it. Uh so a Chicago guy, you're okay betting on the Knicks that way.
WarrenI really am. It's a wonderful team. It's really remarkable how um sports team values are now getting reflected.
Questionervalues are now getting reflected. There's a couple of public market plays and you know the Atlanta Braves and all the rest of it all of a sudden and the group that comes to this meeting seems interested in those types of idiosyncratic type companies. They really do. You know Melody Hopson my coco has started project level to invest in women's sports related franchises and teams. It's a wonderful thing. And I look at the NBA you know it's going to be a worldwide phenomenon. You're going to have NBA leagues someday in Africa. You're going to have them in Europe. You're going to have them in Asia. All those eyeballs will be watching NBA talent. And you can see world championships. It'll be truly world championship. So, still a lot of value in professional sports.
Other>> John Rogers, thanks so much for getting us kicked off today. Really appreciate
Otherus kicked off today. Really appreciate it. Enjoy the meeting. Right now, weit. Enjoy the meeting. Right now, weit. Enjoy the meeting. Right now, we take you to this year's annualtake you to this year's annualtake you to this year's annual Berkhire Hathway shareholder meetingBerkhire Hathway shareholder meetingBerkhire Hathway shareholder meeting right now.Tell me doctor, where are we going thisTell me doctor, where are we going thisTell me doctor, where are we going this time?is to live thisis to live thisis to live this night.All I wanted to doAll I wanted to doAll I wanted to do was play my guitar and saywas play my guitar and saywas play my guitar and say take me away.take me away.take me away. I don't mind. But you better promise meI don't mind. But you better promise meI don't mind. But you better promise me I'll be back in time.I'll be back in time.Give me back in time.Give me back in time.Give me back in time. Give me back in time.Heat. Heat.Last Timeto die.Heat. Heat.Back in time
WarrenGood morning and welcome to Omaha.I want to welcome all our owners, ourI want to welcome all our owners, ourI want to welcome all our owners, our our long-term owners, those that haveour long-term owners, those that haveour long-term owners, those that have recently become a shareholder. Again,recently become a shareholder. Again,recently become a shareholder. Again, thank you for joining us in Omaha forthank you for joining us in Omaha forthank you for joining us in Omaha for this for for the uh for the meeting.this for for the uh for the meeting.this for for the uh for the meeting. Obviously, very excited by this. And IObviously, very excited by this. And IObviously, very excited by this. And I want to also touch on we have manywant to also touch on we have manywant to also touch on we have many people here just experiencing it. So, uhpeople here just experiencing it. So, uhpeople here just experiencing it. So, uh just great to be together. The firstjust great to be together. The firstjust great to be together. The first thing I just want to touch on, we hadthing I just want to touch on, we hadthing I just want to touch on, we had the video, incredible 60 years. The onethe video, incredible 60 years. The onethe video, incredible 60 years. The one thing I did note that we'vething I did note that we'vething I did note that we've traditionally had was we've often had atraditionally had was we've often had a
Warrentraditionally had was we've often had a movie which included the credits that came with it and the mo the video and the we'll have a few other videos that I'll touch on later but we did have a uh an exceptional producer and executive producer and I want to thank her because she it wasn't acknowledged Susie Buffett. Thank you.
WarrenAnd then the director who's always done the movies again did this video and we'll do our company videos that I'll touch on shortly. Uh Brad Underwood. Thank you, Brad.
WarrenNow, we have a great day planned and it's really all around our owners. It's our culture, but most importantly, this is our owner's day, our owners weekend. Uh we have an exceptional group of owners and we're just passionate to be here. We'll communicate a variety of things around Berkshire and and our and our insurance our operating subsidiaries and and the in Berkshire as a whole. But
Otherand and the in Berkshire as a whole. But what we really treasure is thewhat we really treasure is thewhat we really treasure is the engagement with our again our owners,engagement with our again our owners,engagement with our again our owners, our shareholders and the and theour shareholders and the and theour shareholders and the and the questions that come. So thank you.questions that come. So thank you.questions that come. So thank you. Really appreciate it.
OtherNow to touch on this morning, we haveNow to touch on this morning, we haveNow to touch on this morning, we have three sessions that we'll we'll we'llthree sessions that we'll we'll we'llthree sessions that we'll we'll we'll cover over the morning early afternoon.cover over the morning early afternoon.cover over the morning early afternoon. The first session, there'll be someThe first session, there'll be someThe first session, there'll be some pleasantries here and then we'll movepleasantries here and then we'll movepleasantries here and then we'll move into a business update. Uh that'll beinto a business update. Uh that'll beinto a business update. Uh that'll be the first session. As we move into thethe first session. As we move into thethe first session. As we move into the second session, I'll have a Jane join ussecond session, I'll have a Jane join ussecond session, I'll have a Jane join us here on stage. We'll obviously take anyhere on stage. We'll obviously take anyhere on stage. We'll obviously take any questions. So, it'll be a question andquestions. So, it'll be a question andquestions. So, it'll be a question and answer period. We'll do the traditionalanswer period. We'll do the traditionalanswer period. We'll do the traditional uh rotating between our shareholders anduh rotating between our shareholders anduh rotating between our shareholders and Becky. Becky, thank you for being here.Becky. Becky, thank you for being here.Becky. Becky, thank you for being here. Um, and we'll do the traditional Q&AUm, and we'll do the traditional Q&AUm, and we'll do the traditional Q&A and then that session will wrap and thenand then that session will wrap and thenand then that session will wrap and then we'll move to a third session that willwe'll move to a third session that willwe'll move to a third session that will have Katie Farmer. Katie is a been thehave Katie Farmer. Katie is a been thehave Katie Farmer. Katie is a been the uh CEO of
Otheruh CEO ofuh CEO of BNSFR railway for for the past fiveBNSFR railway for for the past fiveBNSFR railway for for the past five years. And then we'll also be joined byyears. And then we'll also be joined byyears. And then we'll also be joined by Adam Johnson who is a uh 10ear CEOAdam Johnson who is a uh 10ear CEOAdam Johnson who is a uh 10ear CEO 10year CEO of uh NetJets but also took10year CEO of uh NetJets but also took10year CEO of uh NetJets but also took on an incremental role recently and uhon an incremental role recently and uhon an incremental role recently and uh we announced that in December. Adam tookwe announced that in December. Adam tookwe announced that in December. Adam took on the consumer products group, serviceson the consumer products group, serviceson the consumer products group, services and retailing group. So we'll have themand retailing group. So we'll have themand retailing group. So we'll have them join us for the third session. Again,join us for the third session. Again,join us for the third session. Again, the traditional question and answerthe traditional question and answerthe traditional question and answer period.period.period. The only thing that I would I would sayThe only thing that I would I would sayThe only thing that I would I would say this is also a little bit incremental orthis is also a little bit incremental orthis is also a little bit incremental or uh different from past uh meetings.uh different from past uh meetings.uh different from past uh meetings. Throughout this morning, we'll haveThroughout this morning, we'll haveThroughout this morning, we'll have three different videosthree different videosthree different videos uh associated with operating companies.uh associated with operating companies.uh associated with operating companies. The first one will be from GEICO. NancyThe first one will be from GEICO. NancyThe first one will be from GEICO. Nancy Pierce, who's the CEO of of Geico,Pierce, who's the CEO of of Geico,Pierce, who's the CEO of of Geico, long-termlong-termlong-term uh veteran and wealth of experience withuh veteran and wealth of experience withuh veteran and wealth of experience with GEICO. She's over in the managerGEICO. She's over in the managerGEICO. She's over in the manager section. She'll she'll narrate a videosection. She'll she'll narrate a videosection. She'll she'll narrate a video on GEICO. And then we'll also have a
Greg Abelon GEICO. And then we'll also have a video on netjets narrated by Adam and a video on netjets narrated by Adam and a video on netjets narrated by Adam and a video narrated video narrated video narrated by Katie on BNSF the railway. So that'll that'll be incremental. Now the that'll be incremental. Now the that'll be incremental. Now the fundamental purpose of both having the fundamental purpose of both having the fundamental purpose of both having the ma some incremental managers join us on ma some incremental managers join us on ma some incremental managers join us on the stage and the videos. We have an the stage and the videos. We have an the stage and the videos. We have an exceptional team at Berkhire. The exceptional team at Berkhire. The exceptional team at Berkhire. The depth of management is very deep. depth of management is very deep. depth of management is very deep. Obviously we have a number of Obviously we have a number of Obviously we have a number of subsidiaries but the depth of our team subsidiaries but the depth of our team subsidiaries but the depth of our team is great. And this is an opportunity is great. And this is an opportunity is great. And this is an opportunity through the videos or having incremental through the videos or having incremental through the videos or having incremental leaders on stage. It's an inc it's an leaders on stage. It's an inc it's an leaders on stage. It's an inc it's an opportunity for you as our owners to opportunity for you as our owners to opportunity for you as our owners to both learn more about those businesses both learn more about those businesses both learn more about those businesses but also about the leaders that lead but also about the leaders that lead but also about the leaders that lead them and that will be a format that as them and that will be a format that as them and that will be a format that as we go forward we'll build on i.e. we can we go forward we'll build on i.e. we can we go forward we'll build on i.e. we can introduce you to other leaders either on introduce you to other leaders either on introduce you to other leaders either on stage or through the through the videos. stage or through the through the videos. stage or through the through the videos. So let's move to the formalities. Now
OtherSo let's move to the formalities. Now I'm going to introduce our ourI'm going to introduce our ourI'm going to introduce our our directors. I'm going to do itdirectors. I'm going to do itdirectors. I'm going to do it alphabetically. So, if they could justalphabetically. So, if they could justalphabetically. So, if they could just uh acknowledge with a wave or howeveruh acknowledge with a wave or howeveruh acknowledge with a wave or however they would like to acknowledge our ourthey would like to acknowledge our ourthey would like to acknowledge our our shareholders, our owners.shareholders, our owners.shareholders, our owners. Start with Howard Buffett,Susie Buffett,our chairman Warren Buffett,Warren, we have a little surprise thereWarren, we have a little surprise thereWarren, we have a little surprise there for you.for you.for you. If you look up to the right, you'll seeIf you look up to the right, you'll seeIf you look up to the right, you'll see a jerseya jerseya jersey and a number. We are We are retiring.worn appropriately. It's number 60 forworn appropriately. It's number 60 forworn appropriately. It's number 60 for 60 years as our CEO of Berkhire.60 years as our CEO of Berkhire.60 years as our CEO of Berkhire. Equally, it's being uh it's it's placedEqually, it's being uh it's it's placedEqually, it's being uh it's it's placed beside Charlie's jersey, number 45.beside Charlie's jersey, number 45.beside Charlie's jersey, number 45. Charlie was with Berkhire for 45Charlie was with Berkhire for 45Charlie was with Berkhire for 45 years, obviously, our vice chairman, andyears, obviously, our vice chairman, andyears, obviously, our vice chairman, and a treasured partner of Warren, and it'sa treasured partner of Warren, and it'sa treasured partner of Warren, and it's just reflective of a great partnership.just reflective of a great partnership.just reflective of a great partnership. Thank you, Warren.I'm happy to report both those jerseysI'm happy to report both those jerseysI'm happy to report both those jerseys will remain in the rafterswill remain in the rafterswill remain in the rafters uh for the years to come. So great.Now we'll continue with our directors.Now we'll continue with our directors.Now we'll continue with our directors. Steve Burke,Ken Chanel,Chris Davis,our lead director, and I'll just add aour lead director, and I'll just add a
Warrenour lead director, and I'll just add a point here because uh this it's Sue's 20th year as a director of Berkshire. Thank you for being our lead director and all you do. Sue Decker, Charlotte Diamond, AI Jane. I would just add for relative to Ajit obviously been our vice chairman for of insurance for nine years. I had many years to be his his co-chairman. But one thing I just want to touch on Ajit joined Berkshire in 1986. So not only is he a director just been really the architect of our insurance business. So again, thank you Azite Tom Murphy Jr. Wally White Whitmer.
Greg AbelNow I I can start to I think my eyes have adjusted a bit to the lights and everyone out there. And I I have to tell a little bit of a story here because when when Warren announced the transition last year and I was sitting here and couldn't been more proud, but I don't mind sharing. The first thing that flashed through my mind was, geez, we've already booked this arena
Otherand I know the directors would be here and I knew I would have some family here, but it's wonderful that I'll have you here. So, thank you. Now, back to a great tradition. I'm going to throw the mic over to Warren. Warren, thank you.
WarrenYeah. This is not my show today, but there are two uh well there are two anniversaries uh that uh we're kind of celebrating today. One is the fact that the uh board has had what I will uh generously call a refreshment uh which they voted and uh uh you couldn't have made a better decision. Uh they did it unanimously. It was surprised all the board when I announced it last year except uh for Susie and uh and uh uh that's been 100% successful. Greg is doing uh everything I did and then some and he's doing it better in all cases and he's got he's he's the right person. So that decision
Warrenthat decision we score 100% on. Thank you, Warren.
QuestionerThank you.
OtherThank you.
OtherThank you.
WarrenBut there's another anniversary today that uh uh I'd like to spend just a minute telling you about because uh about 10 years ago, we made a commitment uh to essentially move 10% of the resources of Berkshire Haway. Uh we turned it over to another uh person who was not that well known at the time. And we did that uh by spending uh roughly $35 billion uh buying uh stock in Apple Corp. and uh and we were going to have that uh under the management. We're we're turning that money over to the management essentially of Apple to make Berkshire look good and without any work by us which is our preferred way of operating and I would like to report that 10 years later several things are happening. One is the 35 billion uh counting dividends, realized appreciation, unrealized appreciation, but that has turned into 185 billion
Warrenbut that has turned into 185 billion uh tax.And uh and I didn't have to do a damn thing. I mean, so it it it uh it's, you know, we're very big around here on having other people do the work and collect the money, but that that has been uh a success and we we do look at marginable securities as being businesses. That doesn't mean we hold all of them forever. But we still our largest holding is Apple. And Apple has a very interesting history that some of you may be familiar with. But one one item is they're they're observing an anniversary themselves. I think just within the last week or so. uh they they celebrated their 50th anniversary and uh uh you know 50 years is seems like a long time but Apple seems like a very new company and when Tim Cook went into uh the top position at Apple uh he's he succeeded allegedly uh you know that that uh
Warrenuh you know that that uh uh Steve Jobs was everybody in Americauh Steve Jobs was everybody in Americauh Steve Jobs was everybody in America knew his name and not many people knewknew his name and not many people knewknew his name and not many people knew Tim's nameTim's nameTim's name andandand Apple had had thisApple had had thisApple had had this roller coaster experience whereroller coaster experience whereroller coaster experience where where uhwhere uhwhere uh the two Steves had started in the garagethe two Steves had started in the garagethe two Steves had started in the garage or something 50 years earlier. And andor something 50 years earlier. And andor something 50 years earlier. And and thenthenthen I'm not sure how many of you know, butI'm not sure how many of you know, butI'm not sure how many of you know, but but Steve was thrown out for a while. Hebut Steve was thrown out for a while. Hebut Steve was thrown out for a while. He came back in.came back in.came back in. He did these marvelous things in termsHe did these marvelous things in termsHe did these marvelous things in terms of developing products.of developing products.of developing products. Uh and then he had an untimelyUh and then he had an untimelyUh and then he had an untimely uh deathuh deathuh death and uhand uhand uh everybody said who's going to manageeverybody said who's going to manageeverybody said who's going to manage Apple when Steve Jobs isn't around andApple when Steve Jobs isn't around andApple when Steve Jobs isn't around and uhuhuh probablyprobablyprobably just a very few percentage pointsjust a very few percentage pointsjust a very few percentage points of American investors had even heard ofof American investors had even heard ofof American investors had even heard of Tim CookTim CookTim Cook and we in effectand we in effectand we in effect Tim took over about 14 years ago whenTim took over about 14 years ago whenTim took over about 14 years ago when when when uh Steve diedwhen when uh Steve diedwhen when uh Steve died but when we made our investmentbut when we made our investmentbut when we made our investment uh and turned over 10% of the resourcesuh and turned over 10% of the resourcesuh and turned over 10% of the resources of Birkshireof Birkshireof Birkshire uh we were turning it over to Timuh we were turning it over to Timuh we were turning it over to Tim andand
Warrenand as As I say, he has turned that intoas As I say, he has turned that intoas As I say, he has turned that into 185 billion or something pre-tax,185 billion or something pre-tax,185 billion or something pre-tax, which we won't bother to compare to ourwhich we won't bother to compare to ourwhich we won't bother to compare to our record with. Uh, and but Tim hasrecord with. Uh, and but Tim hasrecord with. Uh, and but Tim has announcedannouncedannounced that he'sthat he'sthat he's uh retiring as well. That's that's anuh retiring as well. That's that's anuh retiring as well. That's that's an announcement that's just been made inannouncement that's just been made inannouncement that's just been made in the last couple of years. And so I thinkthe last couple of years. And so I thinkthe last couple of years. And so I think it's appropriateit's appropriateit's appropriate if if Tim would take gay bow and ourif if Tim would take gay bow and ourif if Tim would take gay bow and our shareholders would say thanks to him.shareholders would say thanks to him.shareholders would say thanks to him. And Tim is right by me.How would you like to step into theHow would you like to step into theHow would you like to step into the shoes of Steve and and come through withshoes of Steve and and come through withshoes of Steve and and come through with his record? I mean, it it's one of thehis record? I mean, it it's one of thehis record? I mean, it it's one of the miracles of of American businessmiracles of of American businessmiracles of of American business management. And so anyway, thank you,management. And so anyway, thank you,management. And so anyway, thank you, Tim. And I'm going to turn things backTim. And I'm going to turn things backTim. And I'm going to turn things back to uh to Greg and we'll go meeting
Greg AbelTim, on behalf of our shareholders andTim, on behalf of our shareholders andTim, on behalf of our shareholders and owners here, we echo everything Warrenowners here, we echo everything Warrenowners here, we echo everything Warren said and and I would add one thing.said and and I would add one thing.said and and I would add one thing. You've truly been a global ambassadorYou've truly been a global ambassadorYou've truly been a global ambassador around the world for American business.around the world for American business.around the world for American business. Thank you.
OtherAnd Warren, thank you for taking the mic
QuestionerAnd Warren, thank you for taking the mic there. I am reminded I have a cherry coke here in your honor, peanut brittle in Charlie's honor, and that seat remains open. Thank you, Warren.
QuestionerNow, we'll move to a little more a few more formalities and get into the uh business update.
Greg Abelreally started with the letter to our owners and and shareholders at the end of February. And I touched on it in the letter. I highlighted that the first thing as I as we transitioned, I wrote a letter to our 400,000 employees touching on culture and values. And the purpose of that letter was to highlight that was not going to change. It had never changed in Berkshire under Warren 60 years aspects of evolved but they don't our our our culture and values did not change and that as we did the transition that was not going to change either it's the bedrock of Berkhire that culture
Questionerthe bedrock of Berkhire that culture and values. Now um one of the values we've often touched on here is integrity. There's no better example of Warren's remarkable demonstration of that when he testified before Congress in 1991 as the chairman and CEO of Solomon Brothers. I like to call it Berkhire's Anthem, but I wanted to uh make sure we we we had that opportunity to um see the video today. Berkhire's Anthem.
WarrenI thank you for the opportunity to appear before this subcommittee. I would like to start by apologizing for the acts that have brought us here. The nation has a right to expect its rules and laws to be obeyed and that Solomon certain of these were broken. Almost all of Solomon's 8,000 employees regret this as deeply as I do and I apologize on their behalf as well as mine. My job is to deal with both the past and
OtherMy job is to deal with both the past and the future. The past actions of Solomon are presently causing our 8,000 employees and their families to bear a stain. Virtually all of these employees are hardworking, able, and honest. I want to find out exactly what happened in the past so that this stain is borne by the guilty few and removed from the innocent. To help do this, I promise to you, Mr. chairman and to the American people Solomon's wholehearted cooperation with all authorities. These authorities have the power of subpoena, the ability to immunize witnesses, and the power to prosecute for perjury. Our internal investigation has not had these tools. We welcome their use. As to the future, the submission to this subcommittee details actions that I believe will make Solomon the leader within the financial services industry in controls and compliance procedures.
Warrenin controls and compliance procedures. But in the end, a spirit about compliance is as important or more so than words about compliance. I want the right words and I want the full range of internal controls. But I also have asked every Solomon employee to be his or her own compliance officer. After they first obey all rules, I then want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper to be read by their spouses, children, and friends with the reporting done by an informed and critical reporter. If they follow this test, they need not fear my other message to them. Lose money for the firm and I will be understanding. lose a shred of reputation for the firm and I will be ruthless. I welcome your questions.
OtherBerkhire's anthem that's embedded in Berkhire.
Greg AbelBerkhire. We send a a reminder to our it's a greatWe send a a reminder to our it's a greatWe send a a reminder to our it's a great reminder to our CEOs and employees, ourreminder to our CEOs and employees, ourreminder to our CEOs and employees, our 400,000 employees and and we do uh400,000 employees and and we do uh400,000 employees and and we do uh remind them of that including I ask ourremind them of that including I ask ourremind them of that including I ask our CEOs each year just sent out a letter inCEOs each year just sent out a letter inCEOs each year just sent out a letter in again in in the first quarter askingagain in in the first quarter askingagain in in the first quarter asking them as they run their business as theythem as they run their business as theythem as they run their business as they make those daily decisions they makemake those daily decisions they makemake those daily decisions they make apply that simple test that Warrenapply that simple test that Warrenapply that simple test that Warren highlighted the news newspaper test.highlighted the news newspaper test.highlighted the news newspaper test. Now moving to the more formal update onNow moving to the more formal update onNow moving to the more formal update on our numbers. We in fine tradition weour numbers. We in fine tradition weour numbers. We in fine tradition we always start with our exhibit hall salesalways start with our exhibit hall salesalways start with our exhibit hall sales from the uh exhibit hall yesterday. Andfrom the uh exhibit hall yesterday. Andfrom the uh exhibit hall yesterday. And uh the the interesting thing is uh lastuh the the interesting thing is uh lastuh the the interesting thing is uh last year was a record as you may guess butyear was a record as you may guess butyear was a record as you may guess but fortunately this year sales um were veryfortunately this year sales um were veryfortunately this year sales um were very consistent with 24. We're we'reconsistent with 24. We're we'reconsistent with 24. We're we're basically at 1 and a.5 million sales.basically at 1 and a.5 million sales.basically at 1 and a.5 million sales. But the the point is we'd always love toBut the the point is we'd always love toBut the the point is we'd always love to get to 2 million and we're not thereget to 2 million and we're not thereget to 2 million and we're not there yet. So we've got something to work on.
Greg Abelyet. So we've got something to work on. Um but but importantly what the what the exhibit hall represents is our businesses showing their products and services and you get to see this great commitment of our of our leadership team and their passion for Berkshire and their passion for the owners. I was fortunate to spend some time going through the exhibit hall yesterday and that's a wonderful experience because I get to we're we're we're getting the opportunity to engage with all of you as owners. So, um love we we we treasure the exhibit hall and what a what a great experience and I'll just add it's open till 4:00 today and feel free to spend a little money. Now truly moving to the more formal aspects of the business update. We issued our 10Q this morning and had the related press release. You can see the results and I'll I'll touch on those. Uh
Greg Abelresults and I'll I'll touch on those. Uh I'll start with Berkhire just as a whole. Obviously we have our insurance as as I've referenced as our heart of uh heart of Berkhire was our foundation. But as we move to the non- insurance businesses, we're really fortunate to have a number of businesses in there, but in their aggregate, they're fundamental and and really central to American businesses and American industry and to the American uh consumer. And when I combine those, it's really the unique opportunity we have to excel across those businesses. And and that will continue. It's been our focus and it'll very much continue to be our focus. If I start by looking at these results, I'll start with the insurance, total insurance. And I'm starting there because there's a couple really important points to make. You can see in 2026, the first quarter,
Ajit JainYou can see in 2026, the first quarter, we're actually up quarter on quarter. And yet in the letter that I sent out just in February highlighted the fact that we unlikely to see stronger results in 2026. But there are some important points here. In 2025, we have an $860 million after tax uh charge associated with California wildfires that we insured. The adjustment's not so important. It's just a highlight that the 2026 results and what we're feeling in the insurance uh industry right now, there's two things. One, our 2026 results do not reflect any catastro catastrophic events. It was a pretty benign period. There were some storms in the northeast part of the United States, but relative to 2025 and past years, very benign. And and that highlights again that the insurance our insurance businesses, but the the industry as a whole, the pricing
Ajit Jainthe industry as a whole, the pricing we've talked about that hardening, i.e., can you get the proper premium for risk? It's becoming a more challenging market. What's driving that over when you see a benign environment and I'll touch on further results another layer but you start to see competition coming into the industry. They bring a variety of products and forms but it's really they're bringing capital into the industry. So just wanted to really highlight we still see that as a softening market and I'll expand on that. Now when we discuss insurance we all we have two core objectives at Berkshire we want to underwrite at a profit so create a profit for our ultimately for a share we'll just put truly underwrite at a combined ratio I'll come back to it because there's a lot of insurance jargon here and there's a lot of numbers so I'll come back to it and then the
Greg Abelso I'll come back to it and then the second core objective is to increase our float now the insurance jargon and and the numbers on here. Go to the combined ratio on the left and go way over to the right. The 10-year average 93%. I'll give you a little bit of color here. If we have a $100 premium that comes in associated with a policy, the 93% represents the costs incurred associated with that premium. It can be the cost of writing the premium, the commissions, or the loss reserve we set up. the 7% i.e. $7 on $100 is our pre is our profit, our operating profit on that premium. And then if I go back to the $93, just roughly $23 of that would be the expenses, the administration of of running the business. And that's that's just an average. It varies across our businesses and across it varies across the uh the the industry. The other $70
Ajit Jainthe uh the the industry. The other $70 and this is very important. That's actually what goes down into float. So when I you see our float growing, we take that $70, it goes into our float and we'll incur premiums against it over the years to come. And when the premium shows up, we pay out against that 70. But if you take a simple small commercial business or personal insurance that that $70 effectively gets paid out likely over a 3 to four year period that premium sits there as float. We earn on it and Warren's referenced it many times many times. It's a valued part of of Berkshire and and and it's really the opportunity to continue to create value for for you as our owners and and shareholders. You can see on the float we've going back to 2015. It's effectively doubled through 2025. There's a small increase in the current quarter, but
Ajit Jainquarter, but I wouldn't I I wanted you to all see it, but it it's not uh the fact it increased. It could have decreased because it's just subject to the payment cycle we're in. The really core and important objective is that we grow it over the long run. And we'll continue to provide those type of updates to you as our as our owners. Now, if I go back up to the underwriting results and you see the combined ratio again, but we'll we'll focus on 2026. Um, primary and reinsurance, they're both 87% 89.6%. The amazing thing there is that there's an eight in that number. You can, again, our 10-year average is in the 93%. So we're actually realizing more operating insurance income profit there. Again, what's driving that? A very benign environment when you think of the catastrophic environment we insure into. The last time there was a hurricane that
Ajit JainThe last time there was a hurricane that hit landfall in the US was 19 months ago. So our our quarterly results our results last year do not reflect those type of outcomes. Again that means we have more capital coming into that industry. Yes, we like those results. But the reality is as that business as our insurance business softens and we cannot realize the value we should for the related risk ajet and our insurance team across the businesses. We start writing less premium. We still want to write it at an underwriting profit because we'll there's still opportunities there and there's there's a number of risks we'll ensure, but we'll be much more cautious and specifically across the the primary and reinsurance uh businesses. Now, let's move to GEICO. As I highlighted, we have a new CEO. We're fortunate to have uh Nancy leading that team. Um they even have a better
Greg Abelthat team. Um they even have a better combined ratio 87.3%. That means associated with that business 12% plus operating income coming off of each dollar of premium we write there. Um exceptional result. What's driven that is that four or five years ago we the GEICO team stepped back and said that they felt they weren't um relative to the risk getting the proper premium the proper price for risk and over the last four years we've seen a bet we have worked hard the GEICO team worked hard to get the proper bounce across that that meant our premiums went up for our customers across certain classes of drivers. We they worked hard to segment that customer. And by the way, that happened across the the auto industry. Generally speaking, you saw saw an increase in in the overall premium as they they manage that underlying risk. Again, what's that
Greg Abelthat underlying risk. Again, what's that mean to the industry? What's that mean to Geico?
Greg AbelWell, one, there's a lot of folks out there pursuing those customers. Anytime you increase a customer's insurance premium and and especially over a period of time and this is I'm talking about both Geico and our competitors. Listen, people start evaluating and shopping and we've we've seen unprecedented shopping activity across the auto space and you see the advertising that's out there. They're pursuing customers and they're pursuing the Geico customers. So yes, we there there's a an important balance I want to highlight to to all of you is that and this is what our GEICO team's working on. Yes, we have to get the price to risk right, but there's two other important things we really need to balance. The second piece is we really do want to uh retain our customers.
Greg Abeldo want to uh retain our customers. There's no more valued customer than our Geico customers. Many of you as shareholders and owners of Berkshire are Geico customers. We want to retain all of you. We want to retain every Geico customer. So, as we found that right price to risk, the next challenge is making sure we retain our customers. And Nancy and her team have that as a clear objective and they're working hard on that. And then the third piece of that balance is to grow GEICO. How do we measure growth growth in that industry? It's policies enforce. And if I touch on uh what we've experienced as growth in GEICO, if we go back to last quarter 2025 versus this quarter uh ending March of uh this year, our policies in force grew by 2%. Um, now compare that to a comp uh the number one competitor in our industry, Progressive. They just announced their
Greg AbelProgressive. They just announced their first quarter results. They grew by 11%. And our team at Geico fully acknowledge, as I said, that balance that they have to find across those uh the the three metrics, including including growth. It's not going to be easy to just restart the growth engine. We acknowledge that. But they understand the objective and as we go through 26 and into 2027, two important um objectives as I said they have they have is that okay let's retain our customers and let's um start growing Geico. Uh again the last thing I'll just touch on the insurance business and it's uh um Tokyo Marine. I'm not going to expand a lot but other than we announced the transaction in the fourth quarter of I mean in the fourth week of March a great transaction by Ajit and his team and and it's a strategic transaction in that and I'm
Greg Abelstrategic transaction in that and I'm highlighting that because yes there's a financial aspect of it and we're thrilled with that but it is a long-term strategic partnership and when Ajit's on stage I'll have them I'll have him expand on that. So well done Aene. Thank you to you and your team. A great great transaction for Berkshire. Now we'll move to our our non insurance businesses. I'll start with BNSF. As I've highlighted, a number of our non-insurance businesses provide critical product services. is BNSF is a great example of that. 32,500 m of track in the west moving core products for a number of customers that touch every industry uh in the in the US. Um you'll see the results some some improvement there. But what we really want to highlight today and and Katie will be joining me on stage and and she'll touch on this is that um we we have a lot lot of work we know to do at
Greg Abelhave a lot lot of work we know to do at BNSF. We have a great group of employees have been working very hard I would say on the ground boots on the ground. So, you've heard me talk in the past that we have to work hard in our yards and our and work on how we can move our our cars quicker and and meet our our customers expectations. And we're doing a a very good job on the customer service side, but we've recognized we've got to get better operationally. Our team's also very been very focused on uh what resources do we have? Do we have uh too many locomotives? Cuz actually too many locomotives, it sounds counterintuitive, but can be a problem. You're just not as one, you're not as efficient, but the congestion and everything comes with. So our team's been very focused on that. And then how do we best use our employees? Well, that's something our
Greg Abelemployees? Well, that's something our team's working hard on, but uh and we're working hard to become more efficient and more effective. But we also have to very much recognize where we are versus our industry peers. This is the six class one railroads that operate in the US and we're one of them. And you can see that last year we were fifth out of six. And that's a reality of where we are. But we're also getting better and we are going to get better. We recognize that this performance is we've our our as I've said our our teams have worked hard but there's a lot of room for improvement. Now the good news is if I look at it in 2025 and what we have here is our operating margin. So the 34 1.5% you see for Berkhire that's the operating profit uh that came back to to BNSF associated with its underlying operations. That operating
Greg Abelunderlying operations. That operating margin improved by 2 and a.5% 250 basismargin improved by 2 and a.5% 250 basismargin improved by 2 and a.5% 250 basis points. That's a very positive outcomepoints. That's a very positive outcomepoints. That's a very positive outcome obviously and by the way in fairness toobviously and by the way in fairness toobviously and by the way in fairness to our team that's the work they've beenour team that's the work they've beenour team that's the work they've been putting in that was that on a nominalputting in that was that on a nominalputting in that was that on a nominal basis that was the largest improvementbasis that was the largest improvementbasis that was the largest improvement across the uh our five peers. So we'reacross the uh our five peers. So we'reacross the uh our five peers. So we're pleased with that but we know there's apleased with that but we know there's apleased with that but we know there's a lot of work to be done. If you look atlot of work to be done. If you look atlot of work to be done. If you look at our first quarter results, happy toour first quarter results, happy toour first quarter results, happy to report that, okay, we went from fifth toreport that, okay, we went from fifth toreport that, okay, we went from fifth to fourth, but our team would be the firstfourth, but our team would be the firstfourth, but our team would be the first to say there's a lot more to be done.to say there's a lot more to be done.to say there's a lot more to be done. And if you look at our overall operatingAnd if you look at our overall operatingAnd if you look at our overall operating margin there, very consistent with themargin there, very consistent with themargin there, very consistent with the result last year and the efficiencyresult last year and the efficiencyresult last year and the efficiency we've delivered is being maintained andwe've delivered is being maintained andwe've delivered is being maintained and improved versus the quarter vers uh overimproved versus the quarter vers uh overimproved versus the quarter vers uh over the quarter of 2025.the quarter of 2025.the quarter of 2025. So again, umSo again, umSo again, um we we seewe we seewe we see a lot of opportunity here to continue toa lot of opportunity here to continue toa lot of opportunity here to continue to get better, butget better, butget better, but to achieve where say Union Pacific is as
Greg Abelto achieve where say Union Pacific is as a leader at with an operating margin of 39.5%. We know that's going to require a step change both as as how we're operating, but even how we approach our operations. An important step that we've or or something we've identified. we like to identify the gaps and where we can get better is technology and we're doing a lot at BNSF and I'll touch on our other businesses uh here when I uh go through technology but that's where we see a step change or or potentially where our a few of our peers have gapped out versus where how we're using technology. Uh I'm going to back up to GEICO and then I'll come back to uh BNSF cuz it was approximately four years ago. I was in a GEICO meeting with our management team there and they were discussing this price to to risk and segmenting customers and we had our
Greg Abelsegmenting customers and we had our operational team from Geico. They had the commercial team but they had the tech team there and they're often there and and you're looking for some help. But what I heard in that discussion was a clear technology transformation that was happening at GEICO. It was obvious that the technology was going to be a big part of the solution as Geico tackled uh their certain challenges. And as that meeting wrapped up, I very much wanted to spend more time with the technology team uh to understand what was what was driving this and and they were calling it a technology transformation because I could see that it was so applicable to what we were going to what we needed to do and what we would pursue across our non-in businesses. So So what is this technology transformation that they described at GEICO? Uh, I'll I'll I'll summarize it in a few
Greg AbelUh, I'll I'll I'll summarize it in a few different ways, but first and foremost, we recognized we were going to become a builder of technology rather than just a buyer of technology. And that meant that instead of we had a number of systems and we often bought the related applications or software that came with it. And yes, it's it's a valued uh application, but it was disconnected from all our systems. Obviously, we didn't have that ability to then use the information, get to the data. And what they started to talk about is simplifying the infrastructure, making sure we would build what we needed ourselves and deliver solutions back to our customers and we would have clear access to the data. all things that make a lot of sense, but a massive challenge and it doesn't happen overnight. And we're still on that journey at at GEICO in year five.
Greg Abeljourney at at GEICO in year five. There's no question, but quickly recognized that this could be used across our other businesses. Very fortunate that at GEICO they had put their leadership team in place to drive forward this transformation. and the most senior leader uh then uh came from Geico, joined our non- insurance operations, took on a senior leadership role, the leadership role helping us with the technology transformation at uh BA Berkshire Hathaway Energy and then also as a senior technology officer at BNSF. So we started down that journey and one of the first things you have to do is say okay we need a different resource base. So now we're hiring engineers we hire developers in our technology group that help us start to build the solutions we need for these businesses and and it's going beyond Geico now. Um, and we still have the our
Greg AbelGeico now. Um, and we still have the our valued employees there and and and they may be retraining or transitioning to other roles. But the reality is we need less people managing uh the applications and the software and more people building outcomes that our our businesses need. Now, when I asked our team, well, how does AI fit uh fit into this artificial intelligence? What's actually a big piece of this because it's effectively what goes on top of a lot of our systems and that's what they're building. They're using AI to build applications and that's all great but we also know there's certain risks around humanity. There's risks and and there's the broader risk for globally and for the uh and for our country but there's also risk within our businesses. And as I just start heading down this path I said well okay how should we think about this? how how are
Othershould we think about this? how how are should we think about this? how how are we how should we all be comfortable we how should we all be comfortable we how should we all be comfortable we're approaching this uh correctly and we're approaching this uh correctly and we're approaching this uh correctly and they said well we don't really like to they said well we don't really like to they said well we don't really like to call it artificial intelligence they call it artificial intelligence they call it artificial intelligence they call it narrow artificial intelligence call it narrow artificial intelligence call it narrow artificial intelligence and they have three really important and they have three really important and they have three really important principles associated with it and the principles associated with it and the principles associated with it and the first one was that yes we're using it first one was that yes we're using it first one was that yes we're using it and we'll use it uh with these engineers and we'll use it uh with these engineers and we'll use it uh with these engineers we have and and and these highly skilled we have and and and these highly skilled we have and and and these highly skilled individuals we brought in but but how individuals we brought in but but how individuals we brought in but but how are you going to manage it? Well, the are you going to manage it? Well, the are you going to manage it? Well, the first thing was that we still have our first thing was that we still have our first thing was that we still have our employees, our senior management team employees, our senior management team employees, our senior management team involved in implementing the involved in implementing the involved in implementing the recommendations recommendations recommendations that we then receive associated with the that we then receive associated with the that we then receive associated with the uh the architecture or the framework uh the architecture or the framework uh the architecture or the framework they put in place. There may be and they put in place. There may be and they put in place. There may be and there may be things that still occur and there may be things that still occur and there may be things that still occur and and should occur just like they did and should occur just like they did and should occur just like they did within our systems or within that. But
Greg Abelwithin our systems or within that. But as it moves up and the important decisions are being made, there's human involvement. our managers, our employees are involved and that's part of the governance that's effectively in place. The second piece is what they call the safeguard and the safeguard is very intriguing because right away of course we all want good governance. We want that in place but what's that mean? And our team said okay here's how I would describe it. If if we ask for an outcome, we want a recommendation or an action and we ask it now and then half hour later we ask do we get the exact do we get the exact same outcome? If we can receive that same outcome, we're we're it's effectively the safeguard. We know we're utilizing that application properly. And importantly, it means we've got a defined data set that we're comfortable with. And and I
Otherthat we're comfortable with. And and I like to call it the constraint. We know we're constraining our data. We know what data we're using and we know what data is coming in. Now when you talk about all the operations that we're focused on, yes, the next day of operations come in and it updates that that data set and we may get a different if we ask the question the day later, we'll get a marginally different answer. It's got new information. But if we ask it, well, if you ignore today's information and just focused on yesterday, do we get the same answer? Yes. So we we call that our safeguard. And then the third thing on technology and associated with this narrow AI is it has to be um additive to our businesses. We're not going to do AI for the sake of AI. You can spend a lot of money in this area and we need to know what we're trying to
Greg Abeland we need to know what we're trying to achieve and do we see a valued proposition uh for the businesses. So that's what we call narrow AI. Um, and if you see how it's starting to be applied at BNSF, it's incredible. So, if I think of BNSF, um, uh, we have, uh, uh, uh, the expansive network I touched on. We have a variety of trains leaving from a variety of points every day. I've touched on it can be the interotal trains of 150 to 200 on our tracks a day which are moving very quickly and often leaving LA to deliver product in Chicago 48 hours later or it can be in the last quarter we had more than 750 trains a day moving across that system there's weather or there's equipment failures we share our tracks we allow Amtrak to use them they can be running on time or they can be running behind schedule. We have to adjust all to that. And the reality is Katie and
Greg Abelto that. And the reality is Katie and her team been they have a a system that's been running for 177 years, but we were not there in how we could use technology to operate that better. And that's what we're using or we've just started down the path of uh that's how we know we'll see that step change in in our operating performance. Now to summarize it all that but I I want to let you know it's it's all around operational excellence. We are going to get better at at rail but we're going to use that framework across all of our businesses. They very much will create the framework and then our teams can embrace it if they so so choose and we'll help them see the value of it. But there is an opportunity there and I'll break it down with one last comment around technology. Um, when you think of a artificial intelligence, everybody talks about the large language models
Greg Abeltalks about the large language models and okay, they're learning models and and okay, they're learning models and and okay, they're learning models and there's a lot more to it than I just there's a lot more to it than I just there's a lot more to it than I just highlighted. But I summarize it as one highlighted. But I summarize it as one highlighted. But I summarize it as one thing and this is why there's an thing and this is why there's an thing and this is why there's an opportunity across all our businesses. opportunity across all our businesses. opportunity across all our businesses. Those large language models, I really Those large language models, I really Those large language models, I really communicate them and I communicate them communicate them and I communicate them communicate them and I communicate them to our teams or at least it helps me to our teams or at least it helps me to our teams or at least it helps me understand it. They're large logic understand it. They're large logic understand it. They're large logic models. We're at this point in time models. We're at this point in time models. We're at this point in time we're using it to solve logical we're using it to solve logical we're using it to solve logical challenges in our business and what challenges in our business and what challenges in our business and what we're trying to do it is in a more uh we're trying to do it is in a more uh we're trying to do it is in a more uh efficient fashion i.e. do it more efficient fashion i.e. do it more efficient fashion i.e. do it more quickly and get to a better answer. So quickly and get to a better answer. So quickly and get to a better answer. So that was a lot in technology but it that was a lot in technology but it that was a lot in technology but it touches the whole franchise of of touches the whole franchise of of touches the whole franchise of of Berkshire. Berkshire. Berkshire. If I move to energy now um and provide If I move to energy now um and provide If I move to energy now um and provide an update there uh I'm just going to an update there uh I'm just going to an update there uh I'm just going to touch on the opportunity first then come touch on the opportunity first then come touch on the opportunity first then come to the challenges because as I've just to the challenges because as I've just to the challenges because as I've just discussed technology that's the
Greg Abeldiscussed technology that's the opportunity in energy one of the core inputs to all those data centers hyperscalers associated with artificial intelligence is energy our businesses have that opportunity in front of them at at Berkshire Hathway Energy uh And yes, we're pursuing them and and we'll do it I'll touch on it in a in in a way we view as the right approach for both our states and our customers. But I would highlight it's not new to us. If you just go across the river a little bit east Iowa, we serve just under 50% of of that state. If you look at the number of data centers and hyperscalers in that state, it's it's very significant. We have four very large hyperscalers data centers there or or builders of them and and ultimately the their customers using it. But if I look at our peak load i.e. the amount of energy being used from those data
Greg Abelenergy being used from those data centers it's at 8% of their peak load. And the only reason I highlight that 8% is when I hear people in the industry and all the utilities around us, a lot of states, they're talking about this great opportunity and gez hopefully in the next 5 years they'll be from a relatively starting point. They want to get to the 5 to 10%. And we're already at eight and we see opportunities to grow that by 50% over the next 5 years or or potentially more. But we'll do it in a way and you're starting to hear more and more of this across the US. We'll do it in a way where we're not going to impact the costs of our other customers. These users of the i.e. those the the hyperscalers, the data centers and the users of the energy uh they have to bear their full cost. We can't transfer that burden across all our other customers.
Greg Abelburden across all our other customers. and and that's a principle we've applied across all our utilities and from the very early goings when we're building these data centers and I would highlight I think our team's doing an exceptional job of that. If I again go back to Mid-Americ if you look at their with all the data centers and hyperscalers and then and the infrastructure they put in place their rates are still 45% below the national average. That's just unheard of. It's an exceptional outcome and it just highlights they're doing the right things when they build this infrastructure or it's a part of it and we would highlight we have similar positive outcomes across uh the rest of our utilities now and I I would note one other thing our gas network or our infrastructure there are large pipeline company we have there as they build out
Greg Abelcompany we have there as they build out all this infrastructure not just in our utilities but across the US our pipeline footprint will growth. A lot of it's being built by natural gas and and we'll meet that challenge. But here's an interesting point. 15% of the gas consumed in the United States is touched by our pipeline network or one of our our core assets there. So again, that's the opportunity on the energy side. Um but it's not without its challenges and we've talked about this the past few years. Um, and when I think of the Berkshire Hathaway Energy Group, what's the challenge? It's what I call the regulatory compact. We leave your capital, our owner's capital, Berkshire's capital in these businesses and often a portion of the earnings that they generate, we may reinvest back into those businesses and for that we get a very specific set of
Greg Abelfor that we get a very specific set of return. and and it's a fair it's it's over the long run it's been a very balanced and fair return but but how do you measure that it's versus the risks you take on in that business and that's the compact okay you're going to pay us x% return and what risks are you asking us to take and that model has worked very good for a number of years and and for centuries but the problem is it's becoming more stressed if you think of inflation If you think of the data center challenges, but I strongly believe we're managing that separately and then you move to assets that are 60 to 100 years old that are starting to retire and we bring those into the network. The challenge is every day to get more efficient, more effective from the operational side. But as a regulator, as a governor, you're very focused on I
Greg Abela governor, you're very focused on I don't want my rates to go up. I don'tdon't want my rates to go up. I don'tdon't want my rates to go up. I don't want to take on more risk. they want towant to take on more risk. they want towant to take on more risk. they want to transfer that back to us and that's thetransfer that back to us and that's thetransfer that back to us and that's the regulatory compact. And unless thatregulatory compact. And unless thatregulatory compact. And unless that exists, we do not if if we don't seeexists, we do not if if we don't seeexists, we do not if if we don't see that balance, we don't deploy ourthat balance, we don't deploy ourthat balance, we don't deploy our capital back into those businesses orcapital back into those businesses orcapital back into those businesses or into those utilities and and we workinto those utilities and and we workinto those utilities and and we work hard to maintain it. But there's been ahard to maintain it. But there's been ahard to maintain it. But there's been a very important challenge we've hadvery important challenge we've hadvery important challenge we've had within that we've touched on in the pastwithin that we've touched on in the pastwithin that we've touched on in the past two and that's wildfires.two and that's wildfires.two and that's wildfires. wildfires in the west uh very prevalentwildfires in the west uh very prevalentwildfires in the west uh very prevalent the last 15 15 plus years in inthe last 15 15 plus years in inthe last 15 15 plus years in in California.California.California. We experienced a very significantWe experienced a very significantWe experienced a very significant wildfire in Oregon in 2020 or a numberwildfire in Oregon in 2020 or a numberwildfire in Oregon in 2020 or a number of wildfires across Oregon but we beingof wildfires across Oregon but we beingof wildfires across Oregon but we being the state but also the company. So therethe state but also the company. So therethe state but also the company. So there were a number of wildfires across thewere a number of wildfires across thewere a number of wildfires across the state. We had certain equipment,state. We had certain equipment,state. We had certain equipment, certain uh high winds, we had certaincertain uh high winds, we had certaincertain uh high winds, we had certain failures with our equipment thatfailures with our equipment that
Greg Abelfailures with our equipment that contributed to to those fires. And associated with that, we fully acknowledged where we there was causation and where we were responsible for it. But there was also associated with some of the fires and specifically one fire, a class action lawsuit that was um had very large um claims against uh our utility there, Pacific Corp. Um and and we had to approach it such that we'd resolve all the other matters, but that was a class action. And there was specifically one fire that we strongly felt we weren't responsible for. there was zero causation. There was an Oregon Forestry Department report that said though that Pacific Corp did not contribute uh nor cause the fire. We took a very strong position there that one, we were not going to put more capital in to fund the entity and these type of uh risks and these type of
Othertype of uh risks and these type of obligations and secondly, we would challenge that liability verdict. And we challenged it. It's been a long process, but as owners and shareholders, and this was a very significant event that occurred in this in this past quarter or or occurred in in April. We're very fortunate that it was up to the applet court. They reduced they reversed and remanded that liability verdict and said back to ground zero. Start over again. And what they were really saying was that that class of customers and who did we actually affect and and and where was the causation that's been that will be revisited and then the related damages. Um some positive things associated with it. We we recover a billion dollars of security we've already posted. the people the the the the law firms that pursued it are responsible for our costs
Greg Abelpursued it are responsible for our costs associated that period of time. Not associated that period of time. Not associated that period of time. Not not our litigation costs, but the the costs our litigation costs, but the the costs our litigation costs, but the the costs we incurred in posting the bonds we incurred in posting the bonds we incurred in posting the bonds uh or posting that security that's $10 million or approaching likely $10 million or approaching likely $10 million. So, but the most important million. So, but the most important million. So, but the most important thing is we've reset the stage there and thing is we've reset the stage there and thing is we've reset the stage there and that's very important because we're that's very important because we're that's very important because we're working hard to get that regulatory working hard to get that regulatory working hard to get that regulatory compact balanced and and getting the compact balanced and and getting the compact balanced and and getting the right outcome and we do want to see right outcome and we do want to see right outcome and we do want to see these utilities move forward and we want these utilities move forward and we want these utilities move forward and we want to be a very good operator and steward to be a very good operator and steward to be a very good operator and steward of those assets for our our customers. of those assets for our our customers. of those assets for our our customers. So, the last thing I'll just touch on So, the last thing I'll just touch on So, the last thing I'll just touch on wildfires. So when you think of Pacific wildfires. So when you think of Pacific wildfires. So when you think of Pacific Corp, yes, we've addressed that Corp, yes, we've addressed that Corp, yes, we've addressed that challenge, but to get the right compact, challenge, but to get the right compact, challenge, but to get the right compact, we've worked with Wyoming, Idaho, I've we've worked with Wyoming, Idaho, I've we've worked with Wyoming, Idaho, I've touched on Utah on this stage to say it touched on Utah on this stage to say it touched on Utah on this stage to say it requires a judicial system that supports requires a judicial system that supports requires a judicial system that supports the legislature uh the laws in place,
Greg Abelthe legislature uh the laws in place, but more importantly, we all or as importantly, we need good legislation that then sets that that balance. We've had it across those states and we'll continue to work hardly work hard across our our other states. So, an exceptional outcome and and wanted to make sure uh uh you know there's still a lot to be done there because uh we're back to the uh very first uh back to first base on the uh on the uh legal proceedings. Now, moving to our manufacturing and servicing businesses. Uh there's a the this highlights our blues the manufacturing group that represent represents approximately 70% of that group and the service and retailing groups in the uh in the gray or beige. Uh I like to think of when you think of our manufacturing group, we've got three groups there. Uh we have our industrial group, we have our our building products
Greg Abelgroup, we have our our building productsgroup, we have our our building products group, and we have our consumergroup, and we have our consumergroup, and we have our consumer products. The consumer productsproducts. The consumer productsproducts. The consumer products servicing and retailing as I've touchedservicing and retailing as I've touchedservicing and retailing as I've touched on is now under Adam Johnson. We'reon is now under Adam Johnson. We'reon is now under Adam Johnson. We're fortunate to have Adam as our leaderfortunate to have Adam as our leaderfortunate to have Adam as our leader there. He's managing 32 of thosethere. He's managing 32 of thosethere. He's managing 32 of those companies and we'll have him on stagecompanies and we'll have him on stagecompanies and we'll have him on stage and we'll expand on that more. If I goand we'll expand on that more. If I goand we'll expand on that more. If I go back to those a few of those coreback to those a few of those coreback to those a few of those core manufacturing groups, I'll start withmanufacturing groups, I'll start withmanufacturing groups, I'll start with the industrial group. And even when Ithe industrial group. And even when Ithe industrial group. And even when I think of the industrial group, I like tothink of the industrial group, I like tothink of the industrial group, I like to break it down into uh a couple otherbreak it down into uh a couple otherbreak it down into uh a couple other groups, but it's it's a good way togroups, but it's it's a good way togroups, but it's it's a good way to think of our businesses, and that's whythink of our businesses, and that's whythink of our businesses, and that's why I want to share it. Within theI want to share it. Within theI want to share it. Within the industrial group, we have a metals groupindustrial group, we have a metals groupindustrial group, we have a metals group that is very strong. There's threethat is very strong. There's threethat is very strong. There's three businesses.businesses.businesses. We have Precision Cast Parts.We have Precision Cast Parts.We have Precision Cast Parts. It's a business we acquired 10 years agoIt's a business we acquired 10 years agoIt's a business we acquired 10 years ago in 2016.in 2016.in 2016. It's run by Mark Donigan who was the CEOIt's run by Mark Donigan who was the CEOIt's run by Mark Donigan who was the CEO when we acquired the business and he
Greg Abelwhen we acquired the business and he continues to run it today. And as owners and shareholders, we're very fortunate to have Mark in that in that position. He understands precision cast parts inside and out. He understands the industry and very much works towards delivering solutions for our our customers. The second important part of that medals group is a business called IMC and there are international you can hear the management team over there little uh international metalworking uh company and it's really interesting to see that company what one they make the tools that removes uh that remove steel. So they'll take a cylinder steel, they create the tools and then that gets utilized in a variety of other industries. It can be the aerospace uh like a precision cast parts and I'll touch on that or it can be another industry like the auto. If you think of
Greg Abelindustry like the auto. If you think of what's happening in the aerospace industry and this is why precision cast parts and IMC has such um a significant backlog or I'm highlighting a backlog. If we look at what Boeing just announced last quarter or this quarter but just recently their number of planes that they delivered went up by uh 11% quarteron quarter that's phenomenal and they're talking about even doing more very similar results at Airbus and that's who precision cast parts serves and also uh often IMC serves that industry. Um, and that's remarkable. But if you hear of the backlog in this space, it's 10 years. And I I did ask our team the simple question. I go, "Well, is that many more people really flying?" Like, I get it. We're postco and it's building up. And I sort of obviously knew part of the answer, but it's really remarkable why
Greg Abelanswer, but it's really remarkable why there that is that demand. And and a lot of us know this, but the reality is to see what's driving it is the efficiency of those planes and engines is so great now that it's better to buy the new plane and retire the own the old plane. And what you have is this 10-year backlog that we're seeing a very similar backlog across our our metal businesses when you touch on a precision cast parts or or IMC. Now the third piece of the metal groups and and by the way I should just touch on this. Uh we acquired um IMC 10 basic basically 10 years before uh precision cast parts. So you go back to a a 2006 timeline. We acquired 80% of it. Again, we're very fortunate to have the senior leader there, Jacob Harpaz, who was at the business, the senior leader running it back then and still runs it today. If I look at what how
Greg Abelruns it today. If I look at what how Precision Cast Parts and and IMC works Precision Cast Parts and and IMC works Precision Cast Parts and and IMC works together, together, together, Precision Cast Parts is now if not but Precision Cast Parts is now if not but Precision Cast Parts is now if not but very likely IMC's number one customer. very likely IMC's number one customer. very likely IMC's number one customer. We have them working on joint solutions. We have them working on joint solutions. We have them working on joint solutions. Now move to that third group. In 2022, Now move to that third group. In 2022, Now move to that third group. In 2022, we acquired Allegati and we're fortunate we acquired Allegati and we're fortunate we acquired Allegati and we're fortunate to have that in the family now and a a to have that in the family now and a a to have that in the family now and a a very good addition. But along came also very good addition. But along came also very good addition. But along came also with it came three non-insurance with it came three non-insurance with it came three non-insurance businesses. There were a variety of businesses. There were a variety of businesses. There were a variety of other ones. They're tucked into the other ones. They're tucked into the other ones. They're tucked into the appropriate place and other businesses, appropriate place and other businesses, appropriate place and other businesses, but one of them that is standing that but one of them that is standing that but one of them that is standing that stood alone was WW Steel. And it's a it stood alone was WW Steel. And it's a it stood alone was WW Steel. And it's a it was a familyfounded company. It had was a familyfounded company. It had was a familyfounded company. It had transitioned to Rick Cooper. He's he's transitioned to Rick Cooper. He's he's transitioned to Rick Cooper. He's he's here over in the manager section. He's here over in the manager section. He's here over in the manager section. He's the CEO. And it's a remarkable business. the CEO. And it's a remarkable business. the CEO. And it's a remarkable business. They create basically they contribute uh They create basically they contribute uh They create basically they contribute uh steel into a variety of core steel into a variety of core steel into a variety of core infrastructures. It can be bridges. It infrastructures. It can be bridges. It
Greg Abelinfrastructures. It can be bridges. It can be stadiums. It can be arenas. Theircan be stadiums. It can be arenas. Theircan be stadiums. It can be arenas. Their most famous one is the uh Las Vegasmost famous one is the uh Las Vegasmost famous one is the uh Las Vegas sphere. And here we bought an insurancesphere. And here we bought an insurancesphere. And here we bought an insurance company and and Warren has touched oncompany and and Warren has touched oncompany and and Warren has touched on this. We sort of had these nice add-onsthis. We sort of had these nice add-onsthis. We sort of had these nice add-ons that I'm not sure we spent a lot of timethat I'm not sure we spent a lot of timethat I'm not sure we spent a lot of time valuing that side of it, but incrediblevaluing that side of it, but incrediblevaluing that side of it, but incredible additions to the Berkshire family andadditions to the Berkshire family andadditions to the Berkshire family and and that really comprises the the metalsand that really comprises the the metalsand that really comprises the the metals group. Now, if we move to the secondgroup. Now, if we move to the secondgroup. Now, if we move to the second group is the chemical group we havegroup is the chemical group we havegroup is the chemical group we have within the industrial sector. We havewithin the industrial sector. We havewithin the industrial sector. We have three of those. We have Lubberol goingthree of those. We have Lubberol goingthree of those. We have Lubberol going back to 2011. We've touched on thatback to 2011. We've touched on thatback to 2011. We've touched on that business many times. We then acquiredbusiness many times. We then acquiredbusiness many times. We then acquired Oxycam last year.Oxycam last year.Oxycam last year. Uh associated with Oxycam, we announcedUh associated with Oxycam, we announcedUh associated with Oxycam, we announced the acquisition. We closed it on Januarythe acquisition. We closed it on Januarythe acquisition. We closed it on January 2nd.2nd.2nd. Very nice addition. Uh I would say theyVery nice addition. Uh I would say theyVery nice addition. Uh I would say they they provide they produce two corethey provide they produce two corethey provide they produce two core commodities. So it's more a commoditycommodities. So it's more a commoditycommodities. So it's more a commodity chemical business and they're valued
Greg Abelchemical business and they're valued commodities in the again industrial sector. but their plants can't be replicated. That would not be easy. So, we've got valuable assets. And then the third piece of the Chemical Group is a company called LSPI. And I'm just highlighting because it's a it's a it's a real gem for for our owner shareholders. But what that does is it it creates a drag reduction agent that allows oil to move through the through a pipeline. And you can imagine in the environment we're in right now with the with the the fundamental supply and demi demand imbalance on oil, the more oil that can be moved through those pipelines and you can't quite double it, but you can get darn close. They have an amazing product and obviously in in very high demand. Now, the last thing I'll just touch on with the industrial group is we have
Greg Abelwith the industrial group is we have Marman. Excellent business. And the reason I'm touching on it at the end, it's it's really amazing because it's the catchall. It touches our rail industry or the industry. It touches the energy industry. It touches the metal industry. It touches the chemical industry. It touches in all the core industries in the US and again a remarkable asset that we have and and will continue to create strong value for our owners and shareholders. Now, the second piece of the manufacturing group is our building products group. I'm not going to go through all the businesses in there because we have one that is the bellweather and it tells you how the rest of them are doing. That's Clayton Homes. the other businesses will their results follow very much very closely that because with Clayton Homes we're building manufactured homes or sight
Greg Abelbuilding manufactured homes or sight build homes and there's a lot that goes into it and our other companies provide both products to them and across that space. So it could be the insulation, paint, carpet, a variety of other things. If you look at Clayton's results, if you go to the manufactured side of the business, our results are down on true homes manufactured and sold down approximately 10%. A little better than the industry average, but that gives you a feel for it. And if you go to the site build, i.e. homes we were home builder, they're down around 5%. And the numbers I've been seeing for the last quarter are probably more like 7% across the industry. Uh and that and that's obviously driven by where interest rates are and certain other challenges for the uh for the consumer. But where's the opportunity and and and I'll touch on the challenge.
Greg Abeland and and I'll touch on the challenge. Where's the opportunity in these businesses and and how is Clayton tackling it? Um, it's very much around pursuing the American dream and can we help deliver that. And what I what I have is a going to have our team bring up a video uh a slide that highlights this is actually a what we call a crossmod home. We have it in the exhibit hall. It got moved in. Had to cut the back off a little bit. So, it's not quite the full size if you're if you're comparing it to this. But the reality is um this is where the opportunity is is within Clayton. We want to deliver on uh an affordable home to the American consumer. This home you're looking at, we thank you and and thank you to our Clayton team. Including the lot price, assuming it's in the 40,000 range, and there's a lot of place in America where it's well
Greg Abelof place in America where it's well below that. We recognize some others. Uhbelow that. We recognize some others. Uhbelow that. We recognize some others. Uh it may be greater, but we can deliverit may be greater, but we can deliverit may be greater, but we can deliver this home onsite built two-bedroom,this home onsite built two-bedroom,this home onsite built two-bedroom, uh family home, living space, very veryuh family home, living space, very veryuh family home, living space, very very beautiful living space for $249,000beautiful living space for $249,000beautiful living space for $249,000 delivered, including the lot. That'sdelivered, including the lot. That'sdelivered, including the lot. That's that's absolutely incredible. That'sthat's absolutely incredible. That'sthat's absolutely incredible. That's delivering affordability to thedelivering affordability to thedelivering affordability to the consumer.Now, the cross mod, how can we get it toNow, the cross mod, how can we get it toNow, the cross mod, how can we get it to that price? 70% of that home is built inthat price? 70% of that home is built inthat price? 70% of that home is built in our manufacturing side of ourour manufacturing side of ourour manufacturing side of our facilities. So those manufacturing homesfacilities. So those manufacturing homesfacilities. So those manufacturing homes we produce, we now use it. The last 30%we produce, we now use it. The last 30%we produce, we now use it. The last 30% is built by our site builders. Theyis built by our site builders. Theyis built by our site builders. They bring the street appeal and all thebring the street appeal and all thebring the street appeal and all the features that as a homeowner they mayfeatures that as a homeowner they mayfeatures that as a homeowner they may want. So it's a exceptional product. Nowwant. So it's a exceptional product. Nowwant. So it's a exceptional product. Now we don't stop there. We still have awe don't stop there. We still have awe don't stop there. We still have a very strong culture around thevery strong culture around thevery strong culture around the manufactured homes and and how how canmanufactured homes and and how how canmanufactured homes and and how how can we get you know what's the extreme onwe get you know what's the extreme onwe get you know what's the extreme on that? Well, if we deliver a single andthat? Well, if we deliver a single and
Greg Abelthat? Well, if we deliver a single and this is a thousand square feet. If wethis is a thousand square feet. If wethis is a thousand square feet. If we take it to the manufacturing home andtake it to the manufacturing home andtake it to the manufacturing home and think of a traditional manufacturedthink of a traditional manufacturedthink of a traditional manufactured home, and our team probably won't likehome, and our team probably won't likehome, and our team probably won't like it, but it's more the the box squareit, but it's more the the box squareit, but it's more the the box square box, but it it but what it does createbox, but it it but what it does createbox, but it it but what it does create is a home. It can be a two-bedroom withis a home. It can be a two-bedroom withis a home. It can be a two-bedroom with a um again, very nice living space, verya um again, very nice living space, verya um again, very nice living space, very well done. Uh now has a 30-year pluswell done. Uh now has a 30-year pluswell done. Uh now has a 30-year plus life on these assets just like this one.life on these assets just like this one.life on these assets just like this one. they can get a 30-year mortgage on thethey can get a 30-year mortgage on thethey can get a 30-year mortgage on the cross mod or on a manufactured home now.cross mod or on a manufactured home now.cross mod or on a manufactured home now. So, that's the quality we're building itSo, that's the quality we're building itSo, that's the quality we're building it to. And we can now do a singleto. And we can now do a singleto. And we can now do a single manufactured home uh for just undermanufactured home uh for just undermanufactured home uh for just under $35,000. We can deliver it. They still$35,000. We can deliver it. They still$35,000. We can deliver it. They still have to get their lot or rent one, buthave to get their lot or rent one, buthave to get their lot or rent one, but the reality is we're creating homes thatthe reality is we're creating homes thatthe reality is we're creating homes that people can afford and that's reallypeople can afford and that's reallypeople can afford and that's really where the opportunity is is withinwhere the opportunity is is withinwhere the opportunity is is within Clayton. So very proud of what ourClayton. So very proud of what ourClayton. So very proud of what our team's doing there. Now lastly, I'm
Greg Abelteam's doing there. Now lastly, I'm going to move to the service and and retailing business. I'm not going to dive into it in our consumer products business. again we'll have Adam here but when I think of those businesses and and Adam's been in that role as I said so in since December very much um learning the businesses getting to know the management team like myself and and and how we've always done it very will be very focused on capital allocation and the risk and but but also very focused on helping the team achieve operational excellence across those businesses. Now, if you think of those businesses across those 32 businesses, we have a wide spectrum of where they are in their life cycle. We have some that are still growing and growing very quickly. We have some that are growing at a much smaller pace, but still growing. And then we have some
Greg Abelstill growing. And then we have some that I would call in the more mature cycle but still creating a value product to the consumer customer and deploying and and creating capital producing cash flows that often within those businesses will redeploy across our other businesses and we'll have that chance to discuss that with with Adam. Now, the last thing I just want to touch on before we move to the second session and I wrap up here, I'm going to move to our balance sheet and and activity associated with that. In our first quarter of the of 2026, we purchased uh $235 million of of Birkshire stock. Um you can see that reflected on the on the slide. Um, and we've talked about this often, but when do we purchase stock? It's when our intrinsic value, again, conservatively determined, exceeds the current price of our share. And we do that literally. Um,
Greg Abelour share. And we do that literally. Um, Warren and I will be discussing this on a daily basis and and how do we feel around the the overall value. It's not daily, but it we think about it daily. And the reality is there's a lot of different ways to to calculate intrinsic value. It can be a simple premium over book value. You can take book value because we have everything at a historical cost basis and try to adjust our various companies at a BNSF is recorded on the books at the original price we bought it at versus what's it valued at today. You can go through that exercise. Or if I think of it more as how we would think of businesses when we buy a stock or a full company, we think of it as we have our balance sheet, we know what our cash is, we know what our US treasuries are, we know what our in equity investments are, they're marked
Greg Abelequity investments are, they're marked to market, and then we have our operating companies in place. And that's where we have to think about what are the long-term econ economic uh prospects of those businesses 5 years 10 years from now. And then the other important part of that equation is how do we redeploy that capital that comes off of it. And that's really the the approach we take to the intrinsic uh values. Now let's move to our balance sheet. Uh the the the very specific numbers. Um, there's a lot of numbers here. Again, I'll touch on a few captions. If you look at our cash and US Treasury bills, there's a risk that people use the 397.4 billion as the headline number because that is our cash and US treasury sitting there at the end of March. However, and we don't like these type of adjustments, but it is important to communicate it. There is 17.2 2 billion of payables
OtherThere is 17.2 2 billion of payables associated with the treasuries that are associated with the treasuries that are associated with the treasuries that are in that total. How does that happen? We in that total. How does that happen? We in that total. How does that happen? We bought the treasuries right before the bought the treasuries right before the bought the treasuries right before the end of March and the payable i.e. the end of March and the payable i.e. the end of March and the payable i.e. the the the the fact we use our cash to the the the fact we use our cash to the the the fact we use our cash to purchase those treasuries that that purchase those treasuries that that purchase those treasuries that that occurred right after the end of March. occurred right after the end of March. occurred right after the end of March. So we've got the treasuries up in the So we've got the treasuries up in the So we've got the treasuries up in the 397 and we're still holding the cash. 397 and we're still holding the cash. 397 and we're still holding the cash. Accordingly, our cash in U US Treasury Accordingly, our cash in U US Treasury Accordingly, our cash in U US Treasury bills net is 380 billion. Um, and yes, bills net is 380 billion. Um, and yes, bills net is 380 billion. Um, and yes, it it grew by that 7 billion you can see it it grew by that 7 billion you can see it it grew by that 7 billion you can see on the slide. on the slide. on the slide. The other important thing to focus on is The other important thing to focus on is The other important thing to focus on is our cash and investments at the bottom, our cash and investments at the bottom, our cash and investments at the bottom, the 705.8 the 705.8 the 705.8 billion versus the 708 billion versus the 708 billion versus the 708 uh7 billion at the end of the year. So uh7 billion at the end of the year. So uh7 billion at the end of the year. So we're down just uh under three billion. we're down just uh under three billion. we're down just uh under three billion. Now what what drives that or what what's Now what what drives that or what what's Now what what drives that or what what's the underlying numbers behind that? We the underlying numbers behind that? We the underlying numbers behind that? We produced uh a little more than u well produced uh a little more than u well produced uh a little more than u well close to 10.5 billion dollars of income
Greg Abelclose to 10.5 billion dollars of income and related cash flows in in the first quarter. We also uh would have incurred certain capital expenditures against our businesses. We incur those to either ma reduce risk in the businesses to manage those businesses on a sustainable basis or to pu pursue growth. That was like I said just under 5 billion. Again we we are involved in our management teams as they decide to deploy that capital and very comfortable with that. And then the other piece of the equation in the first quarter was we closed on the oxy transaction. $9.5 billion flowed out associated with that. Very pleased with that. Now, we did have two transactions last year that we announced. Oxycam, we announced it and closed on it in this year. Last year, we announced Bell Labs, a smaller transaction. We're fortunate to have it join our company, Steve Levy,
Greg Abelto have it join our company, Steve Levy, and uh uh his team. Um great group there. It's our uh Warren likes to say we finally delivered uh on on Charlie's objective around uh we have a rat poison company that uh we we we value highly, but it's it's an exceptional business. But the reality is that's not in that number. We had the oxy transaction resulted in a little more than a $3 billion decrease in our our results. So with that, a very wholesome business update. So, I appreciate uh the opportunity to share where our businesses are and where they're going. So, thank you. Now, I'm very excited to I'm going very shortly have Ajit join us on stage uh and we'll we'll move to the Q&A. But as we as we transition to that session, we'll have the GEICO video narrated by Nancy. Thank you.
OtherGeico started out um 90 years ago by trying to make things simple and giving
Othertrying to make things simple and giving a great price and service to customers.a great price and service to customers.a great price and service to customers. And when you think about it, today is umAnd when you think about it, today is umAnd when you think about it, today is um exactly the same thing. We're justexactly the same thing. We're justexactly the same thing. We're just continuing to try and perfect that andcontinuing to try and perfect that andcontinuing to try and perfect that and make it a little better every day, amake it a little better every day, amake it a little better every day, a little faster, a little easier. I'mlittle faster, a little easier. I'mlittle faster, a little easier. I'm Nancy Pierce and I became CEO of GeicoNancy Pierce and I became CEO of GeicoNancy Pierce and I became CEO of Geico in December of 2025. Um, prior to that,in December of 2025. Um, prior to that,in December of 2025. Um, prior to that, I was the chief operating officer, butI was the chief operating officer, butI was the chief operating officer, but I've just had my 40th anniversary withI've just had my 40th anniversary withI've just had my 40th anniversary with GEICO. I started as a claims associateGEICO. I started as a claims associateGEICO. I started as a claims associate in 1986 right out of college and I'vein 1986 right out of college and I'vein 1986 right out of college and I've just had the pleasure over many, manyjust had the pleasure over many, manyjust had the pleasure over many, many years of working in I think just aboutyears of working in I think just aboutyears of working in I think just about every department or every sector um thatevery department or every sector um thatevery department or every sector um that Geico has. So while I started in claims,Geico has. So while I started in claims,Geico has. So while I started in claims, uh I've been in pricing, I've been inuh I've been in pricing, I've been inuh I've been in pricing, I've been in product management, I've been inproduct management, I've been inproduct management, I've been in underwriting, I've had an opportunity tounderwriting, I've had an opportunity tounderwriting, I've had an opportunity to run operations in different parts of therun operations in different parts of therun operations in different parts of the country. Um but what really has kept mecountry. Um but what really has kept me
Nancy Piercecountry. Um but what really has kept me all these years and what has inspired me and I think inspires all 30,000 people at GEICO is every day um we're delivering for customers and um we're doing something for them. we're saving them money on a product that um you know everybody has to have but maybe you don't um necessarily want to use it. Um but when you do need to use it, that's really the moment of truth. And for us to be able to do that um and to do it in a way that saves people money and gives that outstanding um customer service, that's what excites me every day. Um and the reason that uh we have customers and will continue to grow is just keeping that as our northstar. And if we do that, I think Geico will be very successful over the next 20 years. Geico was founded in 1936 by Leo and Lillian Goodwin. And their idea was to come direct to consumers and to cut out the
Questionerdirect to consumers and to cut out the middleman and to have much better cost and much better service for those customers. So in 1951 um Benjamin Gran um took an investment in GEICO and of course one of his students was Warren Buffett and that's when Warren really started to think about GEICO and to um deeply try and figure out what we were doing and met with the leadership of GEICO and that was one of his first very big investments um his personal investments and then later um he started investing Berkshire Hathaway shares um and by 1996 he owned all of Geico. From that beginning, we now ensure millions of cars, trucks, RVs, um, campers, etc. Um, we're in all 50 states. Um, and we try and be there wherever the customer needs us. Um, that's always been sort of number one. I I think from the first time I met um, Warren or Greg or Ajit,
Nancy Piercetime I met um, Warren or Greg or Ajit, they always start by talking aboutthey always start by talking aboutthey always start by talking about integrity and reputation and making sureintegrity and reputation and making sureintegrity and reputation and making sure that you're doing the right thing forthat you're doing the right thing forthat you're doing the right thing for customers. So, it's something we livecustomers. So, it's something we livecustomers. So, it's something we live and breathe every day at GEICO and uand breathe every day at GEICO and uand breathe every day at GEICO and u it's just it's absolutely a big big partit's just it's absolutely a big big partit's just it's absolutely a big big part of our culture. Obviously, Berkshireof our culture. Obviously, Berkshireof our culture. Obviously, Berkshire Hathaway was founded in in some ways onHathaway was founded in in some ways onHathaway was founded in in some ways on insurance and um being wholly owned hasinsurance and um being wholly owned hasinsurance and um being wholly owned has just been um terrific for Geico andjust been um terrific for Geico andjust been um terrific for Geico and terrific for our our customers um overterrific for our our customers um overterrific for our our customers um over the years because it really allows us tothe years because it really allows us tothe years because it really allows us to invest in our business and to makeinvest in our business and to makeinvest in our business and to make long-term decisions, not quarterly orlong-term decisions, not quarterly orlong-term decisions, not quarterly or annual decisions on um what's best umannual decisions on um what's best umannual decisions on um what's best um for growing our business. And you knowfor growing our business. And you knowfor growing our business. And you know obviously Berkshire has many other uhobviously Berkshire has many other uhobviously Berkshire has many other uh insurance companies besides GEICO and weinsurance companies besides GEICO and weinsurance companies besides GEICO and we do work together with them. Um Geicodo work together with them. Um Geicodo work together with them. Um Geico sells many of their products uh you knowsells many of their products uh you knowsells many of their products uh you know today and we continue to look and bringtoday and we continue to look and bringtoday and we continue to look and bring more of them onto the Geico um platform.
Nancy PierceThere always cycles in insurance. There always cycles in insurance. There always cycles in insurance. Sometimes there's bad weather. is just Sometimes there's bad weather. is just Sometimes there's bad weather. is just making sure that the company's prepared making sure that the company's prepared making sure that the company's prepared for all of those things and to deliver for all of those things and to deliver for all of those things and to deliver on that promise um that we make to on that promise um that we make to on that promise um that we make to customers when they buy that policy um customers when they buy that policy um customers when they buy that policy um to be there in their hour of need. So, to be there in their hour of need. So, to be there in their hour of need. So, we take that very very seriously. If we take that very very seriously. If we take that very very seriously. If you're involved in a in an auto you're involved in a in an auto you're involved in a in an auto accident, um the last thing you want is accident, um the last thing you want is accident, um the last thing you want is to go weeks and weeks and weeks um to go weeks and weeks and weeks um to go weeks and weeks and weeks um before you get paid and before the whole before you get paid and before the whole before you get paid and before the whole thing is resolved. So, we really strive thing is resolved. So, we really strive thing is resolved. So, we really strive to do that now in minutes um where to do that now in minutes um where to do that now in minutes um where possible as opposed to in days or hours. possible as opposed to in days or hours. possible as opposed to in days or hours. Um, nobody really wants to spend a lot Um, nobody really wants to spend a lot Um, nobody really wants to spend a lot of time with their insurance company, of time with their insurance company, of time with their insurance company, but when they do, we want to make sure but when they do, we want to make sure but when they do, we want to make sure that they're getting the very best that they're getting the very best that they're getting the very best service as fast as they possibly can. service as fast as they possibly can. service as fast as they possibly can. So, when I think about innovation, it's So, when I think about innovation, it's So, when I think about innovation, it's really about things that are going to
Nancy Piercereally about things that are going to allow us to handle claims faster um thanallow us to handle claims faster um thanallow us to handle claims faster um than anybody else in the industry. What I'manybody else in the industry. What I'manybody else in the industry. What I'm really focused on is our customerreally focused on is our customerreally focused on is our customer loyalty and retention. So, we want toloyalty and retention. So, we want toloyalty and retention. So, we want to improve those. Um, it's a veryimprove those. Um, it's a veryimprove those. Um, it's a very competitive market right now.competitive market right now.competitive market right now. um you know everybody has come out of umum you know everybody has come out of umum you know everybody has come out of um sort of a an unusual period uh out of cosort of a an unusual period uh out of cosort of a an unusual period uh out of co in regards to frequency and severity. Umin regards to frequency and severity. Umin regards to frequency and severity. Um so I think everybody now all of ourso I think everybody now all of ourso I think everybody now all of our competitors are in the mode to try andcompetitors are in the mode to try andcompetitors are in the mode to try and grow and the best way for us to grow isgrow and the best way for us to grow isgrow and the best way for us to grow is to retain you know every one of ourto retain you know every one of ourto retain you know every one of our customers.customers.customers. I think that what I'd like toI think that what I'd like toI think that what I'd like to communicate is just that every day umcommunicate is just that every day umcommunicate is just that every day um 30,000 people at GEICO go to work uh in30,000 people at GEICO go to work uh in30,000 people at GEICO go to work uh in support of millions and millions ofsupport of millions and millions ofsupport of millions and millions of customers. And I want you to know thatcustomers. And I want you to know thatcustomers. And I want you to know that that's what the Geico team is deliveringthat's what the Geico team is deliveringthat's what the Geico team is delivering for Berkhire day in and day out. Uh isfor Berkhire day in and day out. Uh isfor Berkhire day in and day out. Uh is a reputation of doing the right thing.a reputation of doing the right thing.a reputation of doing the right thing. Um saving customers money and just
QuestionerUm saving customers money and just giving outstanding service.
WarrenThank you, Nancy. And to the GEICO team, thank you. We've got uh uh an exceptional leader in Nancy. And again, appreciate taking on that that senior role. Welcome, Ajit. Uh yes, great to be up here together.
Questioneras you if you don't mind I'll start with I touched on Tokyo Marine an exceptional transaction exceptional relationship I know you've built over many years with with the Tokyo Marine management team but if you could just expand on that strategic transaction and relationship we'll love to start with that
Ajit Jain>> sure thank you uh Tokyo Marine and fire is the largest non-life insurance excuse me, insurance company in Japan. They've been doing business for more than 100 odd years and are clearly regarded as a blue chip company in the international arena altogether. They're clearly number
Ajit Jainarena altogether. They're clearly number one in Japan. Everyone in Japan. Every every insurance company would like to be associated with them. They have a very very high reputation in Japan and globally as well. We being in the insurance business for the last uh god knows how many years we've tried year after year to try and get a relationship going with Tokyo Marine and Fire. It has not been easy because one of the things we bring to the business is a capital partner and Tokyo Marine were cashri and they really never needed capital in a big way. Uh they have been expanding in Japan now given the limited growth in Japan. They've looked overseas and over these last 8 10 years they've really got most of the lowhanging fruit overseas that they would like to get. Nevertheless, they are keen and they are hungry for business elsewhere outside Japan. And last year we got a chance to
Greg AbelJapan. And last year we got a chance to spend some time with them and talk to them in very general terms about what the two of us could be doing and should be doing with each other.
Greg Abelafter that initial conversation which probably took place nearly a year ago uh things moved fairly quickly.
Greg AbelSo to to sort of get get to the bottom line um in March we finally announced a transaction with them. That transaction has three legs to it. uh I'll describe to you each one of them and that'll give you an idea of uh what the relationship is right now and we've got a long way to go of course. Uh firstly we bought some stock in the company just a simple transaction we wrote a check for $1.8 billion US and we got 2.5% of the stock of Tokyo Marine and Fire.
Greg AbelThat was one part of the transaction. Secondly, they have a good and profitable book of business in terms of
Ajit Jainprofitable book of business in terms of what they write in Japan and elsewhere. We took a piece of the business just that property casualty business that they write and you know we compensated them for their efforts in getting the business, originating the business and running the business. But we get a slice of their business god know for several years down the road.
Ajit JainAnd the third piece was a sort of strategic agreement between the two of us. Uh it is not spelt out in a lot of detail. uh and normally I would be very very concerned about having open-ended strategic uh transactions but Toky Marine they are a quality company in fact they remind me of the the a phrase that JP Morgan used I don't know how many years ago doing business in a doing first class business in a first class way and that is Tokyo Marine in the insurance industry
Ajit JainWe have a general statement that we'll work with each other. We'll coordinate when it comes to finding opportunities elsewhere, running businesses operationally, and that is something that will evolve over time in terms of who's going to bring what to the party. And I certainly hope this serves as a springboard for both of us to move on to the next plateau.
QuestionerThank you, Ajit. It's a an exceptional transaction and a real long-term relationship. Thank you so much. And you know, it's one thing when I think of our also it reminds me of our five other Japanese companies that we've made investments in. Yes, we like the financial investment, but we also see long-term strategic relationships that can develop across one or all five of them. So fully uh support and excited by everything you just described. Thank you. Now we'll move to the more formal
Otheryou. Now we'll move to the more formal or not the formal but our traditional Q&A question and answer uh and we'll go again to the stations and to Becky. But today we'll start with station one. Station one.
QuestionerHi my name is uh Warren. Warren from Omaha. I've recently undergone a let's call it a significant change in role and I have well let's just say a a not insignificant portion of my net worth tied up in Berkhire stock now Greg I've been watching this company for a while long time a very long time and and uh I've been telling people that I have no intentions of selling a single share not one. So, my question is a simple one. I'm 95 years old. I've got nothing but time and cherry coke and I want to know just so I have something to tell my fellow shareholders, why should they hold their Berkshire shares for the long term? Anyway, Greg, take it from here.
Greg Abeltake it from here. Well, uh, well, Warren from Omaha, very astute question. Um, very astute question. Um, very astute question. Um, uh, if if if I think of what we've uh, if if if I think of what we've uh, if if if I think of what we've already discussed this morning, which is already discussed this morning, which is already discussed this morning, which is our culture and values, and highlighted our culture and values, and highlighted our culture and values, and highlighted that's the bedrock of Berkshire, then that's the bedrock of Berkshire, then that's the bedrock of Berkshire, then what did it create? It created the what did it create? It created the what did it create? It created the foundation that we have today and that's foundation that we have today and that's foundation that we have today and that's these this incredible set of assets that these this incredible set of assets that these this incredible set of assets that exists within within Berkhire. We have exists within within Berkhire. We have exists within within Berkhire. We have uh our insurance business uh led by Jeet uh our insurance business uh led by Jeet uh our insurance business uh led by Jeet and his team and we've talked about the and his team and we've talked about the and his team and we've talked about the the it being the heart with talent and the it being the heart with talent and the it being the heart with talent and opportunities because we have capital uh opportunities because we have capital uh opportunities because we have capital uh available and it'll be available at available and it'll be available at available and it'll be available at different times but we've got different times but we've got different times but we've got significant opportunities there. If I significant opportunities there. If I significant opportunities there. If I think of our uh our non-insurance think of our uh our non-insurance think of our uh our non-insurance businesses, I I spent a lot of time on businesses, I I spent a lot of time on businesses, I I spent a lot of time on those, but we've got unique those, but we've got unique those, but we've got unique opportunities on the on the operational opportunities on the on the operational opportunities on the on the operational excellence side and we'll pursue them excellence side and we'll pursue them excellence side and we'll pursue them and they'll be incremental investment
Greg Abeland they'll be incremental investment opportunities in there. Uh we have our equity investments as we know and we also have a very important asset. We have our cash in US treasuries and it it serves a couple purposes. One, uh, and you've heard Warren Charlie say this before, I've said it. We do not intend to be beholden to anyone. We start with that position. Thank you. And it's how we manage Berkshire and we'll continue to manage Berkshire. Now that asset the cash and treasuries also creates a unique opportunity. Um it creates the opportunity to deploy it across these different groups. It can be uh and and and it will be dependent upon the opportunity i.e. is there is it a strong value proposition, but if it presents itself, we'll be prepared to act decisively and with and with significant capital. That's what that's what it's there for. Um and we have will
Greg Abelwhat it's there for. Um and we have will we will and and and do havewe will and and and do havewe will and and and do have opportunities on the within the equityopportunities on the within the equityopportunities on the within the equity investments that we uh we currently haveinvestments that we uh we currently haveinvestments that we uh we currently have and and beyond that we have ourand and beyond that we have ourand and beyond that we have our operating businesses as I said and ouroperating businesses as I said and ouroperating businesses as I said and our and our and and there it can beand our and and there it can beand our and and there it can be deploying capital back into thosedeploying capital back into thosedeploying capital back into those businesses as I touched on the capitalbusinesses as I touched on the capitalbusinesses as I touched on the capital expenditure side or it can be theexpenditure side or it can be theexpenditure side or it can be the incremental opportunity to acquire 100%incremental opportunity to acquire 100%incremental opportunity to acquire 100% of a of a business and Then there's theof a of a business and Then there's theof a of a business and Then there's the opportunities that Ajit's alreadyopportunities that Ajit's alreadyopportunities that Ajit's already alluded to on the uh insurance side. Butalluded to on the uh insurance side. Butalluded to on the uh insurance side. But what's the other unique thing is uh yes,what's the other unique thing is uh yes,what's the other unique thing is uh yes, Berkhire is a conglomerate and weBerkhire is a conglomerate and weBerkhire is a conglomerate and we recognize that. But we are uniquerecognize that. But we are uniquerecognize that. But we are unique conglomerate in that we can move ourconglomerate in that we can move ourconglomerate in that we can move our capital very efficiently and that's thecapital very efficiently and that's thecapital very efficiently and that's the value of the the conglomerate is we canvalue of the the conglomerate is we canvalue of the the conglomerate is we can move our capital very efficiently acrossmove our capital very efficiently acrossmove our capital very efficiently across each of those groups. We can move iteach of those groups. We can move iteach of those groups. We can move it from insurance to non-insurance intofrom insurance to non-insurance intofrom insurance to non-insurance into
Greg Abelfrom insurance to non-insurance into equities or if we so choose to hold it in cash or back across those in a very tax efficient way. I would also add to the fact that um uh how are we unique as a conglomerate? We live by the fact that we hate bureaucracy. We do not embrace in in in our Thank you. Yes. Ajit's the biggest fan. He reminds me constantly and I love it. I treasure it. But no, we we've heard many times the ABCs, the arrogance, bureaucracy, complacency that can creep into a company will kill a company. And we intend to uh never allow that to happen. So we have this unique opportunity to both take the businesses we have today, take that foundation and build upon it. We also have that capital to be deployed back into them. How will personally myself and the team define success? We'll define success is can we ensure that Berkhire endures in its current
Warrenthat Berkhire endures in its current form. That means we do business as we do today consistent with the cultures, values, business principles we have with the both the long-term objective and and with great purpose and intent create long-term value for our shareholders. That will define success. Anyway, Greg, I'll let you take it from here. Uh, I've got a few things on my plate. Actually, excuse me. I need to take this. Someone may want to sell me their business. Uh, I hope it's an elephant.
QuestionerWhat?
WarrenYeah.
OtherNow, as you as you've all picked up, that was a that was a deep fake. Um, but but here's the interesting thing. that was that was done with zero input from Warren voice photo. You know, we we got we were able to obtain that with uh information that's out there and replicate those actions and that voice. And the reality is that's what we're dealing with when we think of Berkshire
Otherdealing with when we think of Berkshire and how we have to protect it every day. It can go to deep fakes and they're using a way to try to penetrate our business. It can be the cyber attacks, but it's a good it's a great reminder for our team because that is a significant risk across Berkhire that we're managing every day, cyber risk, and it's one that we take extremely serious. I touched on the technology side. We're constantly using technology to uh protect our businesses. And then we're also trying to use technology to identify it. We've all a lot of us have heard about mythos and what's going on there. Um we're we're we're very focused on those risks. But Aj before we move truly to our first question um and you've touched on this many times when you when we think of cyber risk and we ensure it what's what's our current approach across our insurance businesses
Ajit JainOkay. Um so cyber is something we worry about in the insurance operation at two levels. Firstly there is a huge demand by people in business all over the world who are interested in buying protection against some kind of a cyber incident. uh we have been slow in terms of consciously we have been slow in terms of entering that class of business as an underwriter. Uh the reason for that is firstly on cyber I find it very difficult to have some meaningful method to assess and model the aggregation. uh people will tell you we've got it under control and they'll show you all kinds of models but nothing that I can really hang my hat on in terms of we really have a good feeling for what the aggregate exposure is because any risk we take on the first question we ask ourselves how bad can bad be and I'm not
Ajit Jainourselves how bad can bad be and I'm not sure we can answer that question as well as we should so the second reason is cyber has been a very popular fashion able product in these last several years. We have not played in it. Now, as it turns out, there haven't been very many cyber losses. So, people who've taken on cyber risk have actually made profits and as a result of which the premiums that cyber insurance commands has been coming down over time. So, we'd hate entering a line of business where prices are coming down. So we sort of sitting on the sidelines and I'm not sure when but I'm pretty certain that the day will come when we will have a fairly significant role to play in cyber. Uh secondly, you know, we being a large company are exposed to cyber perils ourselves. We try and do the best we can. We I think are as good as anyone else. Now,
Ajit Jainthink are as good as anyone else. Now, cyber insurance is very highly regulated by the regulators and we've been consistently above what the regulations call for. So, I think we're doing the best we can, but I cannot be categorical about it.
Greg AbelThank you, Jeep. Let's go to the now truly the Q&A session. Uh Becky, we'll start with with you and thank you for being so patient. Thank you.
Becky QuickThanks, Greg. Uh this first question, Ajet, let's uh follow up with the AI. This is slightly different though. This comes from Billy D. Ross in Ardsley, New York, who writes, "In an era of increasingly complex risk models and AI tools, where does human judgment still provide Berkshire a competitive advantage? Uh okay help you just repeat the last part of the question."
Becky QuickYeah where is human judgment still a competitive advantage for Berkshire when you consider AI tools that are out
Questioneryou consider AI tools that are out there?
Ajit JainYeah so AI also is very fashionable right now. uh people are jumping into it in the from the insurance space and from the non- insurance space and clearly if AI becomes reality as it's being projected then there's no question about it it'll be a huge gamecher right now what we are seeing is AI being used as a productivity tool as a mechanism for reducing uh labor cost and and doing re routine repetitive things. I do not think AI will reach a point where you can make a tradeoff on things like pricing, settling a claim. Uh that is still years away. And you know, I tend to be skeptical. I'll be surprised if AI can solve that problem for you. Uh so if you're counting on AI telling you which stock to buy and which one to sell, I don't think that's going to happen. Yeah.
QuestionerAjit, I I I found it interesting. Ajit
WarrenAjit, I I I found it interesting. Ajit and I were together uh a few weeks ago and Ajet got his uh team on the phone because we were discussing this exact question, Becky. And your team immediately went to yes, the cyber risk, which we've already touched on. They then went quickly to the fact that really across the insurance businesses and it's that building concept that we're very focused on how do we become more efficient in in creating code and managing it. They they immediately went to that aspect of it and then as you touched on becoming more productive, more efficient and and they went as far to say I thought the example was really good. I mean, if if we were looking at a risk and we had our traditionally traditional underwriters doing it, we might have looked at the five largest risks and your team highlighted that now we can pretty much in a fairly quick
Greg Abelwe can pretty much in a fairly quick way. Yes, we focus on those, but we'll get a very quick view on another using technology. We'll probably look at those other 15 risks and have a strong view on it. Is that fair?
QuestionerYep. That's it. Exactly.
Greg AbelSo using it within the businesses but well aware it's evolving I think is a fair way.
QuestionerMhm.
QuestionerYeah. So thank you. Thanks Sit.
OtherThank you.
OtherNow formally station one unless Warren you're up there again.
QuestionerHi everyone. My name is Levia and I'm from Irvine California. Born in Kuing China. And I really want to say it's my honor to see both Mr. Buffett and Mr. Elbow today. I really want to say Mr. Buffett your speech has helped me get through many many dark moments in my life and stand back up not only in investment. I really appreciate you. Okay. My question is, as a young investor navigating both uncertainty and
Questionerinvestor navigating both uncertainty and rapid technology change, I often struggle to balance patience with action. How would you personally distinguish between the two, please?
Greg AbelSure. Um, I think I think our one of our greatest strengths at Berkhire is patience and being disciplined when it comes to allocating our capital. There'll there will be opportunities that come over time and and for yourself and it doesn't mean there's not opportunities now, but it doesn't mean you need to uh deploy all your capital or or spend all your money right now. And that's really our approach. we take every day and we we recognize we've got a a significant asset in in our cash and US Treasuryy's using it as our ourselves as an example and I would think of uh the cash you're holding is that and and that's an asset. It's a great opportunity. You'll you'll you'll feel
Greg Abelopportunity. You'll you'll you'll feelopportunity. You'll you'll you'll feel the moment or or or feel there's a athe moment or or or feel there's a athe moment or or or feel there's a a strong value proposition with anstrong value proposition with anstrong value proposition with an opportunity. When do we see those? Weopportunity. When do we see those? Weopportunity. When do we see those? We we've outlined our investmentwe've outlined our investmentwe've outlined our investment philosophies which is one we very muchphilosophies which is one we very muchphilosophies which is one we very much have to understand what we're investinghave to understand what we're investinghave to understand what we're investing in. So we want to have a strong it canin. So we want to have a strong it canin. So we want to have a strong it can be you touched on technology and thebe you touched on technology and thebe you touched on technology and the things you're seeing there and thethings you're seeing there and thethings you're seeing there and the evolution and how fast it's allevolution and how fast it's allevolution and how fast it's all changing. Um I always start with and Ichanging. Um I always start with and Ichanging. Um I always start with and I know we always have at Berkhire. Do weknow we always have at Berkhire. Do weknow we always have at Berkhire. Do we understand this business? Do weunderstand this business? Do weunderstand this business? Do we understand the opportunity? And moreunderstand the opportunity? And moreunderstand the opportunity? And more importantly, do we understand the risks?importantly, do we understand the risks?importantly, do we understand the risks? Then we want to have a very uhThen we want to have a very uhThen we want to have a very uh understandable view of what the economicunderstandable view of what the economicunderstandable view of what the economic prospects look like for the next 5 10prospects look like for the next 5 10prospects look like for the next 5 10 years. Not not yes the next year mattersyears. Not not yes the next year mattersyears. Not not yes the next year matters but we're not in that investment for abut we're not in that investment for abut we're not in that investment for a year. It has to be a long-term view ofyear. It has to be a long-term view ofyear. It has to be a long-term view of where that uh where that opportunity
Greg Abelwhere that uh where that opportunity will go. We take it one piece one step further. We're going to be in these investments forever. So we think that way and we need to uh we we like to have a strong view on the management team that they're they're capable and operate with with high integrity and if if we can get to that position but the most important one being then at the end the value has to work for us to deploy our capital. We're we're not anxious to just deploy capital into subpar opportunities. We want to know it meets our principles and then we'll as I said earlier earlier we'll act uh decisively both quickly and with significant capital.
OtherAnything you'd like to
Greg AbelNo.
Becky QuickThank you Becky. Oh. Uh, this question is for Greg and it comes from Mark Lunder in Miami who says he's been a Burgkshire shareholder for 30 years. He said, "Greg, given your background as a
Becky QuickGreg, given your background as a business operator, which differs from Warren's roots as a public market investor, could you share how you balance your time between overseeing the wholly owned subsidiaries and the $288 billion now equity portfolio? Also, does your operator lens change how you evaluate new investment opportunities compared to Warren's historical approach?
Greg AbelThank you, Becky. So, obviously, yes, uh the the many years of uh operating of variety Berkhire Hathway Energy and then in the role of the um vice chairman of of non- insurance operations. Fortunately, that was um Aene and I were in those co- roles for for the past eight years, nine years now. But that created a a very significant opportunity to for myself personally to understand those businesses and and as I've already touched on, we have exceptional businesses, exceptional leadership
Greg Abelbusinesses, exceptional leadership there, but there's still opportunities there. But but it does rem does I'll spend a certain amount of time associated with those businesses and and make sure we're allocating our capital properly and we're still uh thinking about risk across those businesses and encouraging operational excellence because listen having been inside a business uh it's easy to look at your internal metrics and convince yourself you're doing okay and you have to look outside and say well what is the customer seeing feeling how what are our competitors doing and I think that's what we can bring on the operational side I've touched on bringing uh uh Adam on or or him taking on the incremental role across 32 businesses he'll bring that great operating knowledge and we have Ajit on the uh insurance side now when it comes to the equity portfolio
Greg Abelwhen it comes to the equity portfolio and again allocating time. Um, still we have significant opportunities there. Uh, as we look at deploying our capital that that's on the balance sheet and I I shared where our uh our cash and and and US treasuries were. Um, I would highlight if you think of our equity portfolio as it as it exists today, I I articulated this in the letter. It's it's in a it's in a very uh we have a concentrated portfolio and we highlighted that by calling it across the core but it's what the best name is really a concentrated portfolio of investments and we had our our core for you and you concentrated investments I highlighted in um uh in the letter we have our Japanese investments and it's interesting if you then go to the next number of companies where we have positions that are very significant. Uh and I would add that um
Greg AbelUh and I would add that um uh associated with those we may still be uh associated with those we may still be uh associated with those we may still be acquiring shares or or rationalizing acquiring shares or or rationalizing acquiring shares or or rationalizing what's the right position across that what's the right position across that what's the right position across that portfolio. So the first group when I portfolio. So the first group when I portfolio. So the first group when I highlighted it was just under 200 highlighted it was just under 200 highlighted it was just under 200 billion and and remains at that we have billion and and remains at that we have billion and and remains at that we have and closer to say 85 billion right now. and closer to say 85 billion right now. and closer to say 85 billion right now. you then add in associated with be it you then add in associated with be it you then add in associated with be it the other investments you have a a BFA a the other investments you have a a BFA a the other investments you have a a BFA a Chevron a Google companies like that um Chevron a Google companies like that um Chevron a Google companies like that um there's another $70 billion of there's another $70 billion of there's another $70 billion of investments investments investments and and what that highlights is a very and and what that highlights is a very and and what that highlights is a very significant portion of our total significant portion of our total significant portion of our total investments are highly concentrated and investments are highly concentrated and investments are highly concentrated and sit across a limited portfolio that the sit across a limited portfolio that the sit across a limited portfolio that the the active management of that is is the active management of that is is the active management of that is is really limited is really what I'm what really limited is really what I'm what really limited is really what I'm what I'm highlighting. We know those I'm highlighting. We know those I'm highlighting. We know those businesses well. We know the management businesses well. We know the management businesses well. We know the management teams. Those are the things that Warren teams. Those are the things that Warren teams. Those are the things that Warren and I would still be absolutely and I would still be absolutely and I would still be absolutely collaborating on and discussing. We
Greg Abelcollaborating on and discussing. We don't have to discuss them every day, but if there's something going on across those businesses, we'd be discussing it that week or that month. Um, and maybe it's where they're going or what we've we've learned. the Japanese companies just announced their results in the last 48 hours and that was a an active conversation and I that Warren and I had just around their results and the businesses and what we're seeing there uh yesterday morning. So that that's those are core but it doesn't mean we just set them aside or they're concentrated investments. We're constantly aware of them and evaluating them. Uh Ted oper Ted manages another 20 billion or just under 20 billion of our our capital and and his responsibilities go far beyond that. He obviously helps us uh across a variety of our other opportunities or helping us assess risk
Greg Abelopportunities or helping us assess risk or capital deployment in our in our businesses. So we're fortunate to have that. But it's a it's a portfolio that's very manageable when you think of the the management around it and the and what's required of it. the the as as we've touched already is the opportunity to deploy that cash in US treasuries at the right time is a very significant opportunity including equities including what we may see on our our on our within the operating businesses and including the the insurance side but um um so when it comes to allocating the time uh yes there's a certain amount of time spent on operations and and we'll prioritize that because we see a huge opportunity to continue to uh uh improve and close those gaps and and operational excellence. We see opportunities within our existing portfolio, but that's that
Greg Abelour existing portfolio, but that's that is either adding to them or oris either adding to them or oris either adding to them or or rightsizing it and then constantlyrightsizing it and then constantlyrightsizing it and then constantly evaluating what other opportunities areevaluating what other opportunities areevaluating what other opportunities are out there either in whole totalityout there either in whole totalityout there either in whole totality acquiring a company that's private oracquiring a company that's private oracquiring a company that's private or public. Equally looking at what are thepublic. Equally looking at what are thepublic. Equally looking at what are the incremental opportunities if we're goingincremental opportunities if we're goingincremental opportunities if we're going to own a piece of a company and andto own a piece of a company and andto own a piece of a company and and those are evaluated in the same fashionthose are evaluated in the same fashionthose are evaluated in the same fashion i.e. We we look at as I said economicsi.e. We we look at as I said economicsi.e. We we look at as I said economics and and really tied to the the the lastand and really tied to the the the lastand and really tied to the the the last answer. Ajit any thoughts there?answer. Ajit any thoughts there?answer. Ajit any thoughts there?
Ajit JainYeah. Uh I really think capitalallocation and operating businessesallocation and operating businessesallocation and operating businesses are two sides of the same coin.are two sides of the same coin.are two sides of the same coin. And a comment that Warren had madeAnd a comment that Warren had madeAnd a comment that Warren had made several years ago I think goes a longseveral years ago I think goes a longseveral years ago I think goes a long way when he made the comment saying thatway when he made the comment saying thatway when he made the comment saying that a good capital allocator will make aa good capital allocator will make aa good capital allocator will make a good operating manager and vice versa.good operating manager and vice versa.good operating manager and vice versa.
WarrenWell said, Ajit.Well said, Ajit.Well said, Ajit.
OtherI didn't see it anymore.>> I didn't see it anymore.>> I didn't see it anymore. Well said, Warren. No, but uh obviouslyWell said, Warren. No, but uh obviously
Greg AbelWell said, Warren. No, but uh obviously we recognize it and it the last thing Iwe recognize it and it the last thing Iwe recognize it and it the last thing I just say around that and I owe it. Ijust say around that and I owe it. Ijust say around that and I owe it. I mean, when you think of our operatingmean, when you think of our operatingmean, when you think of our operating companies, and I touched on this, wecompanies, and I touched on this, wecompanies, and I touched on this, we have a very deep bench. We havehave a very deep bench. We havehave a very deep bench. We have exceptional operators that understandexceptional operators that understandexceptional operators that understand their business. They understand theirtheir business. They understand theirtheir business. They understand their industry, their customers. Yes. Do weindustry, their customers. Yes. Do weindustry, their customers. Yes. Do we have still have opportunities to gethave still have opportunities to gethave still have opportunities to get better? Yeah, it's continuousbetter? Yeah, it's continuousbetter? Yeah, it's continuous improvement and we'll close those gaps,improvement and we'll close those gaps,improvement and we'll close those gaps, but we have exceptional teams there andbut we have exceptional teams there andbut we have exceptional teams there and be it myself, Adam, we spend our timebe it myself, Adam, we spend our timebe it myself, Adam, we spend our time making sure we're comfortable how themaking sure we're comfortable how themaking sure we're comfortable how the capital's allocated. Do we understandcapital's allocated. Do we understandcapital's allocated. Do we understand the risks and then are we aware of thosethe risks and then are we aware of thosethe risks and then are we aware of those gaps? So, thank you Becky.gaps? So, thank you Becky.gaps? So, thank you Becky.
Becky QuickLet's move to station two.
OtherGood morning, Mr. Abel and then Mr.Good morning, Mr. Abel and then Mr.Good morning, Mr. Abel and then Mr. Chen. My name is Jackie Han from China,Chen. My name is Jackie Han from China,Chen. My name is Jackie Han from China, currently work in Toronto, Canada. Thiscurrently work in Toronto, Canada. Thiscurrently work in Toronto, Canada. This is my ninth bookshare meetings. So Iis my ninth bookshare meetings. So Iis my ninth bookshare meetings. So I guess I'm officially a repeat customer
Questionerguess I'm officially a repeat customer and like the most shareholders, I plan to stick around for the long term. Over the years, Mr. Buffets has often said that capsule allocation is BSR's most important responsibility. Today, we are in a very different environment. interest rates are higher, cash actually earns something again and competition for quality assets has increased globally. Uh the station lady actually read my mind a little bit actually my question is how should long-term investor think about their capital allocation approach today when patience has a real opportunity cost and also for Mr. able. As you step further into this role, how do you personally balance patient vas action, especially when standards are shaped by decades of M. Buffett's track record? Thank you.
OtherThank you. And thank you for attending your ninth shareholder meeting.
Questioneryour ninth shareholder meeting.
Greg AbelYeah. So again, when it comes to our capital allocation approach and and the and the long-term uh approach we've taken, it's very much aligned with our owners and our shareholders that are here. Uh they've taken a very long-term approach around their their investment. they've we're fortunate to have this unique ownership base within our our shareholdings and again over the long term there will be significant opportunities for Berkshire and and this is where it's back to the patience and the discipline around capital allocation. Do we have any idea what uh will occur tomorrow or will that event be 3 years from now, 2 years from now? But there will be dislocations in markets that again will allow us to act and that's where the both disciplined approach knowing how we're going to uh our investment philosophy around uh
Greg Abelour investment philosophy around uh those activities. And and I would add it's not that we don't see exceptional companies out there today that we'd love to own a and I'll be careful because I I wouldn't want to say we we long term we'd be happy to own those companies because there there's excellent companies that have excellent management teams that that uh we evaluate and I would say when you think of the world it doesn't mean there's multiple handfuls of those type of companies but they're there but the price relative to the opportunity, the economic prospects of that company and the related risks. Um, we're not interested in in acquiring those those companies at that at that price and that can be a piece of them or all of them. That that doesn't mean that opportunity won't be there in the future. It's what we spend our time preparing for. Uh,
Greg Abelwe spend our time preparing for. Uh,we spend our time preparing for. Uh, i.e. one being disciplined, but twoi.e. one being disciplined, but twoi.e. one being disciplined, but two being aware of of some corebeing aware of of some corebeing aware of of some core opportunities we would treasure or valueopportunities we would treasure or valueopportunities we would treasure or value at the right price. And and that reallyat the right price. And and that reallyat the right price. And and that really ties back to the to the to theties back to the to the to theties back to the to the to the discipline. And I you asked mediscipline. And I you asked mediscipline. And I you asked me personally uh my plan for for patiencepersonally uh my plan for for patiencepersonally uh my plan for for patience for over maybe quote action. Again, itfor over maybe quote action. Again, itfor over maybe quote action. Again, it aligns to uh I took this role and and amaligns to uh I took this role and and amaligns to uh I took this role and and am so fortunate to be in it and work withso fortunate to be in it and work withso fortunate to be in it and work with Vijet and others, but we do it becauseVijet and others, but we do it becauseVijet and others, but we do it because we we love and believe in Berkhire.we we love and believe in Berkhire.we we love and believe in Berkhire. Warren brought this great commitment toWarren brought this great commitment toWarren brought this great commitment to to Berkshire, a great understanding ofto Berkshire, a great understanding ofto Berkshire, a great understanding of Berkhire and passionBerkhire and passionBerkhire and passion and and with that he wanted to createand and with that he wanted to createand and with that he wanted to create something that was very long-termsomething that was very long-termsomething that was very long-term including the opportunities it would itincluding the opportunities it would itincluding the opportunities it would it would create. uh personally and I knowwould create. uh personally and I knowwould create. uh personally and I know all of us we bring that that sameall of us we bring that that sameall of us we bring that that same passion and we fully intend to do itpassion and we fully intend to do itpassion and we fully intend to do it consistent with how we've uh how we'veconsistent with how we've uh how we'veconsistent with how we've uh how we've
Otherconsistent with how we've uh how we've done it in the past. So thank you.
OtherYeah. Yeah. A please I should have Thank you. Thank you. Um, you know, insurance, much like investing, is a game that requires patience. And it is very difficult to get people to sit back and do nothing. When I recruit people, my modus operendi, I tell them right up front, I said I tell them, "Your job is to say no. You will get bombarded with deals day in and day out, but your base case is just say no. I said every now and then you will come across a deal that'll hit you with a 2x4 and it'll be screaming money. That's when you come to me and we'll make a decision whether to do it or not. Yeah,you know, all all kidding aside, it is you know, all all kidding aside, it is very difficult to sit there and do nothing while everyone else is being binded and dying by brokers and taken to London. Uh so I think the real test of being successful certainly in insurance
Questionerbeing successful certainly in insurance and therefore in investing as well is the ability to say no.
OtherYes. Low strategy.
Greg AbelI think it applies to insurance and I think your earlier comment I mean it is it's so applicable across all our businesses. Uh this it did remind me of one story and I'll just share quickly. We uh we were uh we had acquired a company and we were still in um um having a challenging matter with how we were going to resolve some matters. And I remember the the deposition and I don't want to say it's one of my most proudest moments but it was close to it. They said, "Well, how would you describe Greg as a as a CEO and a manager?" And they said, "Well, all he says is no."
OtherAnd I think that's part of management. You have to be ready and including investment, you have to be disciplined and ready to say no. And it and trust me, we understand that a lot of people
Questionerme, we understand that a lot of people have this urgency to act, but you described it uh incredibly well. Thank you.
Other>> Let's go back to Becky. Becky,
Becky Quick>> thanks Greg. This question is for and um the writer is Mindy Wasserman. The question is how and when can you offer insurance to ships crossing the straight of Hormuz?
Warren>> I mean the short answer is depends on the price. Ajit I uh I like your Charlie answer. Um obviously some thought has gone into that because there's a lot of dynamics there.
Ajit Jain>> Yeah, there is a lot of chatter, there's a lot of need. Uh fortunately there's enough capacity in the insurance world today that would like to write that risk for no other reason but people are sitting on excess capital and they'd like to find a way to deploy that excess capital. uh we ourselves have taken a small participation in a program that's put in being put in place so as to write insurance for the
Ajit Jainplace so as to write insurance for the ships in the in the state of Homo. Uh we haven't written any deals as yet. It's still being fine-tuned, but if we can get our terms in terms of the underwriting decisions and the fact that the US Navy will escort these ships, we have put a price on which we will be comfortable underwriting that risk. But nothing has happened as yet.
Becky QuickThank you. Thanks. Thanks, Becky. Uh, station three.
QuestionerGood morning, Mr. able. My name is Josh and I'm from China. So my question is about the key investing principle staying within your circle of competence. I imagine you and Mr. Buffett each have a somewhat different circle of competence. So how do you plan to manage the portfolio by established by Warren Buffett? Thank you.
Greg AbelThank you. Um yeah, as far as managing the existing portfolio and what's in that, um that portfolio as you as you touched on was
Greg Abelportfolio as you as you touched on was put together by Warren, but it is a group of companies that uh Warren understands uh thoroughly and I would be very comfortable that I understand the businesses, the economic prospects of those businesses. So, and that's why when I outlined it in the letter, I was really trying to send the message that yes, we're very comfortable with those. We understand it and and yes, it's a concentrated portfolio, but you know, their businesses will evolve and there's there's risks that may surface. So, we're we'll constantly evaluate it, but it's it's it's a portfolio very very comfortable with. And, you know, Warren Warren touched on Tim's Tim Cook's uh um amazing success with Apple, but it you know, Warren and and and Tim were recently discussing this and and they were talking about Warren didn't
Questionerthey were talking about Warren didn't invest in it because he saw it as a technology stock. He saw what the product was and how much the individual consumer valued it. And it's a remarkable perspective, but it would be very much a similar perspective that I think many of us would apply. Would, you know, uh maybe electricity I know a lot and I know how to make sure something gets generated and how we're going to transfer and all that, but am I really that interested in how they make the Apple phone? I I'll be intrigued by where they make it and some of the risks and challenges around that. But I I do fully and our team, you know, when we talk about it uh on a more broad basis. Listen, we're looking and saying, do we do we understand the value and what why that product has value? And it's really that value to the to the consumer. I
Greg Abelthat value to the to the consumer. I think the the unique opportunity we have and so fortunate is that Warren comes into the office each day. It's fortunate that we get to discuss potential other opportunities that may be out there bringing a different set of skill sets. But in the end, we're going to narrow pretty quickly down to what's what's the opportunity? Why why is it valued? Why does the consumer whoever is using it the whatever industry is it it it is what's why will that company in that product endure and then associated with that where are the risks associated with that and that and that pretty much is how Warren approached it how how I approach it um so the uh when it comes to our existing portfolio yes we'll always be well well aware of what we've invested in. But as far as understanding those the opportunities and risks within them,
Greg Abelthe opportunities and risks within them, very comfortable that uh have a strong view in that and we're comfortable where we're at. Thank you.
OtherAnything there?
Ajit JainNo.
Becky QuickOkay, Becky.
Becky QuickThis question is for Greg, but I think it's important that you take it while Ajit's on stage with you so he can answer some of it, too. Uh, it comes from Zachary Phelps from Medfield, Massachusetts, who writes, "Ajet Jane has been described by Warren as irreplaceable. He's helped build one of the greatest insurance operations in history and has been the backbone of Berkhire's underwriting discipline. How are you thinking about succession planning for Ajet and the insurance business? And how do you ensure that the underwriting culture, the insurance mode is preserved in the next generation of leaders? And Greg, I'll just add for compression's sake. I I did get questions about your succession
Questionerquestions about your succession planning, too. So maybe you can add that in there.
WarrenI don't know how I'm supposed to take that. Um, no. uh both succession obviously succession's an important um uh topic and I'll I'll come back to our board both relative to Ajit and I and I touched on this earlier I mean Ajit joined Berkhire in 1986 and is the architect of our insurance business uh along with obviously warn and input from Charlie but it's a we've created a franchise that's second to none and we couldn't be more proud of it and and as it was touched on the culture and the discipline within within it is exceptional. Now uh I found it really interesting and I I you know when Warren announced the transition last year and Ajit recall this uh the very first thing that happened was we left that meeting there's a lot going on and Warren said let's to to but then also myself let's
Greg Abellet's to to but then also myself let's get the insurance managers together our top five along with the jeep and with Mark Hamburg and let's let's sit down and talk about the business. Let's talk let's discuss the the culture and it was a remarkable opportunity for me to one expand my knowledge base on the insurance side and I um obviously been working with the jeep for a number of years and had other board opportunities where I had a a a wide understanding of but then to spend time with the jeet and our team and and have Warren's perspectives it was great and that was literally the first action Warren took and What I could see within that group was a very deep group that of management experience, insurance experience and they absolutely had the same values and culture that uh that Ajit has has highlighted. Now I think when it comes
Greg Abelhighlighted. Now I think when it comes to culture Ajit touched on it already which is it is challenging to keep a culture where you maintain that discipline. uh because as he said in action and telling people, you know, take a few months off when they're used to being active is not easy if they're if they're that type of uh underwriter or or or selling product. So, that's the delicate balance. But when it when it comes to we're fortunate he's got an exceptional group that works with them and and then also operates a number of our critical subsidiaries. They're they're deep in both knowledge and talent. I would then also uh highlight our board takes the succession issues very sincere seriously both with Ajit and myself. Uh we have a we have a plan they have a plan in place and they discuss it. So uh if Ajit were unable to perform uh in his role today
Questionerunable to perform uh in his role today or I was unable to perform our boardor I was unable to perform our boardor I was unable to perform our board knows what action uh they would take.knows what action uh they would take.knows what action uh they would take.
WarrenUm, Ajit.Um, Ajit.Um, Ajit.
Ajit Jain>> Yeah. Uh,>> Yeah. Uh,>> Yeah. Uh, so in terms of the culture and theso in terms of the culture and theso in terms of the culture and the underwriting orientationunderwriting orientationunderwriting orientation which is so critical, there are a fewwhich is so critical, there are a fewwhich is so critical, there are a few simple rules that I've followed over thesimple rules that I've followed over thesimple rules that I've followed over the yearsyearsyears and it's come at a cost but I think netand it's come at a cost but I think netand it's come at a cost but I think net net is still a positive. But let me justnet is still a positive. But let me justnet is still a positive. But let me just lay it out in terms of how I think aboutlay it out in terms of how I think aboutlay it out in terms of how I think about this issue.this issue.this issue. Firstly, we have a very small number ofFirstly, we have a very small number ofFirstly, we have a very small number of people who actually get involved in thepeople who actually get involved in thepeople who actually get involved in the decision- making.decision- making.decision- making. My top three left in my reinsuranceMy top three left in my reinsuranceMy top three left in my reinsurance operation, forgetting about companiesoperation, forgetting about companiesoperation, forgetting about companies that we acquire, we have been togetherthat we acquire, we have been togetherthat we acquire, we have been together for 35 plus years now and we becomefor 35 plus years now and we becomefor 35 plus years now and we become friends. We and the and the other thingfriends. We and the and the other thingfriends. We and the and the other thing to minimize any kind of competitionto minimize any kind of competitionto minimize any kind of competition among these people and stepping on eachamong these people and stepping on eachamong these people and stepping on each other's toes. We have a compensationother's toes. We have a compensationother's toes. We have a compensation plan that gives fixed salaries fixedplan that gives fixed salaries fixedplan that gives fixed salaries fixed compensation to the individuals as
Warrencompensation to the individuals as opposed to having some complex formula that results in they get the upside and burkshire gets the downside. Uh I try and stay away from that as much as possible. really a problem with all the compensation plans I've seen. Um then the other thing that is important is people need to have experienced uh going through a tough time and the fact that it doesn't penalize them. We insulate them from the ups and downs of the marketplace so that they feel secure and they do the right thing and yeah so those are the elements that I think allow us to have a long-term orientation and not get sucked into the latest fashion of the year day and just do stuff for the sake of doing
Questioneryour compensation question such a a critical point as
Warrenyeah
Questionerthe compensation thing Having seen all these programs over the years, I
Ajit Jainthese programs over the years, I remember having mentioned to Warren at some point in time. I said, "Warren, you give me a compensation plan, I'll game it. You'll not be able to figure it out for years down the road." Uh, and that's the problem together with the fact that if the employees lose, they want to go back and renegotiate the plan, and if they win, they're happy to walk away with everything. Uh, so that's the big challenge.
OtherThank you. Thank you, Ajit. Thank you, Becky.
Becky QuickWe'll go to station 4.
QuestionerHello, Mr. Ael. My name is Kansas and I attend Elkrin South High School in West Omaha. Mr. Ael, you may remember me from last year and I'm here to question your company's business model again. It is compromising my future and the planet's future. Mr. Able. In your first letter to shareholders, you wrote, "Birkshire Hathaway avoids businesses that undermine the fabric of society, but
Questionerundermine the fabric of society, but Birkshshire's electric utilities continue to invest in fossil fuels that are driving the climate crisis. Can you tell me and my graduating class when Birkshshire Hathways Utilities will retire their fossil fuels, transition to renewable alternatives, and stop causing irreparable damage to the environment and my generation's future? Thank you.
OtherThank you.
Greg AbelI had a very uh long and extensive answer last year to the to the um question. Um and and it it is an important one, but I think it's one we have to recognize. Uh when we and we we have I'll touch on rail our rail too. We we have certain companies where we very much operate and this would be our utilities. It would be our our including our our pipelines. Um we we operate as a steward of those assets. We we operate as a steward of those assets effectively for our states and
Greg Abelassets effectively for our states and for our our customers.for our our customers.for our our customers. And whenever we approach resources, forAnd whenever we approach resources, forAnd whenever we approach resources, for example, that we may own or what we'reexample, that we may own or what we'reexample, that we may own or what we're going to build, it's very much first andgoing to build, it's very much first andgoing to build, it's very much first and foremost, we absolutelyforemost, we absolutelyforemost, we absolutely need to comply with the con the uhneed to comply with the con the uhneed to comply with the con the uh current laws that are in place,current laws that are in place,current laws that are in place, including the federal laws. Um, so we weincluding the federal laws. Um, so we weincluding the federal laws. Um, so we we know what those parameters are and as weknow what those parameters are and as weknow what those parameters are and as we see federal law and state law across oursee federal law and state law across oursee federal law and state law across our many states, but the federal law theremany states, but the federal law theremany states, but the federal law there there are things they do and there arethere are things they do and there arethere are things they do and there are things implemented to uh reduce thethings implemented to uh reduce thethings implemented to uh reduce the impact on the environment. We're veryimpact on the environment. We're veryimpact on the environment. We're very sensitive to that and our our teams aresensitive to that and our our teams aresensitive to that and our our teams are absolutely committed to both complyingabsolutely committed to both complyingabsolutely committed to both complying and and absolutely doing it right. Um, Iand and absolutely doing it right. Um, Iand and absolutely doing it right. Um, I would then add that if we're discussingwould then add that if we're discussingwould then add that if we're discussing our facilities, for example, across theour facilities, for example, across theour facilities, for example, across the river in in Iowa,river in in Iowa,river in in Iowa, um, we we have plans on resources andum, we we have plans on resources andum, we we have plans on resources and when we'll um retire our our our coalwhen we'll um retire our our our coalwhen we'll um retire our our our coal units potentially and and our gas units.
Greg Abelunits potentially and and our gas units. That's very much driven by state policy. It's the state will decide, i.e. through their policy legislature and through our our regulatory processes uh how we'll operate what ass how long we operate these assets because in the end it's that those customers that both uh bear the bear the cost and bear the risk and very much we're we are very respectful of that and as I said we're stewards of that do we provide input into that process absolutely so for example I I know I touched on this last year. But if I look at our Iowa utility, uh this is this changes every year because of the load growth we've discussed. But if we look at on a on a on a 12-month 365day period, uh 93, it'll be very close on this. Approximately 93% of our energy came from renewable energy. That's remarkable. They they absolutely lead the nation and
Greg AbelThey they absolutely lead the nation and we've done that in a way where we could do it in an affordable way. But yes, we still have our carbon resources there. We still operate our our coal plants. We need them to deliver uh uh as I would call protection to the system. I it stabilizes it and there's peak times we need it. But do we use them less? Absolutely. But that's a policy our state made many years ago and we provided a lot of input as I said and and we've deployed the capital to um ensure that could be delivered. But the reality is um state by state they'll decide what resources we'll deploy to serve the customers and they'll and they'll also very much provide us input on when we'll retire our units. The real challenge going forward and it's it's well beyond Iowa because I think Iowa we and and our other utilities we approach
Greg Abeland and our other utilities we approach it in a very prudent way and we've got it in a very prudent way and we've got it in a very prudent way and we've got uh one i.e. prudently. We're doing it uh one i.e. prudently. We're doing it uh one i.e. prudently. We're doing it consistent with our our state policy, consistent with our our state policy, consistent with our our state policy, but want to do it in a call it a frugal but want to do it in a call it a frugal but want to do it in a call it a frugal way. We're trying to we're not we're not way. We're trying to we're not we're not way. We're trying to we're not we're not building for just sake of building. building for just sake of building. building for just sake of building. We're trying to do things that are are We're trying to do things that are are We're trying to do things that are are that we feel are best for our states. that we feel are best for our states. that we feel are best for our states. But but the challenge is when you talk But but the challenge is when you talk But but the challenge is when you talk about the hyperscalers and the data about the hyperscalers and the data about the hyperscalers and the data centers centers centers uh there there's that's putting a lot of uh there there's that's putting a lot of uh there there's that's putting a lot of pressure on the system and there'll be a pressure on the system and there'll be a pressure on the system and there'll be a you know if you if you look at the you know if you if you look at the you know if you if you look at the amount of gas units purchased uh amount of gas units purchased uh amount of gas units purchased uh there'll be an incremental amount of there'll be an incremental amount of there'll be an incremental amount of carbon units used as we go forward if carbon units used as we go forward if carbon units used as we go forward if that's going to be a valued if if that's going to be a valued if if that's going to be a valued if if artificial intelligence and the artificial intelligence and the artificial intelligence and the consumers want that uh that and that's a consumers want that uh that and that's a consumers want that uh that and that's a valued product. going to put a lot of valued product. going to put a lot of valued product. going to put a lot of pressure on the systems and on uh the pressure on the systems and on uh the pressure on the systems and on uh the type of assets we use and and the
Questionertype of assets we use and and thetype of assets we use and and the industry usesindustry usesindustry uses a anything on the insurance side becausea anything on the insurance side becausea anything on the insurance side because I know you've gone on the insurance sideI know you've gone on the insurance sideI know you've gone on the insurance side as far as uh how what do we ensure howas far as uh how what do we ensure howas far as uh how what do we ensure how do we approach itdo we approach itdo we approach it
Greg Abel>> yeah so right now>> yeah so right now>> yeah so right now in the insurancein the insurancein the insurance sphere the supply is greater than thesphere the supply is greater than thesphere the supply is greater than the demanddemanddemand And that makes it very difficult to beAnd that makes it very difficult to beAnd that makes it very difficult to be able to carve out a deal that rationallyable to carve out a deal that rationallyable to carve out a deal that rationally is good for the buyer and the seller. Uhis good for the buyer and the seller. Uhis good for the buyer and the seller. Uh when supply is greater than demand, thenwhen supply is greater than demand, thenwhen supply is greater than demand, then it's the seller that loses. So becauseit's the seller that loses. So becauseit's the seller that loses. So because of that, we haven't been active inof that, we haven't been active inof that, we haven't been active in getting involved in writing insurancegetting involved in writing insurancegetting involved in writing insurance for these new facilities, the datafor these new facilities, the datafor these new facilities, the data centers,centers,centers,
Questioner>> the hyperscalers. Yeah.>> the hyperscalers. Yeah.>> the hyperscalers. Yeah.
Greg Abel>> Yeah.>> Yeah.>> Yeah. >> Yeah. But clearly there is a surge in>> Yeah. But clearly there is a surge in>> Yeah. But clearly there is a surge in demand and as long as supply doesn't godemand and as long as supply doesn't godemand and as long as supply doesn't go crazy, we will get a few days in the suncrazy, we will get a few days in the suncrazy, we will get a few days in the sun sometime in the next few years.sometime in the next few years.sometime in the next few years.
Questioner>> Yeah, thank you. Uh very valid question,>> Yeah, thank you. Uh very valid question,>> Yeah, thank you. Uh very valid question, but again very very
Greg Abelbut again very very uh proud. I would say literally proud uh proud. I would say literally proud uh proud. I would say literally proud because I think the one thing we've because I think the one thing we've because I think the one thing we've always emphasized across our utilities, always emphasized across our utilities, always emphasized across our utilities, across our regulated entities, that across our regulated entities, that across our regulated entities, that would include BNSF, they have to move would include BNSF, they have to move would include BNSF, they have to move certain product that has certain risks certain product that has certain risks certain product that has certain risks and dangers around it. We are a carrier and dangers around it. We are a carrier and dangers around it. We are a carrier of that. We have to that's a an of that. We have to that's a an of that. We have to that's a an obligation that came with with that obligation that came with with that obligation that came with with that railroad. Just like our utilities, there railroad. Just like our utilities, there railroad. Just like our utilities, there are certain things we do that are are certain things we do that are are certain things we do that are absolutely required. And the key is that absolutely required. And the key is that absolutely required. And the key is that we do it consistent with uh what's we do it consistent with uh what's we do it consistent with uh what's required both federally and at the state required both federally and at the state required both federally and at the state level and that we're exceptional level and that we're exceptional level and that we're exceptional stewards of the underlying assets. stewards of the underlying assets. stewards of the underlying assets. So with that So with that So with that uh I just we're going to move a thank uh I just we're going to move a thank uh I just we're going to move a thank you and we're going to move to uh our you and we're going to move to uh our you and we're going to move to uh our next session but let me explain how it's next session but let me explain how it's next session but let me explain how it's going to play out a little bit. So, going to play out a little bit. So, going to play out a little bit. So, we're approaching 11:00. As we we're approaching 11:00. As we we're approaching 11:00. As we transition, we'll we'll we'll move to a
Othertransition, we'll we'll we'll move to a NetJets video. Again, just give you some uh more knowledge on NetJets and Adam Johnson. We'll then take a break, but this is the uh the the exciting part, and we're very fortunate Warren agreed to this. At 11:45, Becky and Warren will do an interview backstage. So, basically in 45 minutes, if you take a break and then reconvene, we'll have Warren on the uh large screen. Uh Becky is will interview them. As we take the break, there'll be a couple other activities. Um one, you'll get a 3minut warning before the 11:45. So, if you'd like to rejoin us, but you'll be able to see it throughout the arena, but it'll be a again an interview from Warren. And then, uh, also during the break, we often did commercials during the movies and we could have incorporated into the video. We'll have those at the 15minute
Othervideo. We'll have those at the 15minute mark. Basically, at 11:30, the videosmark. Basically, at 11:30, the videosmark. Basically, at 11:30, the videos will the uh commercials will play.will the uh commercials will play.will the uh commercials will play. That'll be a 12minute se uh reel of ourThat'll be a 12minute se uh reel of ourThat'll be a 12minute se uh reel of our various commercials from our differentvarious commercials from our differentvarious commercials from our different companies. Be a three-minute warning andcompanies. Be a three-minute warning andcompanies. Be a three-minute warning and then we have the interview with Warrenthen we have the interview with Warrenthen we have the interview with Warren and then we'll recommence the thirdand then we'll recommence the thirdand then we'll recommence the third session. As we recommence that session,session. As we recommence that session,session. As we recommence that session, we'll have a video from Katie on BNSFwe'll have a video from Katie on BNSFwe'll have a video from Katie on BNSF that allow our team to get settled inthat allow our team to get settled inthat allow our team to get settled in here. So, please uh enjoy your break ashere. So, please uh enjoy your break ashere. So, please uh enjoy your break as we go to it. And Becky and Warden, wewe go to it. And Becky and Warden, wewe go to it. And Becky and Warden, we look forward to your interview. Thanklook forward to your interview. Thanklook forward to your interview. Thank you.
Other>> Back to CNBC's special coverage of the>> Back to CNBC's special coverage of the>> Back to CNBC's special coverage of the Berkshire Hathaway annual shareholderBerkshire Hathaway annual shareholderBerkshire Hathaway annual shareholder meeting. I'm Mike Sani live in Omaha,meeting. I'm Mike Sani live in Omaha,meeting. I'm Mike Sani live in Omaha, Nebraska. CEO Greg Ael and vice chairmanNebraska. CEO Greg Ael and vice chairmanNebraska. CEO Greg Ael and vice chairman of insurance operations Ajit Jane takingof insurance operations Ajit Jane takingof insurance operations Ajit Jane taking questions for a little over an hourquestions for a little over an hourquestions for a little over an hour after Ael presented a state of theafter Ael presented a state of theafter Ael presented a state of the business update. Abel has just called abusiness update. Abel has just called abusiness update. Abel has just called a break and he also told shareholders that
Otherbreak and he also told shareholders that Becky Quick will interview chairman Warren Buffett. That will kick off in less than an hour right here on CNBC.com. We have a big halftime show for you. Becky Quick is heading back over here to join us and we'll speak with Accidental Petroleum CEO Vicky Halib, Berkhire's Brooks running CEO Dan Sheridan, and former Activision Blizzard CEO and longtime Berkhire shareholder Bobby Kodic. While this morning was the start of a new era with Greg Ael running things, Warren Buffett stole the show to start off. Uh he began with uh it began with Greg Ael thanking Warren for his 60 years running Berkhire and raising a Buffett banner to the rafters of the arena, symbolically retiring his number 60 jersey. The crowd wildly cheering this moment. After that, Abel turned over the mic to Warren Buffett himself, who was seated
OtherWarren Buffett himself, who was seated on the floor.
OtherBuffett started out by saying how happy he is with his decision to turn Berkshire over to Greg Ael, saying, "We couldn't have made a better decision," adding that Greg is the right person.
OtherBuffett then trumpeted Berkhire's biggest holding, of course, that is Apple.
Warren10 years ago, we made a commitment uh to essentially move 10% of the resources of Berkshire Haway. uh we turned it over to another uh person who was not that well known at the time. And we did that uh by spending uh roughly $35 billion uh buying uh stock in Apple Corp. add uh and we were going to have that uh under the management. We're we're turning that money over to the management essentially of Apple to make Berkshire look good and without any work by us which is our preferred way of operating and I would like to report that 10 years
WarrenI would like to report that 10 years later several things are happening. One is the 35 billion uh counting dividends realized appreciation unrealized appreciation. But that has turned into 185 billion uh tax.and uh and I didn't have to do a damn thing.
Other>> Buffett also took a moment to recognize CEO Tim Cook as he gets ready to step down this fall.
Warren>> Tim has announced that he's uh retiring as well. That's that's an announcement that's just been made in the last couple of years. And so I think it's appropriate if if Tim would take a bow and our shareholders would say thanks to him that Tim is right by me.
OtherWarren did not uh you know make mention of the fact that Tim Cook is retiring at an age 30 years younger than than Warren himself did. He's at 65 right now. Now, following all that, Greg Ael then went into the business update. One of the things that struck out was uh AI and the
Greg Abelthings that struck out was uh AI and the need for Berkhire to build out its own tech infrastructure to work across all of its businesses. First and foremost, we recognized we were going to become a builder of technology rather than just a buyer of technology. And that meant that instead of we had a number of systems and we often bought the related applications or software that came with it and yes it's it's a valued uh application but it was disconnected from all our systems. Obviously, we didn't have that ability to then use the information, get to the data. And what they started to talk about is simplifying the infrastructure, making sure we would build what we needed ourselves and deliver solutions back to our customers and we would have clear access to the data. All things that make a lot of sense, but a massive challenge and it doesn't happen
Greg Abelchallenge and it doesn't happen overnight. So we've started down that journey and one of the first things you have to do is say okay we need a different resource base. So now we're hiring engineers we hire developers in our technology group that help us start to build the solutions we need for these businesses.
QuestionerI don't have my news. So that was Greg talking about the need for uh you know cross investment across AI. AI a little bit of a sub theme of course in the morning in various ways.
QuestionerYeah. I I mean I think what's so different about this meeting I don't know what you said before I got back here is just the amount of information that Greg and then a Jeep kind of unloaded on the investors about the businesses that they own on the shareholders about these businesses that they own.
QuestionerThe only thing I'll say as somebody who sat here for a long time and had a lot
Questionersat here for a long time and had a lot of questions from shareholders, I wasof questions from shareholders, I wasof questions from shareholders, I was checking off questions left and rightchecking off questions left and rightchecking off questions left and right that he was answering before we even gotthat he was answering before we even gotthat he was answering before we even got to on some of these things. So, he heto on some of these things. So, he heto on some of these things. So, he he went pretty deep into this. And I thinkwent pretty deep into this. And I thinkwent pretty deep into this. And I think if you're a shareholder, you probablyif you're a shareholder, you probablyif you're a shareholder, you probably feel a lot more comfortablefeel a lot more comfortablefeel a lot more comfortable
Questionerkind of understanding a not only a lot>> kind of understanding a not only a lot>> kind of understanding a not only a lot about these businesses, but alsoabout these businesses, but alsoabout these businesses, but also realizing b Greg knows an awful lot andrealizing b Greg knows an awful lot andrealizing b Greg knows an awful lot and very deep on all of these businesses,very deep on all of these businesses,very deep on all of these businesses, too.too.too.
QuestionerDefinitely conveyed um sort of the>> Definitely conveyed um sort of the>> Definitely conveyed um sort of the breadth of his grasp without a doubt.breadth of his grasp without a doubt.breadth of his grasp without a doubt. there was a density of the information.there was a density of the information.there was a density of the information. Also, I think Warren and and CharlieAlso, I think Warren and and CharlieAlso, I think Warren and and Charlie while he was here, they sort of assumedwhile he was here, they sort of assumedwhile he was here, they sort of assumed a level of familiarity with the broada level of familiarity with the broada level of familiarity with the broad outlines of the business, not having tooutlines of the business, not having tooutlines of the business, not having to explain necessarily the insurance floatexplain necessarily the insurance floatexplain necessarily the insurance float and how much flows through, but I doand how much flows through, but I doand how much flows through, but I do think there's value in bringing peoplethink there's value in bringing peoplethink there's value in bringing people up to that point. And also, I I detected
Questionerup to that point. And also, I I detected even though he's never going to have any kind of corny corporate speak about synergy. Yeah.
QuestionerHe was drawing connections. He was talking about there's a metals business within the industrials businesses that all sort of have a connection to each other. Yeah. And they whether they're a customer of the other. Um and so it's not to say that the conglomerate magic works because everything fits together, but it's not random.
QuestionerRight. And and and again on the AI on touching on the idea that you have these centralized off office operations. I've still got to go back and look through some of these questions to see which ones still apply on all of those levels. Is this still a decentralized kind of minimally oversight? He said we're not going to have bureaucracy, but it sounds like it's a lot more centralized, at
Questionerlike it's a lot more centralized, at least in notion, than it has been to this point. And certainly a lot more attention coming on operations.
QuestionerHe refers to operational excellence. It seems like it's a kind of an internal catchphrase and that means something. It means, you know, attention to margins or maybe some compensation uh things. Maybe just, you know, a closer eye on. The other thing I'll say from this when Ajit sat down with him the two of them kind of going back and forth that was a more comfortable conversation and a more um philosophical philosophical philosophical conversation I should say than I've heard in the past with those two. And it was a little more reminiscent of
QuestionerCharlie and Warren sitting on stage together where they kind of riff off each other a little bit. not not on the same level, but there was a a new level
Othersame level, but there was a a new level of comfort and a new level of kind ofof comfort and a new level of kind ofof comfort and a new level of kind of stepping into their roles and notstepping into their roles and notstepping into their roles and not worrying about looking over theirworrying about looking over theirworrying about looking over their shoulders about what anybody else wasshoulders about what anybody else wasshoulders about what anybody else was paying attention to with it. what whatpaying attention to with it. what whatpaying attention to with it. what what Ajet was just saying where he wasAjet was just saying where he wasAjet was just saying where he was speaking aboutspeaking aboutspeaking about how they get down to the idea that youhow they get down to the idea that youhow they get down to the idea that you don't want to do like the key to doingdon't want to do like the key to doingdon't want to do like the key to doing something great in insurance is to notsomething great in insurance is to notsomething great in insurance is to not do anything. Say no everythingdo anything. Say no everythingdo anything. Say no everything
Other>> and then to tell all of your the people>> and then to tell all of your the people>> and then to tell all of your the people that you have underneath you to makethat you have underneath you to makethat you have underneath you to make sure that their compensation is notsure that their compensation is notsure that their compensation is not based on them writing insurance for thembased on them writing insurance for thembased on them writing insurance for them to to get paid. It's on making sureto to get paid. It's on making sureto to get paid. It's on making sure you're making the right choices andyou're making the right choices andyou're making the right choices and you're going to have a flat a flatyou're going to have a flat a flatyou're going to have a flat a flat compensation structure no matter what.compensation structure no matter what.compensation structure no matter what. So you're not incentivized to go out andSo you're not incentivized to go out andSo you're not incentivized to go out and do the very thing that's going to winddo the very thing that's going to winddo the very thing that's going to wind up leaving Birkshire on the hook.up leaving Birkshire on the hook.up leaving Birkshire on the hook.
Questioner>> Yeah. the the investment discipline was
QuestionerYeah. the the investment discipline was was certainly a key uh a key kind of theme that came through as well and that was one of those ways. I totally agree with that. I mean they were you know kind of peers within the company for a pretty long period of time running separate parts of it.
QuestionerYeah. It's just it's it's nice to kind of hear more from them. Not that this like a semi-evolution that took place over the last 5 months. This is obviously something that was always there,
Questionerbut they're able to speak a little more plainly and openly probably than they did before. Um, so in the room were did people think that the the warrant asking the question was for real or what was
QuestionerNo, I don't think so. You'd already seen him on the floor, right?
QuestionerWell, or that it was a straight video as opposed to an AI fake.
QuestionerIt was a deep fake. And I I'm glad Greg
QuestionerIt was a deep fake. And I I'm glad Greg acknowledged that at the end because I acknowledged that at the end because I acknowledged that at the end because I was thinking nobody thinks this is real, was thinking nobody thinks this is real, was thinking nobody thinks this is real, right? Although there's probably a few right? Although there's probably a few right? Although there's probably a few people who might have gotten fooled people who might have gotten fooled people who might have gotten fooled otherwise. But I mean, that's an otherwise. But I mean, that's an otherwise. But I mean, that's an interesting question by itself, how good interesting question by itself, how good interesting question by itself, how good uh deep fakes are at this point. I have uh deep fakes are at this point. I have uh deep fakes are at this point. I have to not, you know, it's no longer believe to not, you know, it's no longer believe to not, you know, it's no longer believe half of what you read and and or half of half of what you read and and or half of half of what you read and and or half of what you see and nothing of what you what you see and nothing of what you what you see and nothing of what you read. It's now believe nothing of what read. It's now believe nothing of what read. It's now believe nothing of what you hear, read, or see. Um, yeah. Trust you hear, read, or see. Um, yeah. Trust you hear, read, or see. Um, yeah. Trust and verify, I guess, on everything. and verify, I guess, on everything. and verify, I guess, on everything.
OtherVerify first, maybe trust later. Yeah.
OtherAll right. Berkhire is Accidental All right. Berkhire is Accidental All right. Berkhire is Accidental Petroleum's largest shareholder, and Petroleum's largest shareholder, and Petroleum's largest shareholder, and earlier this year, it acquired Oxy Chem. earlier this year, it acquired Oxy Chem. earlier this year, it acquired Oxy Chem. That's a deal worth almost $10 billion. That's a deal worth almost $10 billion. That's a deal worth almost $10 billion. That is thanks in part to the That is thanks in part to the That is thanks in part to the relationship that was forged by CEO relationship that was forged by CEO relationship that was forged by CEO Vicky Halib of Accidental. She now joins Vicky Halib of Accidental. She now joins
QuestionerVicky Halib of Accidental. She now joins us live in Omaha. And Vicki, first of all, welcome. It's great to see you.
QuestionerThank you. It's great to be here. Uh the big news yesterday is that you announced that after 10 years as the CEO and 40 years with Accidental that you're going to be stepping down next month. Um that's some big news. What brought you that to that decision?
OtherWell, the the reality is that with a an incredible leadership team and amazing employees and a strong board, we have over the past 10 years accomplished everything that we set out to do in 2016 when I took the role. What we've done is transformed our portfolio. We've taken it from uh a part a company that was 50% production in the Middle East with a lot of risk to now geopolitically much better. where 83% of our production is in the United States. We've taken it from um from production of 650,000
Otherfrom um from production of 650,000 barrels a day to 1.4 million barrels a day. We've doubled our resource, more than doubled. We've gone from 8 billion BOE of resource of oil and gas to 16.5 billion. And we've um also been able to um to ensure that we had sustainability along runway. the portfolio is not just double more than double it's higher quality assets so higher margin assets and so now we've got 30 years of runway uh in our portfolio assuming uh activity at the current level but now we're not going to keep the current level we will take advantage of accelerating this this runway these this 16 1.5 billion we can accelerate that when the macro allows and what that's going to do it's going to be a massive value creator for Oxy. And now that we've done all that we needed to do to get the portfolio straightened out to to get to where we are with the assets and
Greg Abelget to where we are with the assets and the sustainability, now it's just a matter of developing it. So now we don't we control our own destiny from that standpoint. We don't have to depend on M&A or any future contracts from anybody in the Middle East or in anywhere internationally. we can decide when we want to develop it in what pace. And so when we can, we're going to develop it. And we're going to develop it as quickly as we can as long as and and it won't happen until we get that last debt payment down so that we're down to 10 billion in debt, principal debt. After that, we're free to um take what the macro will give us while also um spending some of our capital, returning it back to the shareholders through share repurchases and dividend growth. So um so we have the ability to to grow organically to then grow the dividend
Questionerorganically to then grow the dividend and to to provide uh shares,and to to provide uh shares,and to to provide uh shares, repurchases. I'm so excited about it,repurchases. I'm so excited about it,repurchases. I'm so excited about it, too. And and the reason I'm steppingtoo. And and the reason I'm steppingtoo. And and the reason I'm stepping down is we have for a long time had adown is we have for a long time had adown is we have for a long time had a great succession planning uh process ingreat succession planning uh process ingreat succession planning uh process in place and while I' and I've had theplace and while I' and I've had theplace and while I' and I've had the support of as I said an amazingsupport of as I said an amazingsupport of as I said an amazing leadership team. So we were able toleadership team. So we were able toleadership team. So we were able to accomplish all of this while buildingaccomplish all of this while buildingaccomplish all of this while building the culture and increasing our technicalthe culture and increasing our technicalthe culture and increasing our technical capabilities. So we did all that. So,capabilities. So we did all that. So,capabilities. So we did all that. So, we've checked all those boxes, but nowwe've checked all those boxes, but nowwe've checked all those boxes, but now we looked at our our top successor andwe looked at our our top successor andwe looked at our our top successor and what we need to do now and the next 10what we need to do now and the next 10what we need to do now and the next 10 years, and we felt like he was better toyears, and we felt like he was better toyears, and we felt like he was better to do that. He's better. He's going to bedo that. He's better. He's going to bedo that. He's better. He's going to be better at doing that than I would havebetter at doing that than I would havebetter at doing that than I would have done.done.done.
OtherWell, what's the goal for the next 10>> Well, what's the goal for the next 10>> Well, what's the goal for the next 10 years?years?years?
QuestionerNext 10 years is this organic growth.>> Next 10 years is this organic growth.>> Next 10 years is this organic growth.
OtherYeah. Okay.>> Yeah. Okay.>> Yeah. Okay.
QuestionerAnd so, that's going to drive our stock>> And so, that's going to drive our stock>> And so, that's going to drive our stock price up, I think, tremendously over the
Questionerprice up, I think, tremendously over the next three to five years. you said um when the macro allows and take what the macro will give us. That's you know kind of a significant when and if I suppose um what does that look like when things clear up?
Greg AbelYeah. And and I'll point out one other thing while while we're going to take what the macro gives us with the um with the growth what we're doing now is creating incremental free cash flow by just reducing our cost and increasing our efficiencies. I think that we have the lowest capital intensity of anybody in our industry and part of that's what Richard Jackson has been driving and to to get us to that level. So, so now with with respect to what the macro is going to give us, I think that this disruption uh in the world with respect to oil, I think that's going to have a a car hangover effect that's going to carry
Greg Abelhangover effect that's going to carry on. that's going to, I think, cause shortages and um and probably starting by mid next year, we're going to be in a scenario where there's going to be a lot of places that need to start developing oil faster. And because of our lower break even cost than anybody else, we shouldn't be one of the ones that that are that are first to the gate to start that process because we have a break even of lower than $40.
QuestionerIf you think that there's going to be the shortage come the middle of next year, where do you think oil prices are going to be as a result? I I think oil prices are a bit suppressed now because of what's coming out of all the strategic petroleum reserves around the world. So I believe that by midsummer this year,
Greg Abelwe're going to start seeing that prices without some growth starting to happen,
Otherwithout some growth starting to happen, we'll will start to go up. And so I Iwe'll will start to go up. And so I Iwe'll will start to go up. And so I I think that you know by by the time thatthink that you know by by the time thatthink that you know by by the time that we're ready to start our growth andwe're ready to start our growth andwe're ready to start our growth and again that that would be when we get toagain that that would be when we get toagain that that would be when we get to the 10 billion that would be later thisthe 10 billion that would be later thisthe 10 billion that would be later this year first of next year. So we'll be ayear first of next year. So we'll be ayear first of next year. So we'll be a part of that process to help build backpart of that process to help build backpart of that process to help build back the supply of oil for the world.the supply of oil for the world.the supply of oil for the world.
Questioner>> Uh you're undergoing a CEO transition>> Uh you're undergoing a CEO transition>> Uh you're undergoing a CEO transition same time Berkhire Hathaway is. What'ssame time Berkhire Hathaway is. What'ssame time Berkhire Hathaway is. What's your I guess the relationship with Gregyour I guess the relationship with Gregyour I guess the relationship with Greg and has he bought into to the plan fromand has he bought into to the plan fromand has he bought into to the plan from here on out? Obviously they're veryhere on out? Obviously they're veryhere on out? Obviously they're very large shareholders still.large shareholders still.large shareholders still.
Other>> Yes. Um, and we do with uh with Greg>> Yes. Um, and we do with uh with Greg>> Yes. Um, and we do with uh with Greg what we do with our other largewhat we do with our other largewhat we do with our other large shareholders or and and our team doesshareholders or and and our team doesshareholders or and and our team does with any shareholders. We we want ourwith any shareholders. We we want ourwith any shareholders. We we want our shareholders to understand what we'reshareholders to understand what we'reshareholders to understand what we're doing, how we're doing it. Um, so Gregdoing, how we're doing it. Um, so Gregdoing, how we're doing it. Um, so Greg has been involved in a part of thehas been involved in a part of thehas been involved in a part of the process of um of understanding what the
Warrenprocess of um of understanding what the business is going to look like. And um I think Greg is amazing. He's the Oxy Kim deal now. He's a tough negotiator, but but he's honest and he's fair and uh so we've built a great relationship.
QuestionerExplain that. Tough negotiator as in what the Oxycm deal or other stuff that that was going on?
WarrenOnly Oxycm deal that was going on.
QuestionerLet me clarify. Uh so on the OxyCim deal, he he is into the details and he doesn't forget. That's why he could sit there and talk about all those businesses.
WarrenHe knows those businesses like the back of his hand. And now now he knows Oxycam in the same way. And we had great discussions around it. That turned out to be an incredibly good win-win for us and for them because we that debt reduction we were able to accomplish with that frees us up. So that just
Otherwith that frees us up. So that just right now we're at 13.8 billion in debt principle. I believe that by the end of this year, first of next year, we'll be down to the 10. and and then that resets everything that we can do that that finalizes the transformation for us and then we're off and running.
QuestionerGreat. Uh Vicki, thank you very much for being with us today. Vicky Halop, it's a pleasure seeing you and um thanks for talking to us about the succession planning and congratulations.
OtherThank you. Appreciate it.
QuestionerAll right. Well, Berkhire Hathaway's almost 70 holding companies give it a unique view onto the economy and the consumer. We caught up with some of the company's CEOs here on the floor to talk about just how the consumer is fairing right now.
OtherI certainly have to acknowledge that the consumer attitude is a little bit different. I watch the University of
Warrendifferent. I watch the University of Michigan numbers very closely. I know exactly where it is and what I know is our numbers are up for the year and I'm very thankful for that because I also know the confection industry fairly well and I don't know that others can say quite that.
QuestionerIt's definitely headwind for Benjamin Moore. number one drivers housing churn at Benjamin Moore and with affordability issues, mortgage reach issues and confidence. It's been a strain. There's no doubt about it.
QuestionerYeah, we've probably seen, you know, a little bit of a a change in our trends over the last month or so. Um, but, you know, there's a lot of factors influencing the consumer. So, sometimes it's a little bit hard to tell, you know, what factors those are.
QuestionerWhen we think about the consumer, it really you end up in two tiers right now. If you are affluent and you are
OtherIf you are affluent and you are looking at your retirement accounts, the market's doing really well and those consumers are looking for new experiences. However, if you're in a lower income uh demographic right now, when you think about persistent inflation, um interest rates that are still relatively high, not by historical averages, but for recent years, um these consumers are pressed. They're trying to manage strained family budgets. I think that what we're trying to do at the end of the day is just be mindful of that we do have a consumer base that is ultimately forced to spend more money on certain other things that they may have been had more money in their wallet before. Gas prices are obviously rising.
QuestionerMy mic here.
QuestionerLet's hear from one more Berkhire CEO on the consumer. Dan Sheridan, CEO of Brooks Running is right here with us.
OtherBrooks Running is right here with us. Good to see you Dan.
OtherThanks for having me. Um, so in general been a pretty competitive environment for a while for for running shoes and things like that. You did report your results and pretty decent growth. What are you seeing broadly speaking?
OtherYeah, customers we Q1 was fantastic for us. Grew 23% globally, a very broad growth story for us. All regions growing double digit. Uh, our core markets really really strong and we're seeing the consumer be very very dur durable and strong right now. So, um, we're excited about the future for for our growth and obviously for the category we're competing in.
OtherWhat do you attribute that strength to? I mean, I guess you say the category. It strikes me that while we talk about um a lot of the relatively newer entrance into running shoes in particular,
Questionerinto running shoes in particular, there's also such a focus on the technology and on like the new thing and how it can help performance.
OtherYeah. Well, the first thing we always track is participation. And participation in health and wellness, specifically in run and walk, is at an all-time high. We think there's 52 million runners in the US that run twice a week. Globally, we think that's up to 600 million. So, that's the the foundation of our business. On top of that is performance matters in people's lives. The last couple weeks in the marathon, we've seen epic athletic achievement and per under two hours. So, what a great spotlight for our sport and uh that's driving interest as well. The the general theme of health and wellness around the world, though, is is a one-way street, we think, and more people than ever are running, walking,
QuestionerThere was a big deal about the under two hours, though. That under two-hour marathon was wearing what was it? Adidas shoes.
OtherYeah.
QuestionerAnd and that was a big deal because Nike had been talking about that for so long. Obviously you guys are shooting towards that and I know you're hitting records in other places, but how important is that specific mile marker and how do you compete for that? How do you go after that?
OtherYeah. Well, first off, epic athletic achievement. So good for our sport. Running is at the center of everybody talking about it. So we sit right in the middle of that with innovation, Becky. And and we were talking off air about this. The shoe matters for the athletes. And so we have always been a company on innovation and R&D for our athletes and everybody that moves and and that's why
Questionereverybody that moves and and that's why we have the number one market share here we have the number one market share here we have the number one market share here in the US in run. Uh we just became the in the US in run. Uh we just became the in the US in run. Uh we just became the number one brand in Germany too. Highly number one brand in Germany too. Highly number one brand in Germany too. Highly technical markets and our products and technical markets and our products and technical markets and our products and brand is right in the center of that. So brand is right in the center of that. So brand is right in the center of that. So we we love it when there's epic athletic we we love it when there's epic athletic we we love it when there's epic athletic achievement like that. achievement like that. achievement like that.
QuestionerYou have um kind of a new sub CEO running You have um kind of a new sub CEO running You have um kind of a new sub CEO running your group, the consumer products and your group, the consumer products and your group, the consumer products and services area of Bergshire Hatway, Adam services area of Bergshire Hatway, Adam services area of Bergshire Hatway, Adam Johnson. What does that mean for you at Johnson. What does that mean for you at Johnson. What does that mean for you at this point? this point? this point?
OtherYeah. Well, new obviously for us and and Yeah. Well, new obviously for us and and Yeah. Well, new obviously for us and and what I've been uh talking about this what I've been uh talking about this what I've been uh talking about this week is just the consistency of week is just the consistency of week is just the consistency of leadership at Berkhire. We've seen it leadership at Berkhire. We've seen it leadership at Berkhire. We've seen it with Greg over the years. Um but now with Greg over the years. Um but now with Greg over the years. Um but now we're seeing it with Adam and I couldn't we're seeing it with Adam and I couldn't we're seeing it with Adam and I couldn't be more excited to to have more be more excited to to have more be more excited to to have more interaction with Adam and start to learn interaction with Adam and start to learn interaction with Adam and start to learn from him. But consistency, this deserved from him. But consistency, this deserved from him. But consistency, this deserved trust, empowerment that has the bedrock
Questionertrust, empowerment that has the bedrock of of Berkshire culture is still the same things that I'm feeling from Adam and from Greg.
QuestionerYou know, Dan, we were just talking about whether there are kind of ways to cooperate with other Berkhire businesses and I I don't know, Brooks is such a unique company. I don't know if that's the case, but you tell me. Are you're here with the managers u I think you everybody had lunch yesterday. I'm sure you're talking to all of your colleagues all the time on this. What What do you learn from each other and are there ways that you can work together?
QuestionerYeah, I think this weekend is a moment for us to network as peers and the lunch is one way, but what I try and do is is spend time one-on-one with some of my peers to suck all the information I can and experience uh from them. And so, this is a moment where we get to network
Otherthis is a moment where we get to network and those networks, you know, last throughout the year. And so it's more one-on-one networking than than in groups. And we've been fortunate to do that this weekend.
QuestionerIs it about um requesting further resources or requesting the freedom to do more of your own thing or any of those things?
OtherYeah, there's not one way. This is the the best part about Berkhire's empowerment and decentralization. I think all of us independently operate, but there's access to be able to share ideas and and solve different problems. We are we are solving very different businesses here, but there's some common themes in the macroeconomic environment, in geopolitical ways, and so we do find times to connect and and share what we're all dealing with.
QuestionerThat's great.
OtherWhat's I was going to say, what's the the kind of frontier in terms of your
Questionerthe kind of frontier in terms of your technology innovation? Like what's next and how tightly are you trying to squeeze out little bits of performance?
OtherYeah, sounds like you're on it, Mike. I mean, this is this is the game. Innovation in our space is just ramping. Both in terms of how fast innovation is coming for runners. Midsole compounds and weight in running right now is really the the arms race. And so, we've got uh great midsole compounds that are that are reducing weight, still giving the runner cushioning and resiliency and rebound. And so all of us in this category are are in this arms race to to create performance products that improve people's lives, which Brooks has done for 25 years. We 25 years now, we're on a 14% compounded annual growth rate. So consistent growth over that time based in product.
QuestionerSo an arms race for the foot race.
QuestionerSo an arms race for the foot race.
QuestionerSo an arms race for the foot race.
OtherThat's right. That's right.
OtherThat's right. That's right.
OtherThat's right. That's right.
OtherDan, good to talk to you. Thank you very much. Dan Sheridan, CEO of Brooks Running. Let's get down to the floor here in Omaha. CBC producer Katie Kramer is at the Oriental Trading Company's booth. So Katie, what are this year's hide items?
OtherI get the best assignment every year, Mike. I get to check out what shareholders are shopping for on the exhibit hall floor. And this year, Greg Ael is a new character in so many different um branded items. We've got Squishallows, we have got candy, we've got spatulas from Pampered Chef, and collectible ducks from Oriental Trading. this year. Warren Buffett, Charlie Munger, and Greg Ael available as rubber ducks. And Oriental Trading uh CEO Steve Mendsick is here. How fast are these selling?
OtherYeah, they're selling like hot cakes. Uh
OtherYeah, they're selling like hot cakes. Uh Warren uh Warren obviously uh is still a feature for us, but Greg has reached icon status uh this year. He's on the Mount Rushmore uh with uh with Charlie and Warren here. And uh we're selling we're selling a lot of them. Um they're high.
QuestionerHow many? So like a thousand, I heard.
OtherUh yeah, we're over a thousand ducks sold. so far. So rolling our top seller,
Questionerthis is the liveliest that the floor has been. I think through the shareholders meeting, we've got crowds of people here around. We've got FL, the Oriental Trading Flamingo. We've got tons of materials that people are taking home to share to uh to enjoy their experience here in Omaha. Are you going to sell out of the ducks, do you think?
OtherUh you better hurry. If you're in if you're in the building, you better hurry.
OtherSupplies are limited very much.
OtherSupplies are limited very much. Uh, you've also got Squishallows that have got Greg Abel's face on them this year. You've got some collaborative items with BNSF, with NetJets, uh, with Seas Candies. These Candies has got 11 tons of chocolate over there. So, this is the moment when shareholders really, uh, empty their wallets and fill their luggage for all the great stuff they're taking home with them.
QuestionerExcellent, Katie. Thank you very much. Looks like there's a lot of activity back there, too. Right now, we're joined by a longtime shareholder of Berkhire, former Activision Blizzard CEO Bobby Kodc, who has been coming to this meeting for how many years? I ask you this every year. It's more than 30, right?
OtherMore than 30 years.
QuestionerMore than 30 years you've been here. Bobby, I just want to ask you as a long-term shareholder, as a long-term
Questionerlong-term shareholder, as a long-term Berkhire follower, um, what did youBerkhire follower, um, what did youBerkhire follower, um, what did you think of the meeting so far? What Whatthink of the meeting so far? What Whatthink of the meeting so far? What What was it like sitting out there?was it like sitting out there?was it like sitting out there?
Other>> It was fantastic. I have to say I Greg>> It was fantastic. I have to say I Greg>> It was fantastic. I have to say I Greg handled himself fantastically well. Ihandled himself fantastically well. Ihandled himself fantastically well. I think Ajet adds a great dimension to thethink Ajet adds a great dimension to thethink Ajet adds a great dimension to the stage. Warren's presence, especially hisstage. Warren's presence, especially hisstage. Warren's presence, especially his AI presence, I think added special valueAI presence, I think added special valueAI presence, I think added special value and I think the business is in terrificand I think the business is in terrificand I think the business is in terrific shape. If you were to think about thisshape. If you were to think about thisshape. If you were to think about this company and its current market value, ifcompany and its current market value, ifcompany and its current market value, if you were toyou were toyou were to revalue the equity portfolio to let'srevalue the equity portfolio to let'srevalue the equity portfolio to let's say the historic mean of the S&P, say 17say the historic mean of the S&P, say 17say the historic mean of the S&P, say 17 times,times,times,
Questioner>> yeah,>> yeah,>> yeah,
Other>> that's maybe about 70 or 80 billion of>> that's maybe about 70 or 80 billion of>> that's maybe about 70 or 80 billion of risk. The operating businesses trade wayrisk. The operating businesses trade wayrisk. The operating businesses trade way below 17 times, probably closer to 10below 17 times, probably closer to 10below 17 times, probably closer to 10 times. So there's a lot of upside intimes. So there's a lot of upside intimes. So there's a lot of upside in Berkshire.Berkshire.Berkshire.
Questioner>> Well, you know, that's been a question>> Well, you know, that's been a question>> Well, you know, that's been a question that has come up. We haven't gotten athat has come up. We haven't gotten athat has come up. We haven't gotten a chance to ask about them on stage yet,chance to ask about them on stage yet,
Questionerchance to ask about them on stage yet, but Berkhire has underperformed the S&P 500 pretty significantly over the last year. S&P has been up by about 29%. I think Berkhire's down maybe 12% over that the same period. Uh maybe a little less. Maybe it's 9% down. Yeah. Over that period of time. But when you look at that, what does that tell you as a shareholder yourself? What do you want to see? What do you think of it all?
WarrenWell, I think it was one of the first slides. uh they're buying stock and
Questionermaybe not as much as people anticipated,
Warrenbut I think we saw it today. You know, there was a substantial amount of stock purchased and we're sitting on 400 billion dollars of cash.
QuestionerSo, I see nothing but opportunity. I, you know, I like to buy when they like to buy.
QuestionerAre you buying back shares? Are you buying more shares of Berkhire? uh
Questionerbuying more shares of Berkhire?
Questioneruh rather not say, but I think umrather not say, but I think umrather not say, but I think um you know I I like to buy when they'reyou know I I like to buy when they'reyou know I I like to buy when they're buying and I think that was a vote ofbuying and I think that was a vote ofbuying and I think that was a vote of confidence.confidence.confidence.
Questioner>> Okay.>> Okay.>> Okay.
Questioner>> I did find it interesting first of all>> I did find it interesting first of all>> I did find it interesting first of all um Gregory was that pains to say that itum Gregory was that pains to say that itum Gregory was that pains to say that it wasn't quite as much cash as iswasn't quite as much cash as iswasn't quite as much cash as is portrayed in the 10Q filing millionportrayed in the 10Q filing millionportrayed in the 10Q filing million billion they still havebillion they still havebillion they still have
Questioner>> of a T- bill purchase that hadn't>> of a T- bill purchase that hadn't>> of a T- bill purchase that hadn't settled yet. So there's some doublesettled yet. So there's some doublesettled yet. So there's some double counting. So fine $380 billion. Um, butcounting. So fine $380 billion. Um, butcounting. So fine $380 billion. Um, but it seems as if some of the things thatit seems as if some of the things thatit seems as if some of the things that Greg said were meant to kind of put theGreg said were meant to kind of put theGreg said were meant to kind of put the investment portfolio a bit off to theinvestment portfolio a bit off to theinvestment portfolio a bit off to the side, right? He emphasizes the four veryside, right? He emphasizes the four veryside, right? He emphasizes the four very large core holdings which are kind oflarge core holdings which are kind oflarge core holdings which are kind of there forever. Uh, as well as thethere forever. Uh, as well as thethere forever. Uh, as well as the Japanese businesses and the rest of it,Japanese businesses and the rest of it,Japanese businesses and the rest of it, he sort of says, well, it's not reallyhe sort of says, well, it's not reallyhe sort of says, well, it's not really that big and it's not all that activelythat big and it's not all that activelythat big and it's not all that actively managed. Does that say to you that he'smanaged. Does that say to you that he'smanaged. Does that say to you that he's mostly focusing his energies and
Questionermostly focusing his energies and attention on just the operating businesses and what else in terms of bolt-on acquisitions he can do as opposed to the portfolio?
Greg AbelNo, I don't think so. I think he's very he's very engaged with Warren on those discussions. I think he's thinking a lot about the investment portfolio. I think if you look at Apple and KO in particular, they're both going through CEO transitions and they're being managed with excellence and I think inspired a lot by the Berkshire transition. In fact, I talked to Tim Cook last night and that was the first thing he said is he wants to be recognized as the person who's managed succession better than anyone. I said, "Well, you've got a tough a tough comparison
Questioneron both ends, right? when he took over for jobs and now he's handing it off again. Cook I was joking that you know
QuestionerCook I was joking that you know Warren was polite enough not to say why are you retiring at 65
Questioner>> right?
Questioner>> You got 30 more good years left you know right
Questioner>> Bobby I want to talk to you that about that as a former CEO yourself and somebody who knows of the stresses that come with that and the huge responsibilities with that. We've seen a lot of executive turnover of some very long-term well-known names, uh, big companies. You mentioned Coca-Cola where you were board member before, too. Uh, Tim Cook with Apple. You've also got Bob Iger turning over. Uh, there's Vicky Holl was just sitting here. Uh, Doug McMillan stepped down. There's just this long this big number of relatively young people in a lot of cases. Doug McMillan was what, 60? um at James Quincy 60 years old today. So you're talking about people who are young and some of them
Questionerpeople who are young and some of them when they've sat down with me have said look it's it's really tough to think of what AI is going to do and that's going to be a 5-year transition. How do you think that through? Is is that what's happening here? Is there something else? Is it just a good time to step down? What's your take on all of this as somebody who's been in that role? You
Greg Abelknow, I think in every one of these cases it's something different. I think in Apple's case, Tim's done this for a long time. I think he has realized that there's an opportunity for product innovation and somebody like John, you know, is head of hardware engineering. You probably couldn't pick a better person for the next decade of Apple and the need for innovation. I think at Coke, Enrique is a fabulous successor. I I would have loved to have seen James stay longer, but I think that, you know,
Greg Abelstay longer, but I think that, you know, the demands of these jobs are great, especially company like Coca-Cola where you're operating 204 countries around the world and you're traveling to those countries. Um, but I think Enrique will be an excellent successor. I think in Doug's case, he acknowledged that the AI transition is going to be one that probably needs different leadership. And I think in a lot of these cases that you're citing, you have CEOs who realize their limitations and the opportunities for somebody new that's going to continue to create shareholder value for the businesses that they run and they're so convicted to the future success of the company like you see at Berkhire that they're making the right choices.
Questioneras you look at Berkshire, I mean it's understandable that would be portrayed AI could be much more of an enhancement
QuestionerAI could be much more of an enhancement to a lot of what's done there as opposed to, you know, them being disrupted by it in various businesses. But I I was fascinated by what Ajid said about um cyber risk related to AI and how he just has a hard time figuring out how to model it like was was is one incursion going to proliferate? How you going to aggregate that risk?
Ajit JainWell, the beauty of the AI is it will model the risks for you or show them to you. Yeah.
QuestionerIt will give you an opportunity to then assess, you know, how right or wrong has the AI actually given you the ability to assess it. But those AI tools are going to be incredibly useful. Then you look at like these operating businesses, they're run incredibly efficiently from an SGNA perspective, but there's no question that there's optimization opportunities. It's like just think
Questioneropportunities. It's like just think about like risk calculation in theabout like risk calculation in theabout like risk calculation in the insurance business. AI will be aninsurance business. AI will be aninsurance business. AI will be an enormous contributor to reassessment ofenormous contributor to reassessment ofenormous contributor to reassessment of risk, reassessment of pricing. I justrisk, reassessment of pricing. I justrisk, reassessment of pricing. I just think all these operating businessesthink all these operating businessesthink all these operating businesses over time are going to have a greatover time are going to have a greatover time are going to have a great benefit in efficiencies andbenefit in efficiencies andbenefit in efficiencies and opportunities from AI.opportunities from AI.opportunities from AI.
Questioner>> What do you want to hear more? What what>> What do you want to hear more? What what>> What do you want to hear more? What what have you not heard so far that maybehave you not heard so far that maybehave you not heard so far that maybe you'd like to hear in the second Q&Ayou'd like to hear in the second Q&Ayou'd like to hear in the second Q&A session? Asking for a friend.session? Asking for a friend.session? Asking for a friend.
QuestionerWell, um,Well, um,Well, um, you know, I I think I they're notyou know, I I think I they're notyou know, I I think I they're not they're not going to talk a lot aboutthey're not going to talk a lot aboutthey're not going to talk a lot about the macro environment,the macro environment,the macro environment, but I would like to hear theirbut I would like to hear theirbut I would like to hear their perspectives about the macroperspectives about the macroperspectives about the macro environment. Um, I just don't think thatenvironment. Um, I just don't think thatenvironment. Um, I just don't think that that's something that historicallythat's something that historicallythat's something that historically they've spent a lot of time talking. Ithey've spent a lot of time talking. Ithey've spent a lot of time talking. I think when you look at where the S&P isthink when you look at where the S&P isthink when you look at where the S&P is trading and you think about a 26 timestrading and you think about a 26 timestrading and you think about a 26 times multiple and a 100year mean at 17 times,multiple and a 100year mean at 17 times,
Questionermultiple and a 100year mean at 17 times, we will regress to the mean.we will regress to the mean.we will regress to the mean.
QuestionerAnd so, but I I almost think it's implicit in the cash balances what they think about the opportunities going forward. You would think I mean because Berkshire was so somewhat early in identifying Japan as an opportunity for kind of rejuvenization whether he might have a view on that if he gets a question on that because I know that Greg was kind of close to that.
QuestionerRight.
QuestionerI think they answered that with Tokyo Marine.
QuestionerTrue enough. Yeah. Through your actions. Yeah.
QuestionerUm I I I keep going back to just the structure and how it's changed. And I will tell you, I've been hearing from a lot of people who have been kind of texting me and telling me what they're thinking from the arena while they're sitting in there. The general impression is people were pleasantly surprised by how much they
Questionerpleasantly surprised by how much they learned in this meeting. Structures changed, but I think they're looking at it as a an evolution that, hey, may not be what they wanted, but they they're enjoying it to this point. I I have to say I I am love I love the fact that they're actually doing more of a deep dive into the businesses and I think that that's a great pivot. You know, you're never going to replace the Warren Charlie dynamic that can never be replaced. But for a company that's so big and so complex, has so many operating subsidiaries, going and actually doing a deep dive and showing the depth of the management teams across all of these businesses. I think that's a great pivot and not what I expected, but something that I'm actually really enjoying.
OtherThat's great. Bobby, want to thank you very much for sitting here with us and
Questionervery much for sitting here with us and talking this through. Um, it's been a pleasure.
OtherThank you for having me.
QuestionerAnd by the way, I'm going to head out at the same time. We've got Warren Buffett coming up in just a little bit. We might get the chance to ask him about some of those macro issues that you were just referencing about what he sees happening with the economy and stocks right now, too.
OtherThat'd be great. Thank you.
QuestionerThank you.
QuestionerAll right. Well, get on back in there. I'll see you in a little bit. One other newsy nugget from this morning was a question about insurance and the current risk around shipping in the straight of moose. Here's what vice chairman of insurance operations Ajit Jane had to say about that.
QuestionerThe question is how and when can you offer insurance to ships crossing the straight of Hormuz?
Ajit JainI mean the short answer is depends on
QuestionerI mean the short answer is depends on the price.
OtherAid I uh I like your Charlie answer.
QuestionerUm obviously some thought has gone into that because there's a lot of dynamics there.
OtherYeah, there is a lot of chatter there's a lot of need. Uh fortunately there's enough capacity in the insurance world today that would like to write that risk for no other reason but people are sitting on excess capital and they'd like to find a way to deploy that excess capital. uh we ourselves have taken a small participation in a program that's put in being put in place so as to write insurance for the ships in the in the state of Homos. Uh we haven't written any deals as yet. It's still being fine-tuned, but if we can get our terms in terms of the underwriting decisions and the fact that the US Navy will escort these ships, we have put a price on which we will be comfortable underwriting that risk. But nothing has
Otherunderwriting that risk. But nothing has happened as yet.
OtherGreg Ael also highlighted what makes Berkhire's business special and spelled out his ethos for running the company going forward.
Greg AbelHow are we unique as a conglomerate? We live by the fact that we hate bureaucracy.
OtherWe do not embrace in in in our Thank you. Yes.
Greg AbelAjit's the biggest fan. He reminds me constantly and I love it. I treasure it. But no, we we've heard many times the ABCs, the arrogance, bureaucracy, complacency that can creep into a company will kill a company and we intend to uh never allow that to happen. So we have this unique opportunity to both take the businesses we have today, take that foundation and build upon it.
OtherLet's get a deeper dive into this morning's Q&A session with our Yun Lee.
OtherSo, uh, Yun, you looked at the numbers this morning. Of course, you were in on the session, uh, uh, from Greg Able this
Questionerthe session, uh, uh, from Greg Able this morning. So, what are your headline thoughts on?
QuestionerYeah, he really spent a good chunk of time talking about the equity portfolio, which I think a lot of shareholders really appreciated because there were some doubts about how he's able to be this hands-on operator at the same time running this massive portfolio, right? So, he talked about how he's thinking about it. the core four that's Apple, American Express, Coca-Cola and Booties and then the Japanese holdings and then some other significant stake like Bank of America America and Google. Um, so I think it's really interesting and I think a lot of people appreciate it. And also like you said, last quarter, um, Berkshire Hathaway was actually a net seller of stocks once again, selling about, you know, a net $8 billion of, um, stocks and, um, that's just not
Questionerum, stocks and, um, that's just not slight tweaking, right? That's there's a slight tweaking, right? That's there's a slight tweaking, right? That's there's a lot of repositioning going on, lot of repositioning going on, lot of repositioning going on,
Questionerright? because it was $24 billion in growth sales and then $16 billion in purchases netting out to to minus8 billion. So yeah, that's that's not trivial. Um it's interesting you he he definitely spent a lot of time on the portfolio characterizing how he views I guess different pieces of it, but those things that were not mentioned like all the rest I I think it still leaves open the question of whether he considers them either too small to matter or maybe not worth spending a lot of time on.
QuestionerRight. That's a good question. what happens to the rest of the stock he didn't mention and um also the selling we talked about a a part of it I think is likely tied to the departure of Todd Combmes the you know the unwinding of
QuestionerCombmes the you know the unwinding of the positions he used to run right andthe positions he used to run right andthe positions he used to run right and because he left for JP Morgan at the endbecause he left for JP Morgan at the endbecause he left for JP Morgan at the end of last year and we don't know exactlyof last year and we don't know exactlyof last year and we don't know exactly which stocks they were but um I know hewhich stocks they were but um I know hewhich stocks they were but um I know he said in the past that Visa andsaid in the past that Visa andsaid in the past that Visa and Mastercard were the two first stocks heMastercard were the two first stocks heMastercard were the two first stocks he bought for Berkshire 15 16 years ago sobought for Berkshire 15 16 years ago sobought for Berkshire 15 16 years ago so we'll see If those ones are still there,we'll see If those ones are still there,we'll see If those ones are still there,
Otherif they survive. Yeah, exactly. Um Iif they survive. Yeah, exactly. Um Iif they survive. Yeah, exactly. Um I think there was a lot a little bit ofthink there was a lot a little bit ofthink there was a lot a little bit of suspense about how much uh sharesuspense about how much uh sharesuspense about how much uh share repurchase activity there was in therepurchase activity there was in therepurchase activity there was in the quarter. Obviously Greg Ael had saidquarter. Obviously Greg Ael had saidquarter. Obviously Greg Ael had said they had restarted the job the buybackthey had restarted the job the buybackthey had restarted the job the buyback program over 200 million. And then itprogram over 200 million. And then itprogram over 200 million. And then it turns out it was 235 million total inturns out it was 235 million total inturns out it was 235 million total in the quarter. Obviously a pretty smallthe quarter. Obviously a pretty smallthe quarter. Obviously a pretty small amount relative to a trillion dollaramount relative to a trillion dollaramount relative to a trillion dollar market cap,market cap,market cap,
Otherright? That's very small. and he heright? That's very small. and he heright? That's very small. and he he still sounded very, you know,still sounded very, you know,still sounded very, you know, conservative and he signaled this, youconservative and he signaled this, youconservative and he signaled this, you know, disciplined approach to buyback.
Questionerknow, disciplined approach to buyback. Um, you know, they're evaluating the intrinsic value with Warren Buffett and um, yeah, I I think people want to hear more more aggressive buyback approach.
QuestionerYeah, especially when you consider, you know, all the cash that they have and now, you know, that's obviously a cushion and it's obviously ammunition to go and do something down the road if they want to do it. But a lot of folks feel as if well if you feel as if there's a positive expected return to buying your shares at these levels maybe do more of that or they want to just wait for a bigger discount to their estimate of intrinsic value.
QuestionerRight. Totally. But he did sound like he's ready to buy new uh either companies or stocks when the price is right. Yeah. And um just judging by how comfortable he was talking about AI and tech and you know LLMs and the defake
Questionertech and you know LLMs and the defake video we we saw. Um, I wonder if there's a sign that maybe Berkhire will be more open to technology investments going forward because as we know Buffet was a little bit hesitant because it was outside of his circle of competence before.
Questioner>> It's true.
Questioner>> Yeah, it is interesting especially when you consider, you know, some of these big formerly blue chip software companies that have actually come down so much in valuation because of AI disruption fear. If Ber would see that as a dislocated deal that they could they could get in there.
Questioner>> Yeah, totally. And to that point, they added that alphabet stake. It was pretty significant, more than $4 billion uh last year. Uh and then he did mention it uh in his you know session. So there I think there are signs that they're getting more into technology.
Questionergetting more into technology.
OtherYou I think we u with tech being a big topic of discussion this morning, Abel uh did take a moment to speak about the role data centers will play in Berkhire's energy investments. Listen up.
Greg AbelIf I look at our peak load, i.e. the amount of energy being used from those data centers, it's at 8% of their peak load. And the only reason I highlight that 8% is when I hear people in the industry and all the utilities around us, a lot of states, they're talking about this great opportunity and gez hopefully in the next 5 years they'll be from a relatively starting point. They want to get to the 5 to 10%. and we're already at eight and we see opportunities to grow that by 50% over the next 5 years or or potentially more. But we'll do it in a way and you're starting hear more and more of this across the US. We'll do it in a way
Greg Abelacross the US. We'll do it in a way where we're not going to impact the costs of our other customers. These users of the i.e. those the the hyperscalers, the data centers and the users of the energy uh they have to bear their full cost.
QuestionerInteresting. He's able to portray the utility business as essentially, you know, kind of newly a growth business, pretty ahead of the industry in terms of data center exposure, but able to do it in a way that's not going to harm local.
Greg AbelRight. Totally customers. I think it's definitely welcome news that you know he's trying to expand into data center infrastructure buildout is such a growth area.
QuestionerYeah.
QuestionerYeah.
QuestionerFor sure. Um I mean I guess the other pieces of it uh at this point uh they they highlighted some of the connections among some of the industrial businesses. They talk about the building products
QuestionerThey talk about the building products area. Even though they don't want to say that this is all meant to, you know, fit together like uh some kind of a top down machine. There are linkages between these companies.
QuestionerYeah. and he's talking about he also talked about AI in a broader sense and he's evaluating ways that can be additive to Berkshire's array of different businesses right and um how they can be more productive and efficient
Questioneryeah for sure you know that's a big part of the uh the priorities here as well as in the insurance business with with Gly thank you so much enjoy the uh the second part of the session now we're now awaiting uh what was just announced a little while ago as an interview between our Becky Quick and Warren Buffett who of course remains chairman of the company and thereafter there will be another Q&A session that's going to
Otheranother Q&A session that's going to include some of the folks from the operating businesses as well. So that interview uh between Becky and Warren will happen back in the arena for all to see.
Becky QuickMike, thank you very much. And I want to welcome everybody back in the arena. Make sure you're getting time to get back to your seats. I know we didn't give you a lot of time for a break, so I hope you made it to the bathroom and you're back and getting ready to sit down. We are sitting down right now with Warren Buffett, uh, the chairman of of Berkshire Hathaway, who for the first time in 60 years has been watching all of this from the audience instead of being on stage. And you know, last year at this time, Warren, you surprised everyone with the announcement that you were stepping down as CEO. Fast forward a year and here we are. What do you
Questionera year and here we are. What do you think?
WarrenWell, I think it's all working. It's all working. it it isn't our ideal uh surrounding area uh or environment I should say uh in terms of deploying cash for Birkshire uh but in terms of how we got the right management we got the right arrangement and uh you know we can pick our spots and and and uh nobody can tell us what to do exactly and and uh so sometimes we're doing nothing but other other times we get quite active. I mean
Questioneryou know a Jeet spent some time on the stage today talking about how one of his keys is to do nothing when it comes to insurance when it comes to writing insurance which is the same thing that you have always talked about with whether to invest or not.
WarrenYeah. The world is full of people that are offering you things to do and then are offering you things to do and then the question is to find find one that you know makes sense and there may be 20
Questioneryou know makes sense and there may be 20 out there that make sense that you don't understand and you just leave them alone. You said that the world or the surrounding environment is not ideal. And I guess that points to the idea that there's almost $400 billion in cash on hand. Although Greg took some pains to show it's really more like $380 billion in cash on hand.
QuestionerBut that there's a lot of cash on hand and you're still active in managing the portfolio too and looking at stocks. You're looking around and you don't see a lot that you want to invest in.
WarrenNo. Well, then we don't do anything. I mean, we've been in the of the 60 years I've been in the business, uh, you know, probably five of them been really juicy, you know, and, uh, I think it was Tom Watson senior of IBM that uh, said they asked him the reason why IBM had been so successful or something like
Warrenbeen so successful or something like that. And he said, "I'm smart of spots that. And he said, "I'm smart of spots that. And he said, "I'm smart of spots and I stay around those spots." And and I stay around those spots." And and I stay around those spots." And that's that's the whole thing. And IBM that's that's the whole thing. And IBM that's that's the whole thing. And IBM was in three different businesses was in three different businesses was in three different businesses including time clocks and a couple and including time clocks and a couple and including time clocks and a couple and two of the three turned out to be no two of the three turned out to be no two of the three turned out to be no good. But they so they just focused on good. But they so they just focused on good. But they so they just focused on the one. the one. the one.
QuestionerWhat what is it when you look around >> What what is it when you look around >> What what is it when you look around that it it's just prices are too high at that it it's just prices are too high at that it it's just prices are too high at this point? I would imagine there are this point? I would imagine there are this point? I would imagine there are Greg said this from the stage too. There Greg said this from the stage too. There Greg said this from the stage too. There are businesses that you like just are businesses that you like just are businesses that you like just >>
Warrenand I would say I understand >> and I would say I understand >> and I would say I understand fewer of the businesses as a percentage fewer of the businesses as a percentage fewer of the businesses as a percentage of the whole than I did 10 years ago. I of the whole than I did 10 years ago. I of the whole than I did 10 years ago. I have not learned have not learned have not learned uh new industries uh for some years, you uh new industries uh for some years, you uh new industries uh for some years, you know, and and so I don't kid myself on know, and and so I don't kid myself on know, and and so I don't kid myself on that. I'm I'm not going to learn. I'm that. I'm I'm not going to learn. I'm that. I'm I'm not going to learn. I'm not going to have an edge on, you know, not going to have an edge on, you know, not going to have an edge on, you know, a whole bunch of younger people that a whole bunch of younger people that a whole bunch of younger people that have actually grown up with them, used
Questionerhave actually grown up with them, used the product, seen things and but uh well, as I mentioned, you know, you don't have to understand too many of them like Apple,
Questionerbut looking around, um let's just get some macro thoughts on this because I don't know that this is something that that Greg is going to comment on per se. Just looking at the macro stock market environment, what does this feel like to you? Is does it feel expensive? Does it feel like there are opportunities in some?
WarrenWell, it feels like, you know, I' I've compared it the markets to a church with a casino attached and and people can move between the church and casino and and I always said there are more people in the church and more people in the casino, but the casino's gotten very attractive to people. you know, if you're buying one day options or selling them,
Warrenor selling them, I mean, that is uh that's not investing. It's not uh that's not investing. It's not speculating. It's gambling, you know, just totally. There's nobody that can explain why they're buying an option for one day unless they maybe maybe the fellow that that uh you know made the $400 and some thousands from knowing when we were going into Venezuela could do it. But I mean that's pretty and the quantity of those things is just incredible. So we've never had people in a more gambling mood than now. But that doesn't mean that investing is terrible. that it does mean that uh that prices for and awful lot of things will look very silly. I mean they, you know, they had a squeeze and and then in in Avis of all things, well, Avis has been around for 50 years, but just this past week. Uh uh and uh we have lots more regulation and everything now, but uh but people spend
Questionereverything now, but uh but people spend their time figuring out how to get around the rules rather than follow the rules. That's just a challenge. The type of investor you are though is is you laid it out yourself. In the 60 years you've been doing this in the business, you've had maybe five juicy years. I guess that means you're always looking for the next juicy year. What do you think it would take to make a juicy year or a juicy opportunity for you?
WarrenIt's a phone call in many in some cases. You know, we we bought a business last year that was that wasn't big enough to be mean meaningful, but we got a letter. Bell Labs.
QuestionerYeah, Bell Labs. No, and and uh you know, and and and sometimes there's more zeros attached to them than others and and we're big enough to handle anything and we can make decisions faster than anybody. And our word is
Questionerfaster than anybody. And our word is good. Uh it uh there's an awful lot of people that they're when they they're in the business of reselling something or you know it's uh and there's it's a lot better if you're a good salesperson. There's no reason to be selling vacuum cleaners or you know as we'll sell stock you'll make way more money. It's where the money is.
Questioner>> Yeah.
Questioner>> And there's and there's more money around than ever. And it uh you know,
Questioner>> but the best opportunities have probably come when the macro environment leads to
Questioner>> most likely. Well, the most likely time to buy things is when nobody else will answer their phones. You know, everybody else talks about their wonderful trading departments and everything. Just try them out. Sometime when uh markets are collapsing, they don't answer the phones.
Questioner>> Right. Right.
QuestionerRight. Right.
QuestionerAnd and if they do, the the bids are subject and the offers are subject and the spread is wide and then and they'll use the information they get from you about what you want to do to go out and kill you some other way. I mean, it it's it's uh it's really like going to a slaughter house. I mean, you don't you don't feel like eating hot dogs for a while. I guess what I'm trying to get at is do you see the circumstances building up anywhere that could lead to a time like that again? Any any sort of panic in the market?
QuestionerWhere do you see them?
QuestionerWell, if you saw them as they wouldn't happen,
Questionerokay?
QuestionerI mean, you've got all kind you don't worry about what what people are talking about can happen. It's it's something comes out of the blue. But some something will come out of the blue.
QuestionerYeah. I mean,
Questionera a nuclear bomb could come out of the
Questionera nuclear bomb could come out of the blue, you know.
QuestionerWell, let's knock on wood on that.
WarrenWell, well, I It doesn't do any good to knock on wood. That's it. It It That's the point.
QuestionerYeah. it, you know, was the arch duke getting shot, you know, in 1914 or something like that for World War uh one and it just take everything in life and it it if it if it's something people are talking about and thinking about, it's not going to happen.
QuestionerYeah.
WarrenBut there are things that can happen out of the blue. And actually that's particularly true to use that phraseiology now because the things that can come out of the sky that you know we don't know what can happen tomorrow. I don't like to talk that way to people whe whether it's you or anybody else. I mean because uh you know whether it does you a lot of good to worry about that. I don't think it does do any good to worry
Questionerdon't think it does do any good to worry about it. I think it's it's good to be cognizant of it, but the worrying about it is terrible. And I don't like to I don't like to even cause that belief with people. I don't like to go around.
Other>> Yeah.
Questioner>> Tell them the end is coming, the end is coming or something like that.
Other>> A friend told me yesterday he's recently started using the phrase, I don't fret, I don't worry. And that's probably a good way to go about life. But let let's talk about some of the issues that are out there right now. Um, inflation is up. That's an issue. So, how does Berkshire how does Berkshire handle that with its businesses?
Warren>> Well, we can't handle runaway inflation except not to be there in the way of it. And if you look at the number of countries that have had runaway inflation since World War II, you know,
Warreninflation since World War II, you know, in my lifetime, it it's very large, you know, it uh and uhuh once you create that, it it becomes a different world. uh you know, Germany obviously experienced it after World War I and but but but there are dozens and dozens of countries that have experienced it. And of course, you have you have countries that gone bankrupt like six or seven times. I mean, it's just amazing what people do. But uh in financial markets,
Questionerwhat about the inflation that we're dealing with right now, which is, you know, not excessive. It's north of 3% at this point, but we're not even back at the levels we were during co at 8 to 9%. So, what about just higher energy prices? How that works through the line and how you handle it?
WarrenWell, it came close before Vulker. I mean it was just it was cash is trash you know and and people were losing faith in the currency
Warrenpeople were losing faith in the currency and they felt they could borrow and 12% to earn 6% on on farming or something like that and they they had huge farmers in this state Nebraska uh collapsed because they bought beyond the earning power or paid interest rates beyond the earning power just because they felt that that that uh the dollar was going to disappear and the the land wouldn't disappear. And I'm it's it's it's tragic for many people. And and uh and if you're the best doctor in town or the best lawyer in town, you'll always make money under any situation. The best the best TV personality. I mean it's it's but uh what not having faith in the money does to a country it it turns it into something else.
QuestionerYeah.
WarrenAnd I you know I've always hope that you know US never does it but we are not immune from it happening.
QuestionerUh,
WarrenUh,Uh, we have a lot of controlwe have a lot of controlwe have a lot of control over whether rates may go up a half aover whether rates may go up a half aover whether rates may go up a half a point or down a half a point, but we maypoint or down a half a point, but we maypoint or down a half a point, but we may have less control over whether they gohave less control over whether they gohave less control over whether they go up 50 points.up 50 points.up 50 points.
Becky Quick>> You you've long been um a supporter of>> You you've long been um a supporter of>> You you've long been um a supporter of Jay Powels.Jay Powels.Jay Powels.
Warren>> Exactly.>> Exactly.>> Exactly.
Becky Quick>> He had his last FOMC meeting as chairman>> He had his last FOMC meeting as chairman>> He had his last FOMC meeting as chairman uh just this last week. He did say thatuh just this last week. He did say thatuh just this last week. He did say that he's going to be sticking around,he's going to be sticking around,he's going to be sticking around, staying on the Fed, staying in thatstaying on the Fed, staying in thatstaying on the Fed, staying in that position um for the foreseeable futureposition um for the foreseeable futureposition um for the foreseeable future in part because of the threats that he'sin part because of the threats that he'sin part because of the threats that he's faced. Umfaced. Umfaced. Um
Warren>> I'll feel better when he's there>> I'll feel better when he's there>> I'll feel better when he's there uh than when he's not. I mean it uh ituh than when he's not. I mean it uh ituh than when he's not. I mean it uh it uhuhuh you know I just I felt better when Boeryou know I just I felt better when Boeryou know I just I felt better when Boer was therewas therewas there but youbut youbut you that's economists aren't the best atthat's economists aren't the best atthat's economists aren't the best at this sort of thing read any oldthis sort of thing read any oldthis sort of thing read any old economics book from 1950 or 1970 thateconomics book from 1950 or 1970 thateconomics book from 1950 or 1970 that was that uh Paul Paul Samuelson who waswas that uh Paul Paul Samuelson who waswas that uh Paul Paul Samuelson who was a terrific guy and smart as hella terrific guy and smart as hella terrific guy and smart as hell He had the standard textbook for 25He had the standard textbook for 25He had the standard textbook for 25 years. And if you looked up, you know,
Otheryears. And if you looked up, you know, zero interest rates in year after year after year, it was a 900 page book. And it wasn't an entry for it, you know. I mean, it was the most important economic development. I mean, in terms of the impact it would have and everything during the lifetime of the students reading it. But uh uh it's what you don't think of that that does all the damage.
QuestionerYeah. Let's talk a little bit about CEOs um in some of the Berkshire Holdings. You mentioned Apple's uh Tim Cook and just the phenomenal job you think he's done.
WarrenIncredible.
QuestionerUh he's not the only one of your major holding CEOs who stepped down. James Quincy recently stepped down from Coca-Cola, too. And we just spoke with Vicky Halib who announced that she is retiring and stepping down from that position at Accidental. Um part of what Greg's talked about is how stable that
QuestionerGreg's talked about is how stable that portfolio is and and these holdings are companies that he knows and managers that he that he knows. There's going to be some new managers in some of those major holdings coming in. Is that a problem?
WarrenWell, it was certainly a problem in Coca-Cola there for good many years when I was around the company. I mean, sure. It's it's uh and you have the most problems with with a really good company because it'll it'll it'll continue. I mean, if you're selling some product that people are buying every day, you can make the wrong decision for a long time. Uh uh but that's one of the problems with investing that uh uh Tim Cook I I I felt was very very good from the start and and our most of our managers uh are very good at the smaller problems like but they can't anticipate the the overwhelming problems. That's that's my
Warrenoverwhelming problems. That's that's my job or now Greg's job.
QuestionerDo you feel good about those holdings still? Have you met any of the new managers >> of those business?
WarrenI haven't met the old managers >> of the new business of the new CEOs that are coming in. Tim replacement >> Enrique at Coca-Cola. >> I certainly met the people that at at Bell Labs that we >> Yeah. You know, and obviously I met Vicky. we made the deal and and so I I enjoy meeting with people and uh uh uh but you can make mistakes with people. I mean, look at the divorce rate, you know, that's that's more important than whether you got the right CEO or anything else. And and now you've got years of trial. I mean, back when I was young, I mean, you had to make the decision, you know, or you didn't have to make a decision, but a good many people made the decision when they were
Questionerpeople made the decision when they were 20 or 21 now to get married.
QuestionerYeah. They got married. And now they they they spent 5 years and they still make the same mistakes.
QuestionerSo, you think we're getting worse at our judgment?
WarrenWell, I don't know. Maybe that people behave differently before the marriage than after. Who knows exactly? Yeah,
QuestionerI would say that almost everybody feels either their marriage is better or worse than they anticipated a month after they were married, but I don't know which.
QuestionerUm, Warren, let's talk a little bit about deep fakes because the deep fake Warren that popped up early in this session was pretty good. Um, they had somebody standing up, you know, Greg was joking about it, but, you know, the first the first question went to a guy from Warren up in the rafters who lives in Omaha. Um, you've been concerned about some of these AI deep fakes and
Questionerabout some of these AI deep fakes and what that means for the world.
WarrenYeah, I would be concerned if everybody would Well, actually, the worst thing would be to have a a really good imitator of any president that came along. I mean, just imagine Well, yeah, we had that famous thing before way back in in New Jersey where they the Martians coming and everything like that.
QuestionerWar of the Worlds with Orson Wells. what you what you can do.
WarrenUh well, if you convince but people lend you money for it, they shouldn't you shouldn't be borrowing it. I mean, it's it's scary and it's it's particularly scary when you have nine countries or so with the nuclear weapons and and people working on it something even more. We haven't dealt with this. We don't know what's going to happen.
QuestionerYeah. Let's circle back to Berkhire and the Berkhire of today. Um I think
Questionerand the Berkhire of today. Um I think I was speaking with you yesterday or the day before and we were talking a little bit about Greg Ael and what a nice guy he is and he said
Warrenhe's a terrific guy.
QuestionerYou said something interesting to me though um about how you picked him and it wasn't because he was a nice guy. Why did you pick him?
WarrenWell, he's very very very smart about businesses. Incidentally, he's getting his Can Canadian I mean, he's getting his American citizenship here very soon. And he was going over with me all the things he had to learn about. And I've actually spent a little time in the past with groups of individuals. Of course, my wife did it too became an American citizenship, American citizen, and the things they have to learn about the Constitution and all these and they're usually so proud when they become
Warrenusually so proud when they become American citizens. And I think I I think American citizens. And I think I I think American citizens. And I think I I think I detected in Greg that I mean, you I detected in Greg that I mean, you I detected in Greg that I mean, you know, as know, as know, as successful he's been and everything successful he's been and everything successful he's been and everything else. I mean he is else. I mean he is else. I mean he is it it means something to him to become it it means something to him to become it it means something to him to become an American citizen and uh you know he an American citizen and uh you know he an American citizen and uh you know he sits there with this his young son you sits there with this his young son you sits there with this his young son you know and son knows more about some of know and son knows more about some of know and son knows more about some of the answers of the questions you know the answers of the questions you know the answers of the questions you know than he may get asked or something about than he may get asked or something about than he may get asked or something about becoming a citizen. It's it's really becoming a citizen. It's it's really becoming a citizen. It's it's really interesting and where else does that interesting and where else does that interesting and where else does that happen in the world? I mean what people happen in the world? I mean what people happen in the world? I mean what people you know that America is special you know that America is special you know that America is special and and uh and and uh and and uh it's a miracle it's a miracle it's a miracle uh what America's accomplished. I mean, uh what America's accomplished. I mean, uh what America's accomplished. I mean, it's just an absolute miracle. it's just an absolute miracle. it's just an absolute miracle. And yet And yet And yet the miracle, the division of the of of the miracle, the division of the of of the miracle, the division of the of of the output and everything is about as the output and everything is about as the output and everything is about as inequitable as it you could come up inequitable as it you could come up inequitable as it you could come up with. While at the same time, it's got with. While at the same time, it's got with. While at the same time, it's got these these these great attractions. There is some secret great attractions. There is some secret
Warrengreat attractions. There is some secret sauce. never been able to define it precisely, but that uh when you run a country for 200 and some years and people want to come here every year, I mean there's there's really something about it. And what Greg Ael is very, you know, is looking forward to becoming an American citizen, that means something to him. And you can't buy that at any place or package it or, you know, won't work for a Madison Avenue approach approach, you know, you know, be an American or something like that. But that that that feeling just goes in my 95 years. I've I've seen it, you know, it's time after time. So I felt I felt good when I Greg just volunteered that in the last day or two to me that he was he was up there for his final exams here pretty becoming a citizen.
QuestionerI didn't realize he wasn't a dual citizen already. I knew he was Canadian,
Questionercitizen already. I knew he was Canadian, but I thought he had dual citizen.
OtherHe doesn't have a full whatever the complete citizenship requirement is. And and you can say, why does he care? I mean, he's gotten along fine with here and everything. He still wants to be a citizen.
QuestionerYeah. 250 years we're celebrating our 250th anniversary. Um you pointed out that you've been around for 95 of them. You think we have the special sauce that that will continue in this country or what do we need to do to preserve that and make sure that it does continue?
WarrenWe've got a special sauce there. A secret sauce. It's such a good secret that I don't know what exactly it it is, but I do know this that that anybody that has a choice would choose to be in Port America. I mean, you know, you can pick some very small little country. They're very happy that they're But
Warrenvery happy that they're But is this is there any other country that is this is there any other country that is this is there any other country that everybody's for couple hundred years everybody's for couple hundred years everybody's for couple hundred years wanted to wanted to wanted to immigrate to? I mean it it uh and it immigrate to? I mean it it uh and it immigrate to? I mean it it uh and it attracted some terrible people, you attracted some terrible people, you attracted some terrible people, you know, too. But but uh know, too. But but uh know, too. But but uh it worked and they had the mafias from it worked and they had the mafias from it worked and they had the mafias from the different groups, not not just the the different groups, not not just the the different groups, not not just the Italian mafia, but I mean it it wasn't Italian mafia, but I mean it it wasn't Italian mafia, but I mean it it wasn't that they were all we had some system that they were all we had some system that they were all we had some system for picking out the the wonderful people for picking out the the wonderful people for picking out the the wonderful people from some other countries, but from some other countries, but from some other countries, but it has it has worked. But it's work the it has it has worked. But it's work the it has it has worked. But it's work the extremes to which it works extremes to which it works extremes to which it works uh don't seem to belong to that kind of uh don't seem to belong to that kind of uh don't seem to belong to that kind of a society. I mean if you were drawing up a society. I mean if you were drawing up a society. I mean if you were drawing up dreams for the ideal society and you dreams for the ideal society and you dreams for the ideal society and you would have this kind of GDP per capita would have this kind of GDP per capita would have this kind of GDP per capita and everything you wouldn't design you and everything you wouldn't design you and everything you wouldn't design you wouldn't design the wouldn't design the wouldn't design the you wouldn't design the inheritance of you wouldn't design the inheritance of you wouldn't design the inheritance of laws. you wouldn't that mean you just do laws. you wouldn't that mean you just do laws. you wouldn't that mean you just do all kinds of things differently but all kinds of things differently but all kinds of things differently but somehow it's worked
Questionersomehow it's worked but that doesn't mean that we can't do better I mean at all you know Warren there are thousands of people shareholders and partners of yours for decades in some cases who are sitting out in this arena right now and I just wonder if there's a message you'd like to give to them um those been following you for yours and who've been partners of yours for years.
WarrenThe number one rule I give them is just not give them the golden rule to others. I'm not a religious guy, but I mean nobody said it any better and and in in a couple thousand years than that, which may be why it's lasted a certain degree, too. I mean that uh you know more people are reading a 2,000-year-old book about how to behave than anything that anybody's coming up with lately. uh uh now it's got a lot of particular the old testament it's got
Warrenparticular the old testament it's got different kinds of stories to some extent but uh if the whole world lived by the golden rule it would be such a more wonderful society
Questionerdo unto others as you'd have them do unto you
Warrenyeah and that's true for everything from parenthood to being a boss cost to being all I mean just everything in life and it doesn't cost you anything. In fact, it it it's reflected in better behavior toward you. So, I mean it's a very selfish sort of thing in in one sense, but I've never seen anybody that's unhappy that behaves that way. They uh uh and I've seen a lot of people
Questionerin a lot of different kinds of situations.
OtherWarren, I want to thank you for taking this time to sit down with us today. Warren Buffett, the chairman of Berkhire Hathaway. Uh Greg Ael is going to be taking the stage in just a moment and you will see more from him in
Othermoment and you will see more from him in just a moment.>> Okay, we're clear.
OtherWe're 177y old company and if we didn't have in our DNA the ability to adapt and to evolve, we wouldn't be here today and we wouldn't be relevant still in in our customer supply chains. And so that adaptability and innovation and really putting the customer first is what we focus on. That that's core to who we are. My name is Katie Farmer and I'm president and CEO of BNSF Railway. I have had the pleasure of working alongside the 35,000 men and women of BNSF for going on 34 years now. And I've worked in almost every area of our company, which is how I came to lead BNSF as our CEO for the last 5 years. We have a long rich history. We got our start as a sixmile railroad in the state of Illinois, a little railroad called the Aurora Branch. And over time, that railroad grew into the Chicago, Burlington, and Quincy railroads. And
Greg AbelBurlington, and Quincy railroads. And then we continued to stitch smaller railroads together to have a route from the Midwest all the way to the Pacific Northwest. We um are made up of 390 predecessor railroads. And some of those railroads actually connected with the Pony Express and our trains were used to sort mail as the train moved across the tracks. That then grew into the present-day BNSF Railway. We operate in 28 states and three Canadian provinces. Every year we move somewhere between 9 and 10 million loads. And we move everything from coal to agricultural commodities to building products, construction products, chemicals. And our largest business segment is our intermoal business. And our interotal business is the movement of trucks from the highway lifted on a container or trailer onto our railroad. Then we haul it the long portion of the route and
Greg Abelit the long portion of the route andit the long portion of the route and then lift it off again from the thethen lift it off again from the thethen lift it off again from the the train to over the road. And to give youtrain to over the road. And to give youtrain to over the road. And to give you some perspective of the scope of what wesome perspective of the scope of what wesome perspective of the scope of what we move, of those 9 to 10 million units,move, of those 9 to 10 million units,move, of those 9 to 10 million units, over 5 million are inner modal. So we'reover 5 million are inner modal. So we'reover 5 million are inner modal. So we're the industry leader in inter innerthe industry leader in inter innerthe industry leader in inter inner modal. And we lift a container on or offmodal. And we lift a container on or offmodal. And we lift a container on or off our trains every 4 seconds, 24x7, 365our trains every 4 seconds, 24x7, 365our trains every 4 seconds, 24x7, 365 days a year. So that just tells you adays a year. So that just tells you adays a year. So that just tells you a little bit about the scope of what we dolittle bit about the scope of what we dolittle bit about the scope of what we do and how we touch literally every part ofand how we touch literally every part ofand how we touch literally every part of the economy. Everything's foundationalthe economy. Everything's foundationalthe economy. Everything's foundational around safety for us. We're going toaround safety for us. We're going toaround safety for us. We're going to lead the industry in service. We'relead the industry in service. We'relead the industry in service. We're going to continue to be productive andgoing to continue to be productive andgoing to continue to be productive and efficient. But one of the things I'mefficient. But one of the things I'mefficient. But one of the things I'm excited about is the next 177 years. Andexcited about is the next 177 years. Andexcited about is the next 177 years. And so we're at a point now where we'reso we're at a point now where we'reso we're at a point now where we're looking at how do we build that spiritlooking at how do we build that spiritlooking at how do we build that spirit of building and innovation to ourof building and innovation to ourof building and innovation to our technology and our innovation efforts.technology and our innovation efforts.
Greg AbelAnd so we created BNSF Tech, which is a new division of BNSF. And it's really focused on taking that moving from looking for commercial solutions and buying technology and speeding that process up and building internally. And so we hired a gentleman by the name of Harry Goend who many of you know came from GEICO and has a long track record of going in and transforming and innovating. And it's not about technology for technologies sake. It's about outcomes. And so, how do we use technology to best position us for the future, to make us a safer railroad, to give the customers a better service product, to drive productivity and efficiency? And so, I'm excited about the opportunities we're going to have going forward to really bring that spirit of building to our technology efforts. So I go back to one of Warren's
Greg Abelefforts. So I go back to one of Warren's annual letters to the shareholders and I remember he said that he believed that BNSF would not only be an asset for Berkshire but an asset for our country 100 years from now. And we take that responsibility very seriously. But we also really appreciate that that aligns well with the way that we have to think about our business. We make investments that are very long-term investments and so thinking about that in that longer time frame is really important. Warren always challenges us to think about the businesses that we lead as if it were our own family's company. And you know, I've worked for BNSF since I was 20 years old. So thinking about BNSF as it as if it's my family's company is not a big stretch for me. And I love that perspective of thinking about how do I make sure that I'm passing this company on so as if it were a family
Othercompany on so as if it were a family company for the next hundred years to those who will come after us. And with Greg, Greg, it's great to help focus on execution and making sure that every day you're making that business your family's business. you're making it better. So, we are very honored to be a part of the Berkshire Hathaway family. We understand the responsibility that we have, which is to operate every single day with the highest ethical standards and deliver value for the shareholder. And I want the shareholders to know that we have 35,000 proud railroaders who come to work every single day and focus on those two things.
Becky QuickWelcome back. I hope you enjoyed the break. Uh Becky Warren, thank you for that exceptional interview. Appreciate that. Katie and Adam, great to have you on stage. I would note both the videos we were um extremely well done in that it gives
Otherum extremely well done in that it gives us a great understanding of your businesses but also you as leaders and I'm just going to start with a question for each of you. Um and then we'll go to the uh back to the question and answer. I think Katie you well I know you did you heard me speaking earlier. Um, I talked to our owners and and shareholders around our operating performance and where we are. Highlighted we were in fifth of sixth last year. We've now moved to fourth and and we need to see we and we also talked about needing significant improvement, a step change. But the one thing I didn't really touch on is I started talking about the the the getting to that next level. But as you touched on, you have 35,000 employees and to move the organization to look externally and recognize where do we go? How do you take on that challenge?
QuestionerHow do you take on that challenge?
OtherYeah, thank you, Greg. And first of all, thank you for the opportunity to speak today and talk about our great company. It's a pleasure to do that, Greg. So, thank you. You know, we absolutely recognize that it's important for us to run an efficient operation, to have a competitive cost structure, and to continue to further close the gap between us and our competitors. You know, we have an exceptional leadership team in place that understands the importance of aligning the entire organization, as you said, Greg, the 35,000 men and women of BNSF, aligning them around that operational excellence. You saw that we made progress, as Greg said, in 2025. We continued to make progress in the first quarter of 2026, but we know that we have more work to be done to drive that operational excellence across all areas of our company.
Warrenareas of our company. Thank you, Katie. And then Adam, when I was uh discussing your new role and thank you for taking on that role and and as you and and also retaining your role at NetJets as the CEO there. So, uh, a lot on your plate and and all of us here appreciate that. Um, but it's early going. You've been in the role since December as the president of consumer uh products and then uh service and retailing. What what are your observations as your your early observations uh across the 32 companies and how are you approaching that?
QuestionerYeah. and talking to the different CEOs. I um if you give me just one second before I answer, I just want to make just one brief comment. Uh really to both Warren and and Greg, um I have been CEO of Ned Jets for the last 10 years, but I I've been with Ned JJets. This is my 30th year there. So only at Berkshire
Ajit Jainmy 30th year there. So only at Berkshire could you feel like the new kid on the block after being here for 30 years. But um you know, Warren has taught us a lot. Charlie's taught us a lot. Greg's taught me a lot. Um, one of the things they that they've said over and over is is that hey, bad news takes the elevator and good news takes the stairs. And I really understood that many many years ago and until I became CEO, I found myself uh on the elevator a few times. And what they never told me was what happens after you get on that elevator. And I just want to point out as the CEO for the last 10 years, there's been many times I've had to make calls on things. We run a big business and I simply want to say that what happens after that is you have the most unconditional support and I echo uh all the CEOs that that are in this portfolio. So I just want to say
Greg Abelin this portfolio. So I just want to say thank you for that because it's not easy delivering sometimes good or bad news but uh it's been phenomenal support. Um, as it relates to the actual the other 31 CEOs in our bucket, um, I have to sort of start with conversation with NetJets because people have been asking me a lot in the last 5 months. So, you're still CEO of NetJets, but how are you going to take on this other role and I I think the journey starts with with the team at NetJets and many of them are here and they're they're incredible. I spent a lot a lot of time over the last 10 plus years with them. I sat up in that stage in the arena in May of 2010 and it was a hard thing to hear but it was the truth and Warren talked about netjets and stated that it was his toughest mistake that year and but for the backing of Berkhire that we would have been
Greg AbelBerkhire that we would have been bankrupt and I don't like repeating bankrupt and I don't like repeating those words and probably shouldn't do it in front of an entire room but it's an important pause because then you have two choices what are you going to go go do and so the team that's sitting with me today and many people back home. Um, I do think we have a wonderful company as Warren talked about with Charlie in 2023 and I just want to say to them, uh, thank you because it's been a rough road to do that and we've accomplished a lot which gets me in to answer your question and and I, you know, I be honest with you. So, thank God I have NetJets cuz I was able to fly around and see a lot of these companies. Unfortunately, all 31 companies are not based out of Columbus, Ohio. So, I've been on our airplanes a lot. Um, and if I'm honest, I was a little concerned about it. Uh, many of
Greg Abellittle concerned about it. Uh, many of the CEOs had reported directly to Warren. Um, all of them reported to Berkhire and then here comes this guy, you know, that they're now going to be uh, working with. And I will tell you, one of the things that that struck me is how um, wise the CEOs are. They have the energy, intelligence, integrity that Warren always talks about. But I say wise because of my concerns were quickly allayed when I started talking to them in the sense that they've been listening. I know many in this room don't know the names of those 31 other CEOs, but they know you and they've been listening. Um they absolutely understand uh the playbook that is the uh the ownership manual. By the way, this is the almost today the 30th anniversary. Warren wrote the owner's manual and in that was sort of our business bible on
Greg Abelthat was sort of our business bible on what we needed to do and I was really pleased every one of our CEOs understands that they've been living that um and that's going to make the interaction uh much easier for me. So uh I feel really good. I feel really good about the form of the CEOs that we have and I know that they have ingrained in them the culture part of the culture certainly is the ownership thinking but the stewardship that that is talked about. We feel a massive and deep responsibility to carry on the stewardship and the legacy of Charlie and and Warren and and work really hard uh for Greg and his team. So uh I feel good about it.
Questioner>> Great. Well, we're very fortunate to have Katie and Adam in these leadership roles. Again, it was a uh very purposeful to have them on stage. We want them to have the opportunity engage with our owners, our shareholders, and
Otherwith our owners, our shareholders, and we really do look forward to the uh the question. So, thank you for joining us on stage again.
Greg AbelYeah, thank you Becky again. Great to have you back. Thank you for that interview and uh if you'd like to start. Thank you.
Becky QuickOkay. Thanks, Greg. Uh this question comes from Chris Frerieded in Philadelphia, Pennsylvania who wants to know how has the current geopolitical situation in the Middle East impacted Berkshire's subsidiaries.
Greg AbelSure. Um, I'll touch on it and then I'll I'll make sure because it it it impacts really in a variety of ways all our businesses, but um, what I'm most proud of are our businesses. Uh, we operate these businesses for the long run just like we do for obviously for our shareholders. We take a long-term approach there. There's not many days and I used to joke when I more had Adams rule. There wasn't a day I woke up where
Greg Abelrule. There wasn't a day I woke up where there the phone the phone wasn't ringing with good news. you know, that phone rang. You knew you're going to have a bit of a challenge and we have that portfolio, but but that's okay. We'd be talking and we always worked our way through it. And we have a team that would lean in and we'd come through and it could be anything. And we never tried to use that as a reason we couldn't do something or get to the to the right place. And what I've seen associated with the uh obviously the the war in Iran and and the and the various conflicts in the Middle East is again a team that is very much taking the approach that that's the situation we're in. We can manage our business and we we very much quickly move to what's the best solution for our customers. how can we deliver and continue to deliver what we've done to
Greg Abelcontinue to deliver what we've done to them and what's their expectations around that and and our teams will work incredibly hard to come up with with solutions. Um I I touched on LSBI, the drag reduction agent on the pipeline company. Um they don't usually sell a lot of product into the Middle East as far as moving. It's more a domestic based product for Canada and the US. When you think of a drag reduction agent on pipelines, literally being uh cargo planes of that that uh chemical being moved in the Middle East to help free up supply and and i.e. remove that uh some of that constraint. So there there's so many things that go on when they start trying to figure out how to solve uh the challenge. Now what I would say is it doesn't mean there's not immediate impacts to our businesses. If you think of companies in America around the
Greg Abelof companies in America around the globe, petroleum is and ga natural gasglobe, petroleum is and ga natural gasglobe, petroleum is and ga natural gas matter is such a fundamental in input tomatter is such a fundamental in input tomatter is such a fundamental in input to so many products.so many products.so many products. And the reality is if you think IAnd the reality is if you think IAnd the reality is if you think I touched on our chemical grouptouched on our chemical grouptouched on our chemical group their their input istheir their input istheir their input is uh generally a petroleum product and theuh generally a petroleum product and theuh generally a petroleum product and the output is the the various products theyoutput is the the various products theyoutput is the the various products they produce. obviously that that areproduce. obviously that that areproduce. obviously that that are byproducts of that. But their inputbyproducts of that. But their inputbyproducts of that. But their input costs have effectively doubled in a verycosts have effectively doubled in a verycosts have effectively doubled in a very short period of time. But again, we'llshort period of time. But again, we'llshort period of time. But again, we'll manage through that and that's the themanage through that and that's the themanage through that and that's the the beauty of being part of Berkhire. Theybeauty of being part of Berkhire. Theybeauty of being part of Berkhire. They know first we'll take care of ourknow first we'll take care of ourknow first we'll take care of our customer. We'll find the right answer.customer. We'll find the right answer.customer. We'll find the right answer. We'll manage the challenges and theWe'll manage the challenges and theWe'll manage the challenges and the value creation will be there in the end.value creation will be there in the end.value creation will be there in the end. So there's some short-term pressure onSo there's some short-term pressure onSo there's some short-term pressure on our chemical businesses. If you lookedour chemical businesses. If you lookedour chemical businesses. If you looked at their first quarter profitsat their first quarter profitsat their first quarter profits individually, they would be down becauseindividually, they would be down becauseindividually, they would be down because or flat to down because they've got some
Greg Abelor flat to down because they've got some challenges. For example, on the on the input side, but they're delivering what the customer needs and that rebalances over a period of time where our prices will move up pursuant to our contracts. We'll be treated fairly in the end in that they'll reset and then may unwind a little bit slower. But the point is um unfortunate situation and and we've got you know men of service and women of service over there and and putting themselves at risk and and and and and that in itself is uh scary because a lot of our employees are are have family involved. But you know as far as running our businesses, it's really heads down. We'll get through this and we'll keep operating everything for the long run. And and again, it includes how we'll operate our assets. We're not going to put the asset at risk to try to get to a
Otherput the asset at risk to try to get to a short-term outcome because a petroleum prices higher or petrol petroleum prices are higher. It's very much continuing to take that that long-term perspective.
QuestionerKatie, um obviously it it can impact demand and what's being brought in on the on the coast. Are you seeing that or what else are your observations?
OtherYeah, it's interesting and and Warren has said this in the past before. You know, the railroad is a really good reflection of what's happening in the industrial and the consumer economies because our loadings really cut across all the various commodities. You know, we touch agricultural products, we touch coal, the industrial commodities like cement and steel and aggregates. You know, certainly our interotal business, which is such a big part of our business, reflects what's going on with the
Greg Abelreflects what's going on with the consumer. And so we're seeing the impact from the conflict in the Middle East in a couple of different ways. First of all, I would say that if you look across our various commodities, it's created an opportunity for some of those commodities just because of the disruption in the supply chain. In addition to that, you know, we see commodities like aggregates and steel, things like that that that are that are favorable and we're seeing an increase in those. But then some of the commodity areas that use energy in the manufacturing of those commodities are certainly being impacted by the increasing fuel prices. The largest segment of our business, as I mentioned, is interotal. And so as fuel prices increase, our interotal business becomes more competitive. And so we're seeing an increase there relative to what's happening in the
Greg Abelrelative to what's happening in the Middle East. I would say in general though as we think about it if fuel prices stay too high for too long it has an impact on consumer demand and when that happens that cuts across all of our businesses
Questionerand have you started to see that yet that obviously when you think of I touched on it being an input to many of our companies but really globally it's an input to so many things and as that price pressure pressure pressure moves up obviously the the demand side is challenged are Are you seeing that yet?
Greg AbelYeah, we're seeing some uh we are starting to see that impact some of the businesses. I would also say, Greg, as we talked to some of our our large interotal customers, what they are telling us, some of the big retailers are the customers are having to make choices now. So, as fuel prices go up,
Otherchoices now. So, as fuel prices go up, they make choices about what they're buying. And so that's where I get back to if if it is a prolonged higher fuel price environment, I do do believe that we will see that customer impact across our businesses.
QuestionerThank you, Adam. Uh across your businesses, um what are what are you seeing? What are you what are you feeling?
OtherYeah, I mean certainly, you know, when you see um when you when you see the increases that have occurred in the in the instant spikes in some cases that occurred certainly on the consumer product side, on the real uh retail side, um it it has affected some of the demand on that side. I would um I would also tell you that we have also faced multiple times at NetJets with a hundred you know dollars a gallon or $100 a barrel pricing. We see those spikes. We see the demand. haven't seen it on the
Greg Abelsee the demand. haven't seen it on the net side. We went from uh really the last two years from about 5 to 540 a gallon. We're seeing spikes up to seven a gallon. I would tell you if I see that kind of sitting at 7 and a quart 750 a gallon, then you'll see it start impacting even on the higher end side on the net side. So, we're feeling it. Um it's, you know, it's not the first time we've had to deal with this. you know, we're prepared to deal with those things and make adjustments where we need to, but it certainly is affecting, I would say, some of the retail businesses and some of the consumer product businesses.
Other>> Great. Thank you, Adam, and thank you, Becky, for the question. We'll now move to station five.
Questioner>> Good afternoon, Mjab Singh from MountainHouse, California. Warren has spoken very highly of of both you, Greg and Katie. So, I'm grateful to
Questioneryou, Greg and Katie. So, I'm grateful to have you both leading our company. Andhave you both leading our company. Andhave you both leading our company. And I'd like to ask each of you a question.I'd like to ask each of you a question.I'd like to ask each of you a question. Greg, as you know, the Berkhire systemGreg, as you know, the Berkhire systemGreg, as you know, the Berkhire system relies on decentralization.relies on decentralization.relies on decentralization. Each manager runs their own subsidiary.Each manager runs their own subsidiary.Each manager runs their own subsidiary. As CEO, which operating units do youAs CEO, which operating units do youAs CEO, which operating units do you think need more oversight and how willthink need more oversight and how willthink need more oversight and how will you handle a manager who underperforms?you handle a manager who underperforms?you handle a manager who underperforms? And Katie, as Greg highlighted, BNSF'sAnd Katie, as Greg highlighted, BNSF'sAnd Katie, as Greg highlighted, BNSF's profitability lags its competitors.profitability lags its competitors.profitability lags its competitors. With eventual technology advancements inWith eventual technology advancements inWith eventual technology advancements in autonomous driving, trucking costs willautonomous driving, trucking costs willautonomous driving, trucking costs will continue to drop. How will B and NSAcontinue to drop. How will B and NSAcontinue to drop. How will B and NSA maintain its competitive advantage frommaintain its competitive advantage frommaintain its competitive advantage from competitors and new new technology?competitors and new new technology?competitors and new new technology?
Greg Abel>> Great. Thank you.>> Great. Thank you.>> Great. Thank you. So associated with the letter I wrote toSo associated with the letter I wrote toSo associated with the letter I wrote to all of you as owners, I highlighted someall of you as owners, I highlighted someall of you as owners, I highlighted some important um as I've touched on values.important um as I've touched on values.important um as I've touched on values. One of them was our decentralized model.One of them was our decentralized model.One of them was our decentralized model. I also touched on risk discipline,I also touched on risk discipline,I also touched on risk discipline, capital allocation.capital allocation.
Greg Abelcapital allocation. And when we think of our businesses, we have an exceptional group of leaders in businesses. And yes, they do own their businesses as Katie touched on it in her video, as Adam's alluded to it and talked about it. Um, there is a great deal of ownership in each of our across each of our subsidiaries and that's absolutely how we'll continue to operate and see it as as an extremely effective model that they're closest to their customers. they understand what needs to be done and if they think like an owner we get very good outcomes across the group of companies. I I would highlight though that with uh decentralized model we we do not um uh take responsibility and I was one of those I ran BHE it's it's a great set of responsibilities where Berkhire Hathway Energy shouldn't be abbreviating sorry but when I ran it that that autonomy meant you
OtherI ran it that that autonomy meant you meant you embraced it and there was a meant you embraced it and there was a meant you embraced it and there was a great amount of uh accountability that great amount of uh accountability that great amount of uh accountability that came with it and sheer pride that you came with it and sheer pride that you came with it and sheer pride that you wanted to do things right. We've got a wanted to do things right. We've got a wanted to do things right. We've got a clear set of uh when we talk about clear set of uh when we talk about clear set of uh when we talk about integrity and how I started it, we have integrity and how I started it, we have integrity and how I started it, we have a lot of expectations a lot of expectations a lot of expectations and that's where both on the uh on the and that's where both on the uh on the and that's where both on the uh on the integrity how they approach managing integrity how they approach managing integrity how they approach managing their business and and servicing their their business and and servicing their their business and and servicing their customers and I've said there's a lot of customers and I've said there's a lot of customers and I've said there's a lot of external factors we we we can we can external factors we we we can we can external factors we we we can we can observe but our primary engagement is observe but our primary engagement is observe but our primary engagement is with their are they managing the risk with their are they managing the risk with their are they managing the risk and risk and foremost do they do they and risk and foremost do they do they and risk and foremost do they do they see themselves as that chief risk see themselves as that chief risk see themselves as that chief risk officer you've heard us discuss many officer you've heard us discuss many officer you've heard us discuss many times are they good allocators of times are they good allocators of times are they good allocators of capital with the capital they have there capital with the capital they have there capital with the capital they have there because even capital you have to manage because even capital you have to manage because even capital you have to manage your operating expense as well I view your operating expense as well I view your operating expense as well I view everything you know that that when we're
Greg Abeleverything you know that that when we're spending money on a uh it may be a capital expenditure it can be an operating expenditure you're deploying our our our shareholders capital are are we doing that well and we focus on that so that's part of that equation of allocation Apple. And the reality is if if we're seeing um a situation where we're underperforming or we're or we're seeing some potentially poor decisions, that's where we engage and have a discussion. And usually it's relative, and I touched a bit on this with Katie, it's relative to what we see externally and just really trying to understand um where our performance gaps are and and then it quickly moves to how and and we have we don't have the people at corporate to go in and quote help. So, it's not like we send in an army, but there's generally some people within our
Otherthere's generally some people within our subsidiaries or maybe someone we know that could help them with that with that performance gap because we do treasure um continuous improvement and strongly, as you've heard, believe in uh operational excellence and there's, as I've said, there's room for us to to get better and that's how we would approach the situations where we see the gap and need to close it. Katie, maybe you can probably touch on both. Um, absolutely.
OtherSo, thank you for the question and as I said, we absolutely know that it's critically important that we continue to drive an efficient operation, that we continue to have a competitive cost structure, and that we continue to close the gap with our competitor relative to our profitability. There's a couple of specific things that we're working on and it's really about operationalizing
Greg Abeland it's really about operationalizing the improvement that we saw in two twothe improvement that we saw in two twothe improvement that we saw in two two in 2025 into the first quarter of 2026in 2025 into the first quarter of 2026in 2025 into the first quarter of 2026 and making sure that we're reallyand making sure that we're reallyand making sure that we're really institutionalizing that. So the firstinstitutionalizing that. So the firstinstitutionalizing that. So the first thing that we really focused on in 2025thing that we really focused on in 2025thing that we really focused on in 2025 was we knew that we needed to improvewas we knew that we needed to improvewas we knew that we needed to improve our single car operational efficiency.our single car operational efficiency.our single car operational efficiency. And when I say single car unitAnd when I say single car unitAnd when I say single car unit operational efficiency, we run a coupleoperational efficiency, we run a coupleoperational efficiency, we run a couple of different networks. We run ourof different networks. We run ourof different networks. We run our intermoal network. We run ourintermoal network. We run ourintermoal network. We run our agricultural and our coal network, ouragricultural and our coal network, ouragricultural and our coal network, our bulk networks. And then the balance ofbulk networks. And then the balance ofbulk networks. And then the balance of it is what we call our carload networkit is what we call our carload networkit is what we call our carload network or our single car network. And that'sor our single car network. And that'sor our single car network. And that's where we we have non-unit train. Itwhere we we have non-unit train. Itwhere we we have non-unit train. It takes a a lot of operational focus. Ittakes a a lot of operational focus. Ittakes a a lot of operational focus. It takes a a lot of work effort and ittakes a a lot of work effort and ittakes a a lot of work effort and it consumes a lot of resources. And soconsumes a lot of resources. And soconsumes a lot of resources. And so anything you do to improve that singleanything you do to improve that singleanything you do to improve that single car networkcar networkcar network is good for all of your customers. Itis good for all of your customers. Itis good for all of your customers. It frees up resources. It creates capacity.
Greg Abelfrees up resources. It creates capacity. It allows you to handle the same amount of volume if not more with fewer assets. And that translates through then to the improvement that you're seeing in the profitability. An example of that is in in the first quarter of this year, we handled more volume than we did in the first quarter of last year, but we did it with 260 fewer locomotives. That translates into a more consistent service product for our customers and it also translates into better financial results, which is what you saw in the first quarter of 2026. So we we're spending a lot of time ensuring that we have operational excellence not in all not in just all those other networks but in the network that frees up resources and drives improvement and operational excellence for all of our customers.
Greg AbelThe second area and you heard Greg talk
Greg AbelThe second area and you heard Greg talk about this earlier was around ourabout this earlier was around ourabout this earlier was around our technological transformation.technological transformation.technological transformation. We really believe that in addition toWe really believe that in addition toWe really believe that in addition to driving that operational discipline thatdriving that operational discipline thatdriving that operational discipline that you saw in 2025 and into 2026you saw in 2025 and into 2026you saw in 2025 and into 2026 thatthatthat working with the the new BNSF techworking with the the new BNSF techworking with the the new BNSF tech organizationorganizationorganization to drive that next step level ofto drive that next step level ofto drive that next step level of improvement. And so you you saw unitsimprovement. And so you you saw unitsimprovement. And so you you saw units dwell in our terminalsdwell in our terminalsdwell in our terminals less time that translated through to theless time that translated through to theless time that translated through to the financial results that I talked about.financial results that I talked about.financial results that I talked about. You saw velocity improve as well. And soYou saw velocity improve as well. And soYou saw velocity improve as well. And so how do we leverage technology then tohow do we leverage technology then tohow do we leverage technology then to take the next step level improvement? Sotake the next step level improvement? Sotake the next step level improvement? So I'm excited about what we're doingI'm excited about what we're doingI'm excited about what we're doing there. We're literally attracting datathere. We're literally attracting datathere. We're literally attracting data scientists,scientists,scientists, operations research folks, and we'reoperations research folks, and we'reoperations research folks, and we're putting them alongside of our operatorsputting them alongside of our operatorsputting them alongside of our operators in our network operations center. We'rein our network operations center. We'rein our network operations center. We're looking at things like uh digital twins,looking at things like uh digital twins,looking at things like uh digital twins, which gives us the opportunity to modelwhich gives us the opportunity to modelwhich gives us the opportunity to model how we run the railroad before we
Greg Abelhow we run the railroad before we actually run the railroad. We're looking at opportunities to do predictive ETAs for our customers, which allows our customers to have a better product. It allows us to turn the assets faster. And then last, what I would say is that we're just it's good oldfashioned going to work on on attacking the largest structural cost buckets. We had a record for the first quarter in our fuel efficiency. That's the kind of thing we want to do because it makes us competitive with trucks. It is good for the environment and it's good for our financials. So those are the things we're doing to close the gap relative to profitability. Now your question about competing with trucks. I would say a couple of things with that. First of all, we have the largest interotal franchise of all of the railroads. We have a unique relationship with JB Hunt and we
Greg Abelunique relationship with JB Hunt and we have been extremely successful in converting over the road freight. We've done more of that than anybody. So, we know how to compete with trucks. But your question about technology is a good one. And I would say that we in the past have invested in a in a system called positive train control, which is a safety overlay that allows us to operate the railroad efficiently. As you know, we operate in a closed circuit. And so we have the ability to your point ultimately to run the train with fewer people than we operate with today. And in fact if you go way back in time we used to operate the trains with five people on the train. Now we're down to two people on most of our trains. So the technology will continue just like most industries will continue to evolve and we're continuing to look at that as
Greg Abelwe're continuing to look at that as well. The last point I would say with that though is that we also have to be allowed to innovate and so we need regulation that supports the ability for railroads to be able to compete with trucks. As you said, we know that there are trucks out there running today in our state in Texas along I45. We just there was just a pilot with autonomous trucks. what we have to be able to do is to be able to cone compete with that and to be able to innovate. And so we're going to need regulations that allow the railroads to be able to do that. So that's how I think about competing ensuring that we're closing the gap as well as maintaining our competitive advantage with trucks.
Other>> Thank you, Katie.
QuestionerAdam on that on that point in Katie's point um you know you came literally Adam had left for a very brief stint 10 10 years ago uh and and and had a very
Questioner10 years ago uh and and and had a very senior role in in NetJets and had been effectively been recruited to be a CEO of another business that was going public and we were fortunate enough to uh convince Adam to come back but he he came back to a challenging situation the asset was underperforming we had billions of dollars of debt I back to ourselves to the parent company but it ourselves to the parent company but it was debt that had been incurred and some was debt that had been incurred and some real challenges real challenges umum when when you think about how we address when when you think about how we address underperformance and how do we get a underperformance and how do we get a business back on track um may maybe you business back on track um may maybe you just want to touch on that period of just want to touch on that period of time and and and that bringing the time and and and that bringing the business back and and and how how you business back and and and how how you achieved that.
OtherUh yeah. Well, I one I will tell you um you know the one of the I came back on June 1st of 2015 and that Monday Monday afternoon and and many of the team that's up here today we got in
Greg Abelthe team that's up here today we got in a room and I asked a question about how many people really understand sort of the bookends of our business. Uh NetJets is complicated. We're ad hoc. We're unscheduled. We fly to thousands of airports. Commercial airlines will fly to 50 to 100 airports. uh we fly to 150 countries around so it's a very complicated business and I asked a question to the team um how many people do you think really understand the book ends of our business and I didn't like the answer I won't tell you what the answer was but it was too few and it sort of started there and what we did was we we really said you know to build this culture the way we want it if I understand what you're doing you understand what I'm doing at at deeper and wider levels we're going to do good things together so it sort of started on that Monday afternoon and when we we
Otherthat Monday afternoon and when we we started building that back Um, I will tell you it was also a reinforcement from probably from Greg. I remember my first board meeting prep and I was excited and we were starting to kind of move and and I was talking about uh growth and we're going to get this right. We're going to grow and Greg pulled me aside in a very kind way and he said, "Why don't you pay $1 back to Warren and work on getting your debt down?" That was a teaching lesson. Uh, I took that to heart. I heard it clearly and I actually already knew that. And so we just started really putting our blinders on and we said safety and service, safety and service. Warren bought NetJets after becoming customer in 1995. Bought nets uh in 1998 and he did a video for us that we still use and he said I want safety and I want service and we've been really focused on
Greg Abelservice and we've been really focused on making sure everybody stays in that alleyway. That in large part plus a lot of hard work um is why we we're able to pay our debt back. um we're able to pay uh cash back to Berkshire Hathaway and move our way as I said in the video out of the other comm and be first in the service business and I'm proud of that.
Othergreat.
OtherY
Otherthank you Adam. Thank you Katie
Becky QuickOkay this kind this comes from Brian Simpkins in San Diego, California. The question is, has Berkshire Hathaway considered seeking any tariff relief or reimbursement programs for its whollyowned operating businesses exposed to import costs? And how significant is that impact across the portfolio?
WarrenUh let me let me start with the impact across our portfolio because it's it it's very close to uh discussing the the situation in the Middle East in that yes
Greg Abelsituation in the Middle East in that yes there were there was the the tariffs andthere were there was the the tariffs andthere were there was the the tariffs and each business may have fallen under aeach business may have fallen under aeach business may have fallen under a different uh tariff or what they weredifferent uh tariff or what they weredifferent uh tariff or what they were importing and and we'd gone through itimporting and and we'd gone through itimporting and and we'd gone through it once already in the in the first term ofonce already in the in the first term ofonce already in the in the first term of the administ administration and therethe administ administration and therethe administ administration and there there were lessons leson learned there.there were lessons leson learned there.there were lessons leson learned there. So we were both better better preparedSo we were both better better preparedSo we were both better better prepared in how to manage through it and hadin how to manage through it and hadin how to manage through it and had realigned a certain amount of our ourrealigned a certain amount of our ourrealigned a certain amount of our our input. So it you know that was valuable.input. So it you know that was valuable.input. So it you know that was valuable. The second thing was it's as I describedThe second thing was it's as I describedThe second thing was it's as I described with the with the conflict. It was headswith the with the conflict. It was headswith the with the conflict. It was heads down and we'll just manage ourselvesdown and we'll just manage ourselvesdown and we'll just manage ourselves through it. You know listen therethrough it. You know listen therethrough it. You know listen there there's some cost pressures here. We'llthere's some cost pressures here. We'llthere's some cost pressures here. We'll figure out how we're going to continuefigure out how we're going to continuefigure out how we're going to continue to serve the customer. we'll workto serve the customer. we'll workto serve the customer. we'll work through on on delivering what they need.through on on delivering what they need.through on on delivering what they need. And there has to be some reasonableAnd there has to be some reasonableAnd there has to be some reasonable expectations on the other side that we'dexpectations on the other side that we'dexpectations on the other side that we'd recover those tears from our from
Otherrecover those tears from our fromrecover those tears from our from through through the uh either through athrough through the uh either through athrough through the uh either through a direct contract with them or through thedirect contract with them or through thedirect contract with them or through the product we're creating and and and thatproduct we're creating and and and thatproduct we're creating and and and that was a good approach in that we just umwas a good approach in that we just umwas a good approach in that we just um held our course and wanted to continueheld our course and wanted to continueheld our course and wanted to continue to service them. So they yes there isto service them. So they yes there isto service them. So they yes there is financial impacts but our team did a afinancial impacts but our team did a afinancial impacts but our team did a a really remarkable job of addressing itreally remarkable job of addressing itreally remarkable job of addressing it and and really minimizing the impact anyand and really minimizing the impact anyand and really minimizing the impact any of our businessesof our businessesof our businesses um as far as recovering it. Umum as far as recovering it. Umum as far as recovering it. Um that would definitely be at ourthat would definitely be at ourthat would definitely be at our operating level they would be makingoperating level they would be makingoperating level they would be making such a decision. But but overall rightsuch a decision. But but overall rightsuch a decision. But but overall right now our perspective has been there's anow our perspective has been there's anow our perspective has been there's a there's a lot to sort out when it comesthere's a lot to sort out when it comesthere's a lot to sort out when it comes to refunds.to refunds.to refunds. uh what we're eligible for and and so atuh what we're eligible for and and so atuh what we're eligible for and and so at this point in time, we're very muchthis point in time, we're very muchthis point in time, we're very much taking an approach that um uh if it'staking an approach that um uh if it'staking an approach that um uh if it's appropriate, our teams will evaluate itappropriate, our teams will evaluate itappropriate, our teams will evaluate it and and and again, it'll be a discussionand and and again, it'll be a discussionand and and again, it'll be a discussion with our customers and in with a number
Otherwith our customers and in with a number of them. So, it it's it's an operating subsidiary decision, but we're not naive to it and that we're encouraging them. It's there's a lot to be sorted out at this moment in time and and and we're not pursuing them. that doesn't mean we may not have a a subsidiary and I'll I'll look to our our team on stage here that may be uh pursuing one or seeking one.
Otheruh not as far as the the reimbursement, but I would say just as far as the impact of the tariffs and what we're seeing with our customers, um you know, I I would say that in early 2025, we saw several of our our customers pulling forward shipments in advance in advance of the tariffs. And um you know we we certainly saw our volumes ramp up at the beginning of 2025 because people were were trying to get ahead of the
Otherwere trying to get ahead of the implementation of the tariffs. So we didimplementation of the tariffs. So we didimplementation of the tariffs. So we did see uh you know an increase in volumessee uh you know an increase in volumessee uh you know an increase in volumes through early 2025. That reallythrough early 2025. That reallythrough early 2025. That really stabilized then in the back part of 2025stabilized then in the back part of 2025stabilized then in the back part of 2025 and then into 2026. I would say that ourand then into 2026. I would say that ourand then into 2026. I would say that our customers have have really adapted tocustomers have have really adapted tocustomers have have really adapted to the tariffs and adjusted to the tariffs.the tariffs and adjusted to the tariffs.the tariffs and adjusted to the tariffs. With that said, it it does cause someWith that said, it it does cause someWith that said, it it does cause some uncertainty and I think where we seeuncertainty and I think where we seeuncertainty and I think where we see that really showing up is, you know,that really showing up is, you know,that really showing up is, you know, it's very difficult for our customersit's very difficult for our customersit's very difficult for our customers from a planning perspective and I Ifrom a planning perspective and I Ifrom a planning perspective and I I think it's keeping some capital on thethink it's keeping some capital on thethink it's keeping some capital on the sidelines as far as investment insidelines as far as investment insidelines as far as investment in manufacturing facilities and it's justmanufacturing facilities and it's justmanufacturing facilities and it's just really the uncertainty of the tariffsreally the uncertainty of the tariffsreally the uncertainty of the tariffs that that really is what we're seeingthat that really is what we're seeingthat that really is what we're seeing reflected with our customers.reflected with our customers.reflected with our customers.
QuestionerThank you, Adam.
OtherYeah, I mean I would echo both those>> Yeah, I mean I would echo both those>> Yeah, I mean I would echo both those points. one um I would probably use uhpoints. one um I would probably use uhpoints. one um I would probably use uh you know Berkshire Hathaway Autoyou know Berkshire Hathaway Autoyou know Berkshire Hathaway Auto Automotive Jeff Rocker who is an
Greg AbelAutomotive Jeff Rocker who is an excellent you know CEO of that division um you know his the new and used sales are you know slightly down in in Q1 of this year compared to last year and part of that is is sort of that same effect from uh the tariff buying that occurred a year ago to to to today. Um, I had to smile because we were collecting. Okay, it's just it's changed every day as we know and you manage through that and just understanding the tariff bouncing ball was, you know, a job in itself. But I I had to smile because I was actually calling our our CEOs just to get their take on it. And the 32 companies in the portfolio, consumer product services and retail, it's a stat that I love. They've been actually been around on average 88 years and only 0.5% of American businesses have been around more than 80 years. Our average in that sector from a
Greg Abelyears. Our average in that sector from a founding standpoint is 88 years. And several of the uh five of the companies specifically companies that were founded in the 1800s. And when I called those CEOs, they said we've been dealing with tariffs for a hundred years, you know, kind of thing. And so not being dismissive at all of tariffs. The point is I look at the whole tariff conversation as you're always going to have a curveball. If I think of the CEOs in the last, you know, seven, eight years, we've had to deal with a global pandemic, the highest inflation 40 years, and now this thing, uh, you know, the bouncing ball of tariffs. So, the businesses have done an excellent job of managing through that. Um, I wouldn't put it in the fun department of the things we have to deal with, but we're learning it and um, I think we're in a pretty decent spot um, moving forward.
Otherpretty decent spot um, moving forward.
OtherSo,
Other>> thank you, Adam.
OtherWe'll move to station six.
QuestionerGood afternoon. My name is Amir Rahani from Vancouver, Canada. Uh, thank you for hosting us and thanks to everyone at headquarters that makes this weekend possible. Um, Berkshire's investments in the five Japanese trading houses was passive. Good businesses at good prices financed by GPN. Uh, your Tokyo Marine deal is fundamentally different. A 10-year joint M&A and reinsurance partnership. That's a level of operational integration Berkhire has never done internationally. What does that look like in practice? And does it signal a broader shift toward active international partnerships under your leadership? And to put you on the spot, Greg, Canada versus USA and hockey, who are you cheering for? Sorry.
Greg AbelNow I'm in trouble. Um yeah, Aji did an exceptional job of of discussing Tokyo Marine and and I'll
Greg Abelof discussing Tokyo Marine and and I'll I'll touch on it, but um what and I and I teed it up a bit in saying it is a strategic relationship less than a uh financial transaction. Yes, we like the 2 and a half% investment into Tokyo Marine and and that will be a long-term uh um investment. It's the type of investment we put with our other five investments in in Japan. We really think of those as forever because it goes beyond the investment and it's very much around the relationships we want to build there and you'll continue to see that. Um Ajit expanded on the underwriting opportunity that we do jointly participate in their their their risk and rewards associated with effectively also 2 and a half% of their book there now and and that's again part of the uh financial transaction but there's also great deal of faith there. We we as Ajit
Greg Abelgreat deal of faith there. We we as Ajit said and really Ajit says and I take his word for that but it's you know it's an exceptional company and and and their performance has been remarkable. So we're we're thrilled to have them. And then the third thing that was touched on was the the the partnership highlighted a variety of things we how we would like the relationship to develop and that's not defined yet. So we'll continue to let that take its proper form. They're the type of partner that has the same culture, same values as us. So there's little question it's going to be exceptional for many years to come. Uh but as far as pursuing an absolute acquisition in in in insurance or something like that that'll evolve with time and that would be obviously the discussions Ajit and the senior team at Tokyo Marine would be having and and if such an opportunity materializes we'd be
Greg Abelsuch an opportunity materializes we'd be thrilled with it. Now to the really tough question Canada versus US in hockey. Um hm I I did find a way and it's it can cause a lot of angst in my own family. So, um, I remember waking up that morning and Canada was playing the the men, but I'd already decided a little bit earlier that, uh, when it came to the Canadian men versus the US men, Conor McDavid plays for Edmonton. And, uh, therefore, I was going to cheer because being from Edmonton, I would I would cheer for the Canadian men's team. And I've always followed the US women and I love what a program the US hockey and I I love USA hockey and how they approach the coaching and the and the development of the youth and I think they've done a great job there. So I chose to cheer for the US women and it was the the perfect outcome for me. So a
Warrenwas the the perfect outcome for me. So a little selfish in finding that type of outcome.
WarrenI will say Greg and I had an Oilers stars bet last year and
Greg AbelYes. True. And we the losing person had to wear the jersey of the other. And I now own Oilers gear.
WarrenYeah, Katie owns some Oilers jersey. And and unfortunately this year neither of us got that.
Greg AbelThey're both on the sidelines very quickly, but um uh thank you for that question. Uh
Becky QuickBecky,
Becky Quickthis question comes from a shareholder who didn't want to be identified, but it's a variation of a question that I got from several shareholders. Is there any future circumstance that you could inver envision Berkshire divesting businesses or being broken up? If so, what are those circumstances? The shareholder also writes, note, I don't want this to happen, but it's a commonly discussed. It's commonly
Questionercommonly discussed. It's commonly discussed among followers of the company.
Greg AbelYes. So the so um when we think of the question and I think it's a good one because uh we've always highlighted there's certain circumstances that we may not be the best owner of a business. We've touched on if there's labor issues that we cannot resolve. I would uh take it to the point then further in my letter I touched on if there's reputational risk that we're not willing to to ever have our owners or shareholders or Berkshire experience and that we have to maybe the business has evolved the customers have evolved but if we're if there's that type of situation um then then it that company does not belong in the in the Birkshire family and and it may be it may be a fine business that can be owned by someone else, but it may mean we don't own it. Um, I would then take it a little bit
Greg AbelUm, I would then take it a little bit further. I touched on um a couple things or or one other thing before I jump to that would be we've often talked that if we have a business that is unsustainable it and and and no longer generating uh operating cash for our shareholders, we have to make some serious decisions around that. If there's someone else who could operate it and make it be more successful both for the customer and for uh our employees then we have to consider that otherwise that business is unfortunately in a place where uh we can't just fund it and experience losses. We would wind it down over a period of time but we'd look for a better solution for our customers employees. So that's always been the ca well that that at least from my perspective has always been the case and how we'll continue to do it. I would say we're taking it uh we take the the
Greg Abelwe're taking it uh we take the the obligation and in making sure capital's properly deployed obviously very seriously. I touched on the regulatoratory compacted energy and that that has to exist and we have to be if we have capital deployed there we have to get a fair return. we have a a situation where we've actually announced we're selling a portion of Pacific Corp, our our Washington State utility. Um, and and that's really a function of the fact that we have a multi-state process in Pacific Corp. There's six different states and each each customer is impacted in different ways. And I've already said there's we we very much focus on what's the needs of our each state and how can we best service them. And unfortunately we were in a situation in Washington where they clearly had policy that they wanted from Pacific Corp. And it was
Greg Abelwanted from Pacific Corp. And it was having a significant impact on the costs of our other states. And as much as we would have liked to seen what we call a multi-state compact, i.e. how do they balance all that? it wasn't occurring and our other states were bearing costs that they felt were not theirs that were being imposed by another state. So we consciously said this isn't working for the six states and the one state who had very specific policies and wanted them implemented uh we chose to exit. We found a very good purchaser uh who very much supported and and could implement what was required at that state. So there we there we have evolved and it's a situation where it just didn't make make sense for Berkshire to be an owner of that asset or our owners to be an owner of that asset and it'll be I believe a better outcome for the state and for their customers. So there
Greg Abelstate and for their customers. So there are those situations where we would uh we would divest and we we we will always approach things that when we buy something it's forever. When we acquire a a utility we tell the regulators it's forever. But it has to be a relationship that works and if it's broken we'll find a better path both for the company, the employees, customers and and obviously for for Birkshire.
QuestionerYeah, Kate. Yeah, >> Greg, there's a second part of that question though that gets at is there is there a point where some of the parts or something is there a point where it doesn't make sense for Berkhire to be a conglomerate where you would break up the company?
Greg Abel>> Yeah. So, to the second part of the question, um, absolutely not. We we I touched on it early. We we we are a conglomerate. Um, but we are an efficient conglomerate. We we don't have
Greg Abelefficient conglomerate. We we don't have layers of management. We don't have a bunch of committees telling our businesses how to run, how they're going to um, you know, manage their customer relationships. We try to at the odd time create frameworks so there's value shared across the businesses so they're aware of what our other businesses are doing and and technologies. That's one of them. We like our framework now. We think it's it it it's become it's very effective across three of our businesses. So of course we want them to understand it but we don't create layers. Uh I remember when Adam took on the role I nicely said you know there there'll be no corporate group supporting you either in Omaha or amongst your own team. We we he's got folks in netjets and they always step up and take more responsibility including when I was uh in that role or in the the
Greg Abelwhen I was uh in that role or in the the the vice chairman role. So we but the one thing we don't do is create layers of bureaucracy or uh other decision trees around it and I think so many conglomerates end up with with layers and layers of costs that don't add value in in in to the to the overall corporation. I'm I'm even careful when I talk about our metals group and our chemicals group because because they're a group in in call it maybe uh in my vision i.e. they I I see similar opportunities. I want them to work together but they don't have a corporate group on top of them or anybody directing them on what to do. They find ways to work together because they have a lot of the can have the same challenges can have the same customers. So we see our conglomerate structure working without the bureaucracy and and and and bloated costs. We see a great
Greg Abeland and bloated costs. We see a great opportunity to continue to move capital across those different groups in a very taxefficient way. Other people can't say I want to move capital um BNSF's a great example. Um yes they they have a strong operating uh results and they they generate they're in a a cycle in their their uh uh business cycle right now where there's certain amount of capital we have to deploy into it but we also receive substantial dividends from BNSF on an annual basis. we can take that capital and decide is it needed in a different operating business or do we see opportunities in equities and if we don't see those opportunities we're happy to not happy but we understand the logical home right now is US treasuries we we think that's a good asset we would prefer to see that deployed but uh in a different fashion yes when the opportunity presents itself
Greg Abelyes when the opportunity presents itself but it allows us to really move that capital across the group So I actually uh the answer to the conglomerate is uh yes, we understand we're one. We see it operates very effectively and we do not see ourselves uh divesting of subsidiaries for that reason or ever breaking off a group. Thank you.
Other>> Okay. Uh, station station 7.
Other>> Hi, Greg.
Greg Abel>> Hi.
Questioner>> Hi, Greg. Katie and Adam. My name is Bori Wong. I'm here from Chundu, China. On behalf of myself and my investment partner, Shui. Thank you very much for this opportunity and congratulations, Greg, on surviving your first year as CEO.
Greg Abel>> Thank you.
Questioner>> I'm sure the seed feels a bit warmer than it used to be. As you lead Berkshire into this new chapter, what would you say is the most significant evolution in your personal framework for assessing cash flow certainty and margin of safety compared
Questionercertainty and margin of safety compared to Warren? And specifically, are you to Warren? And specifically, are you to Warren? And specifically, are you more inclined towards technology more inclined towards technology more inclined towards technology companies that exhibits the same robust companies that exhibits the same robust companies that exhibits the same robust cash flows? Thank you for continuing the cash flows? Thank you for continuing the cash flows? Thank you for continuing the legacy of Mr. Warren Buffett and Mr. legacy of Mr. Warren Buffett and Mr. legacy of Mr. Warren Buffett and Mr. Charlie Manger, Charlie Manger, Charlie Manger,
Other>> thank you.
Greg AbelSo, uh I I think I'll start with the So, uh I I think I'll start with the So, uh I I think I'll start with the important part of that question. I mean, important part of that question. I mean, important part of that question. I mean, as far as how Burk how Warren thought as far as how Burk how Warren thought as far as how Burk how Warren thought about it, how Berkhire thought around about it, how Berkhire thought around about it, how Berkhire thought around approaching investments, quote, our approaching investments, quote, our approaching investments, quote, our margin of safety around investments and margin of safety around investments and margin of safety around investments and how we how we approach it. Um we're how we how we approach it. Um we're how we how we approach it. Um we're we're absolutely aligned there and I and we're absolutely aligned there and I and we're absolutely aligned there and I and and that starts with our culture and and that starts with our culture and and that starts with our culture and values and how we've approached values and how we've approached values and how we've approached everything over the years. Um so if I go everything over the years. Um so if I go everything over the years. Um so if I go back to looking at opportunities and back to looking at opportunities and back to looking at opportunities and energy and it may have been an energy and it may have been an energy and it may have been an acquisition or we're deploying acquisition or we're deploying acquisition or we're deploying significant capital, it quickly went to significant capital, it quickly went to significant capital, it quickly went to yes, we understood the opportunity, but yes, we understood the opportunity, but yes, we understood the opportunity, but Warren and and I'd want to have this
Greg AbelWarren and and I'd want to have this conversation. um where's the risk and do we really understand the risk associated with this and uh I have a I have a really great example is that we were acquiring NV Energy in the um uh had the opportunity to acquire it and Warren was actually coming back from China and and had been over there and I was waiting for him to arrive and land in Seattle and give him an update that we had this potential opportunity and I very much knew the occ the uh the opportunity and what the uh the value proposition was. I'd clearly had three significant risks in my mind that um was anxious to discuss with Warren and in the in Warren landed and I had a a short presentation said I'm asking him to just give me a call. It was literally one page, but just to really trigger it, could we have this conversation? And the
Greg Abelcould we have this conversation? And the immediate conversation we had was, yeah, the economics, you'll you couldn't agree more, understood them, went right to the biggest risk. And I was just getting ready to walk him through the two or three risks I'd seen and and wanted to make sure we understood it and were comfortable and wanted his input. And the risk was fundamentally rooftop solar and how would it disrupt that business and disrupt our customer. We discussed it. We understood it was a a challenge. I remember saying to Warren, well, that's part of the reason I'm sure we're we have this opportunity to acquire this public company that there is certain amount of risk in the public and the board and the and the management team had decided uh uh that they they didn't see the same opportunity we did. But Warren went right to it. It was all around the risk
Greg Abelright to it. It was all around the risk and and that risk did surface 12 months later, 18 months. We managed our way through it. Um our team did a great job. But so I don't see there being incremental margins or we think of risk differently. We think of them as in the Birkshire mindset that the the we're going to understand the economic prospects of of this opportunity. And as I said, we really go to that 10-year window potentially and say what's the business look like 10 years from now? and that and and is there enough safety margin 10 years from now? is is what we see it the outcome do do we see an outcome and if we don't understand what that looks like 10 years from now I know Warren would would say this I would say it then we don't do it there's no safety margin or maybe we can um adjust some numbers or there'll be synergies or something of that like we have to have a
Greg Abelsomething of that like we have to have a vision of what that's going to feel like and look like and that really is the the how how we approach it now touching on techn technology companies. Um we are not going to ever say geez this is a a specific sector for us or we need to be in it. If there's something in the technology sector or in that group of companies and we understand one of those companies to understand again what their uh opportunities are and what we view as the economic prospects for it and we have an understanding of what those risks are. that doesn't preclude us just because it's in a technology sector or that but it would start with back to the fundamentals of do we understand it do we both the opportunities and the risks and and then is it and then is it uh fairly valued relative to that and that's all that's
Questionerrelative to that and that's all that's always going to be the approach. So
Warrenalways going to be the approach. So thank you for your excellent question. Now, uh, Becky, if this is okay, uh, we're going to and and so please pick, uh, your toughest question, but, um, we're we're beyond 1:00 now. This will be our last question for today. So, we look forward to it and, uh, and then I'll I'll have some, uh, conclusionary thoughts and comments. But, uh, thank you, Becky.
Becky QuickUh this question comes from Joseph Matias and he said Warren had Charlie's partnership for most of his tenure as CEO which naturally reduce the risk of subpar investment decisions. Who will serve as the Charlie for Greg
Greg Abeland there and there they're a reason why they're in the rafters together. That was an incredible partnership and and one that uh you know you you can't replicate. But what what I would start with is that very fortunate to still have Warren as our our chairman and and
Greg Abelhave Warren as our our chairman and andhave Warren as our our chairman and and that's very important and it's and itthat's very important and it's and itthat's very important and it's and it makes for an excellent transition.makes for an excellent transition.makes for an excellent transition. I have a an exceptional board ofI have a an exceptional board ofI have a an exceptional board of directors that I'm comfortable reachingdirectors that I'm comfortable reachingdirectors that I'm comfortable reaching out to any of them in individuallyout to any of them in individuallyout to any of them in individually depending on the circumstances anddepending on the circumstances anddepending on the circumstances and either the risk we're dealing with or aneither the risk we're dealing with or aneither the risk we're dealing with or an opportunity that may be present inopportunity that may be present inopportunity that may be present in uh any of our businesses or or one thatuh any of our businesses or or one thatuh any of our businesses or or one that may be coming our way. So, we'remay be coming our way. So, we'remay be coming our way. So, we're fortunate to have that exceptional groupfortunate to have that exceptional groupfortunate to have that exceptional group in place. And and then it really comesin place. And and then it really comesin place. And and then it really comes back to our team that's in place. And Iback to our team that's in place. And Iback to our team that's in place. And I said this when I was answering to umsaid this when I was answering to umsaid this when I was answering to um Warren from Omaha um that we wantWarren from Omaha um that we wantWarren from Omaha um that we want Berkhire to endure and that means yesBerkhire to endure and that means yesBerkhire to endure and that means yes I want to lead Berkhire and I'll be aI want to lead Berkhire and I'll be aI want to lead Berkhire and I'll be a strong leader. I strongly believe thatstrong leader. I strongly believe thatstrong leader. I strongly believe that and and I'll I'll take Berkhireand and I'll I'll take Berkhireand and I'll I'll take Berkhire forward. But it it will be um as a asforward. But it it will be um as a asforward. But it it will be um as a as you always need a single leader and I Iyou always need a single leader and I Iyou always need a single leader and I I think we strongly understand that. But
Greg Abelthink we strongly understand that. But you surround yourself with great people and they're already here. I've been fortunate on the non-insurance operation to to operate with the with with Adam's 32 and the 18 that I still get to interact with a lot. those 50 uh including Adam and and Katie obviously have an exceptional working relationship with Ajit and fortunate with that and would seek counsel uh regularly even even as vice chairmans we would constantly have a conversation around he he may be making a an insurance decision or I was making a decision around one of our non-operating businesses and the first thing we'd cross check is how's it impact your group. So have an amazing uh uh uh relationship and a val and someone I val im immensely value the input and then across our CEOs we're so fortunate to have a great group that I
Greg Abelfortunate to have a great group that I would reach out to any of them on a specific circumstance and ask them for their input and I generally know where they've dealt with a challenge or a significant opportunity and I'd be the first to seek it out and say let's talk about it and figure out our path forward. And it may be that it was someone on their team that really dealt with it and then I'd want to be talking to their team. So, fortunately, because of Berkshire and the way we're created, again, it is a a unique structure, but we have an immense amount of resources around us. And then we have our our team in Omaha who has supported Warren for all those years. They're remarkable folks. There's there's not a lot of them, but they are good. and they're and they're exceptional and we're fortunate to have them as part of the team. So I it will be such that uh Berkshire
Warrenit will be such that uh Berkhireit will be such that uh Berkhire endures and will endure u uh as a as aendures and will endure u uh as a as aendures and will endure u uh as a as a team but clearly with uh um leadership.team but clearly with uh um leadership.team but clearly with uh um leadership. So thank you Becky that last question.So thank you Becky that last question.So thank you Becky that last question.
Greg AbelSo, as we as we wrap up today,So, as we as we wrap up today,So, as we as we wrap up today, obviously, I can't help but thankobviously, I can't help but thankobviously, I can't help but thank everyone for joining us this morning andeveryone for joining us this morning andeveryone for joining us this morning and early afternoon, both as our long-termearly afternoon, both as our long-termearly afternoon, both as our long-term shareholders are or uh those that areshareholders are or uh those that areshareholders are or uh those that are are our our newer shareholders and allare our our newer shareholders and allare our our newer shareholders and all again all of you that came for theagain all of you that came for theagain all of you that came for the experience. It's it's greatlyexperience. It's it's greatlyexperience. It's it's greatly appreciated. We enjoy this engagement.appreciated. We enjoy this engagement.appreciated. We enjoy this engagement. It all comes together because there's aIt all comes together because there's aIt all comes together because there's a an individual Warren has highlighted inan individual Warren has highlighted inan individual Warren has highlighted in the in the past pulls together thethe in the past pulls together thethe in the past pulls together the exhibit hall pulls together everythingexhibit hall pulls together everythingexhibit hall pulls together everything here. I'd like to acknowledge herhere. I'd like to acknowledge herhere. I'd like to acknowledge her Melissa Shapiro. Thank you.And then uh the the light was over onAnd then uh the the light was over onAnd then uh the the light was over on that table. But we do have um and wethat table. But we do have um and wethat table. But we do have um and we made this announcement in December. Ourmade this announcement in December. Ourmade this announcement in December. Our longstanding CFO Mark Hamburg islongstanding CFO Mark Hamburg islongstanding CFO Mark Hamburg is retiring in June of this year. We're
Greg Abelretiring in June of this year. We're very fortunate that then he will stay on for an incremental year as an adviser to our incoming CFO as a a personal friend adviser to myself. We we'll have Mark's knowledge resource and and it's immense when it comes to Birkshire. I like to Mark has been our our CFO for 34 years. It's this not this June, the following June when he when he truly retires, it'll be 40 years with Berkhire. and it's been such an incredible career and and has worn so he wears so many hats in this organization. I mean, he's he's helping Melissa uh Melissa's organizing and doing all but when she has a question, she went to Mark to look for the answer around be at the annual meeting. He's our corporate secretary. I I like to say and I uh to to replace Mark, we we hired a CFO, but we also hired a general counsel. uh it took it took two to replace him and and and more
Greg Abeltook two to replace him and and and more than that. So Mark, thank you for your incredible contributions to Berkhire. Warren has highlighted those and I can only echo all that. Thank you so much. Now, lastly, again, thank you for this remarkable uh experience for all of all of us at Berkhire. We we treasure what we call owner's day. That opportunity to communicate around what's going on in Berkshire because we're so proud of it, absolutely committed to it and and passionately believe in Berkhire. But equally the engagement of all you throughout the day yesterday into this afternoon just uh greatly appreciated. Thank you and look forward to seeing you next May. Thank you.
OtherThere you have it. The 61st Berkshire Hathaway annual meeting is in the books. That was Greg Ael's first time running the show, but he did get a little help from the chairman, Warren Buffett.
Otherfrom the chairman, Warren Buffett. Buffett sat down with Becky ahead of theBuffett sat down with Becky ahead of theBuffett sat down with Becky ahead of the afternoon session and delivered a numberafternoon session and delivered a numberafternoon session and delivered a number of newsy comments. Uh we'll kick thingsof newsy comments. Uh we'll kick thingsof newsy comments. Uh we'll kick things off. He kicked things off by saying thatoff. He kicked things off by saying thatoff. He kicked things off by saying that he is staying cautious with his ownhe is staying cautious with his ownhe is staying cautious with his own investments.investments.investments.
WarrenI think it's all working. It's allI think it's all working. It's allI think it's all working. It's all working. I it it isn't our idealworking. I it it isn't our idealworking. I it it isn't our ideal uh surrounding areauh surrounding areauh surrounding area uh or environment I should say uh inuh or environment I should say uh inuh or environment I should say uh in terms of deploying cash for Berkhire.terms of deploying cash for Berkhire.terms of deploying cash for Berkhire. UhUhUh but in terms of howbut in terms of howbut in terms of how we got the right management, we got thewe got the right management, we got thewe got the right management, we got the right arrangement and uh you know we canright arrangement and uh you know we canright arrangement and uh you know we can pick our spots and and andpick our spots and and andpick our spots and and and uh nobody can tell us what to do exactlyuh nobody can tell us what to do exactlyuh nobody can tell us what to do exactly and and uh so sometimes we're doingand and uh so sometimes we're doingand and uh so sometimes we're doing nothing but other other times we getnothing but other other times we getnothing but other other times we get quite active.quite active.quite active.
OtherBut with stocks sitting at record highsBut with stocks sitting at record highsBut with stocks sitting at record highs and at elevated valuations, Beckyand at elevated valuations, Beckyand at elevated valuations, Becky pressed him on the overall valuationpressed him on the overall valuationpressed him on the overall valuation picture and whether he seespicture and whether he seespicture and whether he sees opportunities anywhere. Here's what heopportunities anywhere. Here's what heopportunities anywhere. Here's what he said.
WarrenThat's compared to the markets to a church with a casino attached and and people can move between the church and casino and and I always said there are more people in the church and more people in the casino, but the casino's gotten very attractive to people. you know, if you're buying one day options or selling them. I mean, that is uh that's not investing. It's not speculating. It's gambling, you know, just totally. There's nobody that can explain why they're buying an option for one day unless they maybe maybe the fellow that that uh you know made the $400 and some thousands from knowing when we were going into Venezuela could do it. But I mean that's pretty and the quantity of those things is just incredible. So we've never had people in a more gambling mood than now. But that doesn't mean that investing is terrible.
QuestionerThat's of course been a persistent theme of Warren Buffett for a very long period of time. He's always been skeptical of short-term traders ability to to outperform the market or certainly outperform a longerterm shareholder, the church attached to the casino and the p the the attendance varies between those. So when asked about the impacts just to get to Greg Abel's Q&A of the Iran war on Berkhire, Abel said, "While it impacts businesses in a variety of ways," he echoed Buffett's emphasis on long-term thinking.
Greg AbelIt impacts really in a variety of ways, all our businesses, but um what I'm most proud of are our businesses. Uh we operate these businesses for the long run, just like we do for obviously for our shareholders. We take a long-term approach there. There's not many days and I used to joke when I more had
Greg Abeland I used to joke when I more had Adam's role. There wasn't a day I woke up where there the phone wasn't ringing with good news. You know that phone rang. You knew you're going to have a bit of a challenge and we have that portfolio. But but that's okay. We'd be talking and we always worked our way through it and we have a team that would lean in and we'd come through and it could be anything. And we never tried to use that as a reason we couldn't do something or get to the to the right place. And what I've seen associated with the uh obviously the the war in Iran and and the and the various conflicts in the Middle East is again a team that is very much taking the approach that that's the situation we're in. We can manage our business and we we very much quickly move to what's the best solution for our customers. how can we deliver and
Greg Abelcustomers. how can we deliver and continue to deliver what we've done to them and what's their expectations around that and and our teams will work incredibly hard to come up with with solutions.
Other>> Abel was also asked uh about his willingness to divest holding companies invest subsidiary companies and whether Berkhire will remain a conglomerate under his leadership. conglomerate.
Greg Abel>> We are a conglomerate. Um, but we are an efficient conglomerate. We we don't have layers of management. We don't have a bunch of committees telling our businesses how to run, how they're going to um, you know, manage their customer relationships. We try to at the odd time create frameworks so there's value shared across the businesses so they're aware of what our other businesses are doing and and technologies. That's one of them. We like our framework now. We think it's it it it's become it's very
Greg Abelthink it's it it it's become it's verythink it's it it it's become it's very effective across three of oureffective across three of oureffective across three of our businesses. But the one thing we don'tbusinesses. But the one thing we don'tbusinesses. But the one thing we don't do is create layers of bureaucracy ordo is create layers of bureaucracy ordo is create layers of bureaucracy or uh other decision trees around it. And Iuh other decision trees around it. And Iuh other decision trees around it. And I think so many conglomerates end up withthink so many conglomerates end up withthink so many conglomerates end up with with layers and layers of costs thatwith layers and layers of costs thatwith layers and layers of costs that don't add value in in in to the to thedon't add value in in in to the to thedon't add value in in in to the to the overall corporation. So I actually uhoverall corporation. So I actually uhoverall corporation. So I actually uh the answer to the conglomerate is uhthe answer to the conglomerate is uhthe answer to the conglomerate is uh yes, we understand we're one. We see ityes, we understand we're one. We see ityes, we understand we're one. We see it operates very effectively and we do notoperates very effectively and we do notoperates very effectively and we do not see ourselves uh divesting ofsee ourselves uh divesting ofsee ourselves uh divesting of subsidiaries for that reason or eversubsidiaries for that reason or eversubsidiaries for that reason or ever breaking off a group.breaking off a group.breaking off a group.
Other>> Thank you.
Becky Quick>> As you can see, our Becky Quick is back with us. Um, you know, I thought thatwith us. Um, you know, I thought thatwith us. Um, you know, I thought that was an interesting answer and you youwas an interesting answer and you youwas an interesting answer and you you pressed him on this idea. Do youpressed him on this idea. Do youpressed him on this idea. Do you envision down the road there would beenvision down the road there would beenvision down the road there would be any kind of a breakup, some kind of aany kind of a breakup, some kind of aany kind of a breakup, some kind of a big spin-off or something like that.big spin-off or something like that.big spin-off or something like that. Pretty much swatted that away. However,
QuestionerPretty much swatted that away. However, before that, he did express a willingness under some circumstances to sell some businesses. It seemed pretty narrow in terms of what it would take, but I did think that was relevant. He seemed to want to get on the record with that.
QuestionerYeah. I I because I think in some ways he said, "Look, this is the same way I've been looking at things for a while." That's not necessarily the way it was seen, I think, under Warren and Charlie originally. The deal was if we buy you, we buy you. You're forever. And that was something that brought you in. Back again to the idea of Greg's roots as an operator. If a business is losing money, uh we're not going to continue to sustain that. If we can find somebody else who can run that business better, we'll sell it off. We're going to do what's best for our shareholders, also
Questionerwhat's best for our shareholders, also for the employees of that company, as he said, to not want to wind something down. But he said if we have to, we'll wind something down.
QuestionerYeah. I mean, as the questioner said, I get this from a lot of investors in Berkhire, the the curiosity around that. Now, on one level, it's like, what are you going to do? Sell a business for cash and just add to the cash you're not doing anything with. But in the in the, you know, I I guess in just a general capital allocation, you don't want capital to be eroded on one end of the business, even if it's, you know, relatively small.
QuestionerIt's the definition of capitalism, right? That that the idea of a profit motive, that is what drives things to be more efficient. And he's basically saying, "We're capitalists. We believe in that idea when it comes to it." I I
Questionerin that idea when it comes to it." I think the question of the conglomerate was an important one though because it's a question that I got several times in the shareholder questions that were sent in and you probably get this all the time too just in talking to people who follow the company. That's that's the question. Will the conglomerate make sense? Because conglomerates over time don't tend to make sense. Um Berkhire has been the standout that says we're going to stand alone on this. There's always been the question is will there be some sort of activist who tries to come in and break things up and tries to say is it more valuable if you break these things apart than the sum of the parts by putting them together and that's part of the reason I wanted that answer on the record too.
Questioner>> Yeah. Exactly. And I you know his characterization of it's an efficient
Questionercharacterization of it's an efficient conglomerate or an effective conglomerate. And what Warren and Charlie always said was well we let the businesses run. They have to be profitable. they give us the cash because we have a great track record of actually getting returns on newly invested cash that works really well even if there's no supposed coherent strategy as to why these businesses should be under one roof
Questionerright and and and Greg laid that out again the idea that this is a really tax efficient way of taking capital from one business and putting it in other businesses now I in the past under Warren Buffett that's always meant that you can take that money and invest it in stocks because he was such a take a great stock picker. I think the evolving idea of this company is you can take that money and use it to do huge capex in, you know, maybe Berkhire Hathway
Questionerin, you know, maybe Berkhire Hathwayin, you know, maybe Berkhire Hathway Energy, maybe if you're looking to doEnergy, maybe if you're looking to doEnergy, maybe if you're looking to do something, maybe with the railroad,something, maybe with the railroad,something, maybe with the railroad, maybe it's one of the other businesses,maybe it's one of the other businesses,maybe it's one of the other businesses, you can buy and acquire other bolt-onyou can buy and acquire other bolt-onyou can buy and acquire other bolt-on businesses for some of those and letbusinesses for some of those and letbusinesses for some of those and let them expand, increase your operations.them expand, increase your operations.them expand, increase your operations. So, I think we have to look at that ideaSo, I think we have to look at that ideaSo, I think we have to look at that idea of capital allocation more broadly andof capital allocation more broadly andof capital allocation more broadly and and differently than we have underand differently than we have underand differently than we have under Warren Buffett as the CEO. And there wasWarren Buffett as the CEO. And there wasWarren Buffett as the CEO. And there was that other question from the room thatthat other question from the room thatthat other question from the room that gave Greg the opportunity to create anygave Greg the opportunity to create anygave Greg the opportunity to create any differentiation between his approach todifferentiation between his approach todifferentiation between his approach to capital allocation and what kind ofcapital allocation and what kind ofcapital allocation and what kind of emergence and safety you look for andemergence and safety you look for andemergence and safety you look for and the cash flow metrics and would you lookthe cash flow metrics and would you lookthe cash flow metrics and would you look at technology more closely, right?at technology more closely, right?at technology more closely, right?
Other>> He declined the opportunity to point to>> He declined the opportunity to point to>> He declined the opportunity to point to any daylight between him and Warren onany daylight between him and Warren onany daylight between him and Warren on that. He said there's a Berkhirethat. He said there's a Berkhirethat. He said there's a Berkhire Hathaway way and that's the way we'reHathaway way and that's the way we're
OtherHathaway way and that's the way we're going to keep going.
QuestionerVery thin layers kept coming back to the idea of we're not building a bureaucracy with a lot of layers. We want to make sure that we operate efficiently. That's why this conglomerate works versus others.
QuestionerYeah. Uh and then the question of who is your Charlie was kind of fun at the end. No individual yet appointed to that role.
QuestionerA lot of people. But I will say again back to that idea of when he and a G were on stage together. It was a very natural flow to watch some of those things happening too. But the reason that you're seeing people like Katie Farmer and Adam Johnson who's now running 32 companies is because he's relying more heavily on on someone like Adam to do a lot of that lifting.
QuestionerFascinating nugget. Adam highlighted which is that the average age of the companies now under his purview is 88
Questionercompanies now under his purview is 88 years and that's 30ome you know consumer companies right uh quite remarkable and they and they use that as a way of downplaying these kind of near-term challenges like tariffs and like the Iran war
Questionerlike we've we've seen this before kind of the idea that comes through
Questionersomewhere in the culture we've seen this before even if we personally haven't seen it before
Questionerum what about Warren's comments any what most struck you about the those
Questioneryou know the idea I think you guys played time. I I didn't hear the sound because I was walking back from the stage, but I think he played some of the ideas of he's still looking around and things don't look all that cheap in the market. Not huge opportunities. And by the way, he's looking, you know, like he comes to the office 5 days a week. He's still pretty involved in that. He told
Becky Quickstill pretty involved in that. He told us when we last sat down with them last month that uh yeah, he had made a small purchase at that point. So, he's still playing every day looking for these things and they're active. But I think he and Greg both would love to get a phone call at any point if there's a a seller of a business they might be interested.
Questioner>> Even a year ago when he first announced that he was going to be stepping down as CEO at the end of this year, you could you could actually perceive
Becky Quick>> his eagerness to get that call over the course of the next year or so while he was still going to be dayto-day involved as he still is.
Questioner>> Right. Anyway, that uh concludes things for CNBC's coverage of Berkshire's 61st annual shareholder meeting. Mike, it's been a pleasure. Been great hanging out here with you. Got lots more to come.
Becky Quickhere with you. Got lots more to come. Mike and I are going to be reunited on Monday morning, in fact, on Squawkbox. I'll still be on the ground here in Omaha, and we'll be bringing you more information from what we've been learning all weekend. Mike and Melissa Lee are going to be holding down the fort back at the NASDAQ. That program starts, of course, at 6:00 a.m. Eastern time. Don't miss it. Bye, everybody. That does it for us. Thanks for watching again. We'll see you soon.