The Latest: Berkshire Investors Reject Climate Change Report

Warren Buffett

The Latest on Berkshire Hathaway’s annual shareholders meeting, where tens of thousands of people have listened to CEO Warren Buffett and Vice Chairman Charlie Munger talk business for several hours (all times local):

4:15 p.m.

Berkshire Hathaway shareholders have overwhelmingly rejected a resolution calling for the company to write a report about the risks climate change creates for its insurance companies.

CEO Warren Buffett says he agrees that dealing with climate change is important for society, but he doesn’t think climate change creates serious risks for Berkshire’s insurance businesses.

Buffett says the fact that Berkshire generally writes insurance policies for one-year periods allows it to regularly re-evaluate risks, such as climate change.

The activists who proposed the motion tried to urge Buffett to take a public stance in favor of measures to reduce consumption of fossil fuels, but he resisted.


3:20 p.m.

Warren Buffett says he doesn’t think a nationwide bubble in real-estate prices has developed, but that real estate isn’t as attractive of an investment as it was a few years ago.

Buffett told shareholders at the Berkshire Hathaway annual meeting that he thinks many real estate markets, such as his hometown of Omaha, Nebraska, continue to offer sensible prices.

Buffett says he doesn’t think real estate will be the source of broad economic problems the next time the U.S. economy is in trouble.

But he says the current low interest rates may be encouraging people to buy homes at elevated prices they may eventually lose money on.


2:20 p.m.

Warren Buffett says he doesn’t think 3G Capital has overdone its cost-cutting and layoffs at Heinz and Kraft Foods.

Berkshire teamed up with the Brazilian investment firm 3G to buy Heinz and Kraft Foods.

Buffett says he thinks 3G has been extremely intelligent in its cuts and hasn’t eliminated things that will hurt sales volume.

Buffett says all kinds of American companies are “loaded with people not doing anything or doing the wrong thing.”


1:15 p.m.

Warren Buffett says he thinks Berkshire Hathaway’s unusual culture will endure long after he is no longer leading the company.

Buffett says Berkshire’s board, managers and more than 350,000 employees will work to preserve the company’s culture in the future.

Berkshire trusts its managers to largely run their companies themselves with little oversight. Buffett always encourages employees to protect Berkshire’s reputation and strengthen their brand.

To eventually replace the 85-year-old Buffett, Berkshire plans to split his job into three parts — chief executive officer, chairman and several investment managers. Buffett wants his son Howard, who already serves on the board, to become chairman after he is gone.

Buffett, however, has indicated that he has no plans to retire, and he says he loves his work and remains in good health.

Buffett has said previously that the company has several outstanding internal candidates for CEO, but he has refused to name them.


11:30 a.m.

In presidential politics, Buffett has long supported Democrat Hillary Clinton, so one shareholder asked what might happen to Berkshire if Republican Donald Trump were elected.

Buffett says the effect on Berkshire won’t be the main problem if Trump is elected. But he reassured shareholders that Berkshire would prosper regardless of who is elected.

He says U.S. businesses will continue to adapt and thrive, and no president will end that.


11:10 a.m.

The derivative contracts that big banks hold on their books can make them hard to evaluate, but Warren Buffett says he remains comfortable with Berkshire Hathaway’s investments in Wells Fargo and Bank of America.

Buffett says he still thinks derivatives can be dangerous in large quantities.

Berkshire holds a portfolio of derivatives that act similar to insurance policies. Some of them cover whether certain stock market indexes will be lower years into the future. Others cover credit losses at groups of 100 companies, and some cover credit risks of individual companies.

Buffett told shareholders Saturday that he won’t ever agree to a contract that Berkshire couldn’t easily pay if it needed to.

Munger says the country would have fared better if banks had been prohibited from engaging in derivatives.


11:05 a.m.

Warren Buffett doesn’t think Coca-Cola’s critics are right to blame the company’s sugary beverages for obesity.

Buffett’s Berkshire Hathaway is Coca-Cola’s largest shareholder, and Buffett says he gets about one-quarter of his calories from Coke products every day.

Buffett says everyone has a choice about whether to consume more calories than they need, and it’s not Coke’s fault if they do.

Buffett says he’s probably happier because he’s consumed so much Coke, fudge and peanut brittle in his life, and the 85-year-old remains in good health.


This version of The Latest has been corrected to say right rather than write.


11 a.m.

Billionaire Warren Buffett says one of the keys to successful investing is avoiding envy.

Buffett told shareholders at Berkshire Hathaway’s annual meeting Saturday that investors shouldn’t envy someone who profited by buying shares in a company’s initial public offering or claimed a lottery jackpot.

Buffett says the key is to find look for investments that make sense to you and think of stocks as a slice of an individual business that you’d be comfortable to own for the long-term.


10:40 a.m.

Warren Buffett defended NV Energy’s role in a recent rate hike that regulators approved for rooftop solar customers.

Buffett’s Berkshire Hathaway owns the Nevada utility, so he was asked about the issue at Saturday’s annual meeting.

Buffett says people with rooftop solar power systems were allowed to sell power to the utility at prices roughly three times the market price.

Supporters of renewable energy complained that the new rates will discourage solar power investments. But Buffett says the old rates had the effect of forcing other ratepayers to subsidize the small group of people who invested in solar systems.


9:35 a.m.

Berkshire Hathaway’s first-quarter profit grew 8 percent largely because of the way it had to account for its Duracell acquisition on paper, but revenue fell at its BNSF railroad and at its insurance units.

CEO Warren Buffett offered a preview of the first-quarter results at the company’s annual meeting Saturday although Berkshire won’t release its full report until next Friday.

Berkshire earned $5.589 billion, or about $3,400.89 per Class A share. That’s up from $5.16 billion, or $3,143 per Class A share, last year.

During the first quarter, Berkshire traded roughly $3.8 billion worth of Procter & Gamble stock for Duracell and about $1.7 billion cash. That boosted the paper value of Berkshire’s investments and derivatives to $1.85 billion this year over $920 million last year.

Berkshire also completed its $32 billion acquisition Precision Castparts during the quarter.


9:05 a.m.

Berkshire Hathaway’s annual shareholder meeting again opened with a humorous movie filled with a mix of skits and ads for the company’s products.

One of the bits in the movie showed Berkshire CEO campaigning to earn a spot in the Celebrity Apprentice show with Arnold Schwarzenegger.

But Buffett, who served as a financial adviser to Schwarzenegger when he ran for California governor, was outmaneuvered by Berkshire Vice Chairman Charlie Munger.

Schwarzenegger picked Munger for the team after the 92-year-old’s ruthless pitch that said “Hire me if you want to live.”

The video also showed Schwarzenegger pretending to practice variations on “You’re fired!” such as “You’re terminated!” to prepare for the show.

Buffett and Munger will begin taking serious business questions Saturday morning and continue through the day.


7:25 a.m.

A shareholder exclaimed “There he is” as he joined the throng of people surrounding Berkshire Hathaway CEO Warren Buffett at the booth displaying aviation parts and other products made by Precision Castparts.

Buffett was again surrounded by dozens of shareholders trying to get close enough to take a picture as he toured the exhibit hall at Berkshire’s annual meeting. The 85-year-old investor is treated like a rock star at the event.

University of Arkansas student Fabio Rivera says he and some friends drove up to attend the meeting to hear Buffett talk.

Rivera says he wishes he had opportunities to see top business leaders like this in his home country of Honduras.


6:40 a.m.

A group of environmentalists hopes to make an impression on Buffett and the audience when they urge shareholders to support drafting a report on climate change risks Berkshire Hathaway’s insurance companies face.

Tim Rinne with the Nebraskans for Peace group that submitted the resolution says he knows the measure is likely to be defeated given that Buffett opposes it and he controls nearly one-third of the votes, but he hopes they can persuade Buffett to speak out about climate change.

The group brought in climate scientist Jim Hansen and Illinois State University professor and insurance expert Jim Jones to make their case at Saturday’s meeting.

Buffett said in his annual letter that the report isn’t needed. He says it’s reasonable to worry about climate change’s effect on the world, but it shouldn’t hurt insurance companies because policy prices are set annually based on that year’s risks.


6:25 a.m.

Shareholders began to fill Omaha’s downtown arena for Berkshire Hathaway’s annual shareholder meeting before 6:30 a.m. Saturday.

The company let the crowd in the Centurylink Center early Saturday, so people could get out of the steady rain and begin filtering through the metal detectors security set up for the first time this year.

They’ll have to wait a couple hours for Berkshire CEO Warren Buffett and Vice Chairman Charlie Munger to begin answering questions. That’s the day’s main attraction.

But in the meantime, they can grab breakfast or start shopping at one of the booths selling products made by Berkshire Hathaway subsidiaries in the 200,000-square foot exhibit hall. See’s Candy and Dairy Queen offer plenty for a sweet tooth while Fruit of the Loom, Geico insurance and Brooks running booths can serve more practical needs.


6:05 a.m.

Berkshire Hathaway’s peculiarities are on display again this weekend with tens of thousands of people filling an arena to listen to Warren Buffett and Charlie Munger talk business for hours at the conglomerate’s annual meeting.

The Omaha event features an adjoining 200,000-square-foot exhibit hall where Berkshire subsidiaries such as See’s Candy, Fruit of the Loom and Geico insurance sell their products as executives chat with shareholders.

For the first time, Saturday’s meeting will be broadcast online on Yahoo Finance. The crowd may be smaller than last year’s 50th anniversary meeting.

Bob Shanahan returned to for his second Berkshire meeting, so his son, Tim, would have a chance to attend the event while the 85-year-old Buffett and 92-year-old Munger are still leading the company.