Quick Take: Arriving in Omaha

http://www.fool.com/investing/value/2007/05/05/quick-take-arriving-in-omaha.aspx

Matt KoppenhefferMay 5, 2007

Yesterday, sporting my "Warren is my dawg" T-shirt, I flew into Omaha for the annual Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) shareholder meeting. I was far from alone -- it's expected that attendance will top last year's 24,000.

Though the focus of the weekend is today's shareholder meeting and five hours of Q&A with Warren Buffett and Charlie Munger, there are other activities for shareholders throughout the weekend. The Friday night warm-up for the weekend was a cocktail reception at Borsheim's, the massive Omaha jeweler that rivals the world-renowned Tiffany (NYSE: TIF).

To be frank, though, "cocktail reception" is probably a bit of a misnomer. The event takes place inside Borsheim's and spills out into the Regency Court Mall -- which was closed to outsiders for the event -- as well as out behind the mall, where a huge tent had been set up. The event had the feeling of a spring festival mixed with the warm, easy air of a massive family picnic. A band was set up to play inside the mall, and another was rocking and rolling in the overcrowded tent.

Coca-Cola (NYSE: KO) products flowed like water -- not surprising when you consider that Berkshire's largest stock holding is in Coke. And while attendees enjoyed their food and beverages, they were free to roam around Borsheim's, which was manned with an army of salespeople, ready to help everyone take advantage of their shareholder discounts.

The sense of community that has sprung up around this company is truly impressive. But it makes sense, too, when your CEO has the largest ownership position, pays himself $100,000 a year, and is a notoriously straight shooter with his shareholders. The stratospheric rise in Berkshire's stock price from the mid-'60s to today helps, too.

Quick Take: The Berkshire Bum-Rush

http://www.fool.com/investing/value/2007/05/05/quick-take-the-berkshire-bum-rush.aspx

Matt KoppenhefferMay 5, 2007

This morning marked the beginning of the annual extravaganza that is the Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) annual meeting. Even though it was raining and lightning lit up the sky, multiple snaking lines of enthusiastic Berkshire shareholders already stood eagerly waiting to get into the Qwest Center for the festivities when I arrived at 6 a.m.

I got the opportunity to wander around the exhibition hall before the gates opened to shareholders. If you've ever been to a trade show, you can picture the scene -- booths set up all over the hall, all staffed by eager salespeople. The only difference here is that Berkshire owns every company that's represented, from NetJets to Fruit of the Loom, Clayton Homes, Dairy Queen, and, of course, Nebraska Furniture Mart.

Near the Justin Boots display -- which actually included two huge steers inside a pen! -- Warren Buffett was holding court with the press. I had the opportunity to make my way through the melee and ask the Oracle himself a couple of questions.

Buffett on young investorsGiven the number of youthful shareholders running around the exhibit hall, I asked Buffett for his thoughts on what young investors should be doing with their money. He started by cautioning that even though youngsters need to learn good financial habits early on, not all of them should be getting involved in investing, even if they do have a keen interest in stocks -- just as he did at an early age. He suggested it's just as important that young people understand, for example, that "credit cards can cost you a lot of money," and he said he's currently working on a cartoon series with DiC Entertainment Chief Executive Andy Heyward that will be aimed at educating the young on good financial habits.

Buffett on private equityI then asked Buffett for his thoughts on the private-equity boom. He acknowledged that a lot of people with a lot of money are looking to make massive acquisitions, and he noted that the situation is creating greater competition for Berkshire, which itself is trying to make increasingly large purchases that can still move the company's needle.

The difference between Berkshire and the private-equity shops, Buffett said, is motivation. While private-equity firms are motivated primarily by the fees they collect for raising funds and investing, he said, Berkshire is motivated by finding great businesses such as Coca-Cola (NYSE: KO) and Gillette -- now a part of Procter & Gamble (NYSE: PG) -- that it can own and hold for a long, long time.

Warren kept his comments brief and didn't mention how long he thought the private-equity boom might last, but I fully expect that we'll hear more about this topic during the upcoming Q&A session.

Bum-rushAt roughly 6:50 a.m., one of the many people working at the Qwest Center for the event ran through the exhibit hall and yelled, "They're opening the doors early. We're going to get bum-rushed!"

And the party was on.

Quick Take: The Annual Berkshire Videos

http://www.fool.com/investing/value/2007/05/05/quick-take-the-annual-berkshire-videos.aspx

Matt KoppenhefferMay 5, 2007

Once shareholders had packed themselves into the huge Qwest Center stadium (and I do mean packed -- the place is absolutely filled) it was time for the first annual rite of the Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) meeting: the video collage. Among the highlights this year:

BerkstockWith the help of animator Andy Heyward of DiC Entertainment, the first video starred Warren Buffett and Charlie Munger as long-haired hippies who set up a stand selling tie-dye shirts. Among the passers-by were Jimi Hendrix, Janis Joplin, and Microsoft (Nasdaq: MSFT) CEO Bill Gates. The toon Buffett helped Joplin with the hook for her classic tune "Piece of My Heart" but was utterly dumbfounded by Gates' software. "Servers," he said. "You mean like waiters in a restaurant?" This performance was a self-effacing reminder to the crowd that the likes of AMD (NYSE: AMD) or even Rule Breakers selection Akamai (Nasdaq: AKAM) have never been for Buffett. He has always held that he simply doesn't understand the technology, and so he won't invest in it.

Folks from two businesses that Buffett has very famously loved then visited him and Charlie at their tie-dye stand. The first was from Coca-Cola (NYSE: KO), Berkshire's largest stock holding, and the second came from See's Candy, an outstanding confectioner business that has made a ton of money for Berkshire and its shareholders over the years.

Buffett the athleteA few other short clips showed Buffett putting his athletic abilities on display. In the first, the 76-year-old Oracle took on Ariel Hsing, the top U.S. table-tennis player in the 12-year-old age bracket. Hsing made short work of Buffett in a two-point game, but we're told that Buffett-Hsing II will be held tomorrow during a shareholder event at Borsheim's.

A second video centered on having Buffett call his buddy LeBron James, the Cleveland Cavaliers forward who, in real life, has received financial guidance from Buffett. After arguing over whether James should be drinking Buffett's favored Cherry Coke -- the hoops star was instead drinking Powerade, another Coca-Cola (NYSE: KO) product -- the two decided to settle it "on the court." Buffett cautioned James to "bring his game" and then took it to LeBron on the court, beating him first in a game of horse, and then in a one-on-one showdown.

The rest

The gaggle of other videos included a prominent spattering of commercials for Berkshire businesses such as GEICO, NetJets, and Coca-Cola.

One spot focused on Buffett's visit to Iscar, his recent multibillion-dollar acquisition that's headquartered in Israel, right near the Lebanon border. Speaking about the acquisition, Buffett quips, "Berkshire is going to be here forever, and Iscar is going to be here forever."

There was a special tribute to GEICO and its former chief executive, the late Lorimer Davidson. This video included excerpts from a video that Lorimer made a year before his death at age 97. In the video, he said, "Warren, keep on doing in the future what you've been doing in the past."

And we were treated to a remake of the song "My Favorite Things," over which flashed pictures of the Berkshire subsidiary executives. Among the "favorite things" singled out were Berkshire's Ajit Jain, one of Buffett's superstar insurance managers, and Fruit of the Loom underwear, a Berkshire company.

Quick Take: The Questions Begin

http://www.fool.com/investing/international/2007/05/05/quick-take-the-questions-begin.aspx

Matt KoppenhefferMay 5, 2007

We're now moving into the meat of the Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) shareholder-meeting weekend -- the Q&A session with Warren Buffett and Charlie Munger. If capitalism were to spawn a rock band, and that band were to perform a concert, it would look a lot like the way Buffett and Munger looked on the riser here in Omaha's Qwest Center as they took questions from the audience.

On private equity (again!)I figured there'd be more on private equity in addition to the question that I posed to Buffett early this morning, but I didn't figure it'd be the very first question! I guess that just goes to show the amount of mindshare that private equity is gobbling up these days.

The questioner, noting that private-equity managers are chasing all kinds of deals -- some of questionable quality -- and using a lot of leverage, asked Buffett what he thought could burst this bubble and what will happen when it does pop.

Buffett quipped that the scenario presented in the question nearly brought him to tears and pointed out, just as he did to me, that Berkshire has to compete with many of these firms to secure the large acquisitions that it wants to get done. But he added that the private-equity phenomenon really doesn't lend itself to the bubble-bursting analogy. Because the money is tied up for long periods of time and there's no easy scorecard with which to check in on the value of the acquisitions, he said, it could take quite a while before investors become disillusioned with the private-equity industry.

Buffett, though, does seem to think that disillusionment will eventually come and that the money spigot will get twisted at least a couple of turns downward. He also pointed out that spreads on junk bonds versus high-grade bonds are very low, and if that spread widens, it will likely slow down the rate of private-equity activity we see now.

On investing overseasAnother shareholder wanted to address Berkshire's overseas investing record. This speaker argued that are plenty of great stocks and businesses outside the U.S. and that they can typically be had for a discount versus what a similar business would cost here.

To illustrate that he doesn't have anything against investing internationally, Buffett began his reply by saying he bought his first overseas stock 50 years ago. He then said that while the company hasn't marketed itself as an acquirer in other nations as much as it has here in the States, that approach is changing.

Berkshire, of course, recently acquired Israel's Iscar. And in terms of publicly traded stocks, Buffett pointed out that his company does own shares of overseas companies. He specifically pointed out POSCO (NYSE: PKX), a South Korean steelmaker, though PetroChina (NYSE: PTR), the stock that's been causing Berkshire some grief in regard to the Sudan situation lately, is another example. Buffett also said that Berkshire owns a good deal of overseas stocks that it isn't required to disclose. As always with his holdings, Buffett prefers not to show his cards unless required to do so.

While Buffett and Munger play their overseas stocks close to the vest, Bill Mann, a Berkshire shareholder who unfortunately couldn't be at the meeting today, doesn't. He heads up The Motley Fool's Global Gains service and recommends some of the world's best international stocks for his subscribers.

Quick Take: More Questions for Warren and Charlie

http://www.fool.com/investing/value/2007/05/05/quick-take-more-questions-for-warren-and-charlie.aspx

Matt KoppenhefferMay 5, 2007

Continuing with the five and a half hours of questions that Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) shareholders are putting to superinvestors Warren Buffett and Charlie Munger, let's review some more gems from the annual meeting.

On manager compensationPrivate equity is one of the key hot-button issues relating to the market lately, and CEO pay is certainly another. Not too long ago, there was a furor surrounding how much compensation was being given to the now-departed chief executive of Home Depot (NYSE: HD) -- interestingly enough, a Berkshire holding.

It's easy enough to guess that Buffett, who pays himself all of $100,000 per year -- with no stock options to boost that figure -- is opposed to the egregious packages that many CEOs take home. He began his answer, though, by saying that whether you're talking about Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), or American Express (NYSE: AXP) -- again, all Berkshire holdings -- the most important thing is making sure you have the right person running the business.

Of all the boards Buffett sits on, he was elected to the compensation committee of just one, and he says that company subsequently regretted its decision. Regarding how companies pick their compensation committees, he quipped, "they're looking for cocker spaniels with their tails wagging, not dobermans. I try to pretend that I'm a cocker spaniel just to get on the board."

On corporate jetsOne shareholder cited a study that said that companies with corporate jets underperform by 4%. Munger's witty reply: "I want to report that we are solidly in favor of private jets." Berkshire owns NetJets, a company that allows customers to own time-share lots in private

jets. Buffett, joking that Munger used to take the bus to travel, and then only when there was a senior-citizen discount available, said he has since persuaded Munger to buy a NetJets share.

Riffing further on executive compensation and benefits, Buffett reiterated Berkshire's policy of compensating people based on what they actually do and what they have control over. Here he specifically cited oil companies and the rising price of their products. Although a high oil price may give a profit boost to the likes of Exxon or BP, Buffett contends that that shouldn't necessarily translate into a bigger bonus for the executives at those companies, there since it was not their actions that led to the higher oil price.

On the credit marketsA question came up over how well Berkshire would deal with a serious tightening of credit -- a timely topic, given how loose credit has been in recent years. Buffett pointed out that the Federal Reserve itself was created as a result of huge credit contractions and is designed to control major swings in the credit market. He seems to believe that the only way a major credit tightening would happen is if it were by design -- and most authorities, he said, are not too keen to step on the brakes. Munger added that if a huge adverse credit event unfolded, there would probably be legislation introduced to mitigate the effects.

In terms of Berkshire, both Buffett and Munger pointed out that they have been able to make serious money when the credit markets have gone crazy. Buffett went as far as to say that "we benefit when others suffer to some extent."

Buffett also brought up the example of Long-Term Capital Management, the hedge fund that lost billions in 1998. He said there were lots of people with seriously high IQs on Wall Street who were doing some very silly things that helped that situation unfold. He then cited the famous Mark Twain quote that "history doesn't repeat itself, but it does rhyme" and said he believes we'll eventually encounter another situation that "rhymes" with 1998.

Quick Take: Shorting, Gambling, and Being Like Buffett

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Matt KoppenhefferMay 5, 2007

Continuing our on-the-scene coverage of Berkshire Hathaway's (NYSE: BRK-A) (NYSE: BRK-B) annual meeting, we look on as shareholders continue to poke and prod Warren Buffett and Charlie Munger on a wide variety of investing topics.

On shortingWorking through a question regarding issues with Wall Street firms and stock deliveries, Buffett strongly emphasized that he has nothing against shorting stocks. He said he'd be happy if somebody shorted Berkshire's stock, since, as he put it, the one sure buyer of a stock is a guy who shorted it. He added that he'd also be fine if someone decided to naked short Berkshire stock.

Continuing, Buffett specifically called out the example of wallboard manufacturer USG (NYSE: USG). When the company hit really hard times, a major Wall Street firm came to Berkshire and asked to borrow millions of shares. Berkshire was paid interest while the shares were borrowed. "I wish they had borrowed more," Warren quipped and added, "Those guys didn't do too well shorting USG at $4, either."

On gamblingGambling stocks have seen some nice returns over the past year, whether you're talking about MGM (NYSE: MGM), Wynn (Nasdaq: WYNN), or Las Vegas Sands (NYSE: LVS). One shareholder asked the dynamic duo whether gambling would continue to be a good business.

Buffett figured the industry will have a great future as long as gambling continues to be legal. He said the human desire to gamble is huge and cited how much more exciting a football game, even a boring one, can become just by betting a few dollars on it. Therefore, he believes, the easier it is for people to gamble, the better the gambling industry will do.

As for his personal feelings on the industry, Buffett calls gambling a "tax on ignorance," with the "ignorant" defined as people who continue to put their money on the line when the odds are against them.

Munger followed up: "It's a dirty business, and you won't soon find a casino in Berkshire Hathaway."

On being a better investorA 17-year-old shareholder who has been to 10 straight Berkshire annual meetings asked what he should do to become a better investor.

Not surprisingly, Buffett went straight to the books. That is, he told the teen to read everything related to investing that he could get his hands on. Buffett said he was still young when he had already read every book -- some of them multiple times -- in the Nebraska public library having to do with investing. He didn't name names, but it's hard to go wrong with classics such as The Intelligent Investor or Peter Lynch's One Up on Wall Street -- and (of course!) The Motley Fool Investment Guide.

Buffett cautioned, though, that the difference between investing on paper and investing with real money is like the difference between reading a romance novel and, as he delicately put it, "doing something else." "There's nothing like having a little experience in investing," he said. Once you've done that, you can decide whether, as Buffett said, "it turns you on."

On a final note, he gave a not-too-surprising suggestion to always look a stock in terms of the whole company. So, for example, if you're thinking about buying GM (NYSE: GM) at $30, he said, you should consider whether you think the entire company is really worth $18 billion.

There was an unspoken lesson in this answer. Thinking of today's basketball video with LeBron James, I could easily picture a Buffett video mimicking the famous Michael Jordan "Be Like Mike" ad campaign. He wouldn't say it himself, but the advice the Oracle gave the teen Berkshire investor could easily be summed up in three words: "Be Like Warren."Go back to Matt's original report to keep up with the news as it unfolds from the annual meeting.

Buffett likes railroads, outlook not "sensational"Sat May 5, 2007 4:15 PM ET

OMAHA, Neb., May 5 (Reuters) - Warren Buffett, whose Berkshire Hathaway Inc. <BRKa.N> <BRKb.N> recently bought large stakes in three railroads, said on Saturday that business would never be "sensational," yet its prospects had improved.

"What was a terrible business 30 years ago (is) a better business now," Buffett said at Berkshire's annual shareholder meeting. "It will never be a sensational business."

Buffett called railroads a "very capital-intensive" business, but said there "isn't a whole lot of new capacity. ... It could be a lot better business than in the past."

Shares of several railroads rose on Monday, April 9, after Berkshire disclosed in a regulatory filing the previous Friday that it had accumulated a 10.9 percent stake, worth $3.23 billion, in Burlington Northern Santa Fe Corp <BNI.N>.

On April 9, Berkshire said it also spent $700 million for a stake in a second railroad company, and slightly less to invest in a third. The other companies' identities remain unclear.

Major U.S. railroad companies whose shares rose April 9 on news of the Buffett investments included Burlington Northern, CSX Corp. <CSX.N>, Norfolk Southern Corp. <NSC.N> and Union Pacific Corp <UNP.N>.

Being Buffett ... and bluntOracle of Omaha has frank assessments of the Dow, housing and CEO compensation.by CNN's Susan LisoviczMay 7 2007: 10:17 AM EDTOMAHA, Neb. (CNN) -- He played the ukulele. He sang with dancing fruits. He went one-on-one in a comical videotape against NBA star LeBron James.

And then in the spectacle long known as the Woodstock for Capitalists, Warren Buffett fielded questions from shareholders at Berkshire Hathaway's annual meeting in Omaha, Nebraska, Saturday. For nearly six hours the 76-year-old billionaire and is counterpart and vice-chairman, Charlie Munger, 83, addressed issues before a crowd of roughly 28,000, handling topics ranging from the glut of private equity deals in the United States to acquisition possibilities overseas.

In a brief interview with CNN before the meeting, held in front of a pen holding two large steer munching hay, Buffett remained bullish about the stock market... even amid Dow 13,000 and its best win streak in 80 years.

"To get 5.4% of gains per year, the Dow will have to end this century at 2 million. So you better get used to announcing the little milestones," he said.

The so-called Oracle of Omaha was also upbeat about the resilience of consumer spending despite gas prices that are approaching record highs. "Gasoline, here, of course is still very cheap compared to costs around the world," he noted. "We can overcome an awful lot of things that seem like temporary problems in this country."

But Buffett had a decidedly different view about the housing market. He said too many homes were bought by people carrying mortgages with little or no money down who then hoped to flip them quickly for a profit. "The housing market is sick and it's going to stay sick for a couple of years" he opined.

Berkshire Hathaway (Charts, Fortune 500), which reported first quarter profit increases Friday of 12.2 percent, has delivered compounded annual gains at Berkshire of 21.4 percent from 1965 when Buffett took over to 2006.

Buffett, as revered for his stock picking as his ethics, collects an annual salary of $100,000. He continued to speak out against exorbitant compensation packages.

"The CEO's have a good game. They're not about to give it up," he said. "Somebody said CEO pay has the honor system. The shareholders have the honor and the CEO's have the system."

But Buffett himself came under fire from some shareholders, who urged him to divest Berkshire's stake in a PetroChina, a Chinese oil company whose parent does business with the government of Sudan, and is blamed for the genocide in Darfur.

Buffett discussed the issue in a previous letter to shareholders that called conditions in Darfur "deplorable." But he noted at the meeting that, "There is zero connection between our investment in PetroChina and what's happening in the Sudan." Nevertheless, Buffett allowed about 45 minutes of discussion on the issue of divestment alone.

Buffett, who last year pledged to give the bulk of his estimated $44 billion to charity, acknowledged that some of the throngs of disciples who hung on every quip and anecdote Saturday would love to succeed him.

Buffett said in his shareholders letter in March that Berkshire's board of directors knows who would succeed him as chairman if he dies suddenly. But in a surprise announcement, Buffett said he wants to split his dual functions. He said he is looking for a chief investment officer who possesses "independent thinking, emotional stability and a keen understanding of both human and institutional behavior."

Buffett said the search would accelerate after the annual meeting and the folksy billionaire said it would be conducted much like "American Idol." When asked if he would be more like Paula Abdul or Simon Cowell in judging candidates, Buffett said, "I guess I'm a little more like Simon." 

Insurance earnings to fall, Buffett saysGlobal warming may increase hurricane losses, Berkshire Hathaway chairman addsBy Alistair Barr, MarketWatchLast Update: 4:02 PM ET May 5, 2007

OMAHA, Neb. (MarketWatch) -- Berkshire Hathaway's insurance earnings will decline in future because prices for coverage are falling, Chairman Warren Buffett said during the company's annual meeting on Saturday. The billionaire investor also warned that global warming could increase hurricane losses borne by the company's catastrophe reinsurance businesses. That means Berkshire (BRKA) will likely charge more for such coverage each year. Competition has been heating up in the property and casualty business as companies try to put big profits from previous years to work underwriting more new business. That means more competition, lower insurance prices and possible declines in future underwriting profits.

After record losses from Hurricane Katrina and other storms in 2005, catastrophe reinsurance prices surged and Berkshire took advantage by underwriting lots of risks other reinsurers were shying away from. But since then, lots of new capital has come into the catastrophe market, increasing competition and restraining prices.

Premiums written by Berkshire's Reinsurance Group in the first quarter of 2007 dropped roughly 41% vs. a year earlier. The decline was mainly caused by more price competition which left fewer opportunities to write new business, Berkshire explained earlier this week. "It's been an extraordinary period for insurance. Nothing bad happened last year and the same was true in the first quarter. That has caused people to lower prices, in some areas quite dramatically," Buffett said.

Berkshire hopes its insurance businesses will break even on an underwriting basis over time, but they may do a little better than that from now on because of diversification, he added. Global warming could materially change the probability of catastrophes, increasing both the frequency and intensity of storms, he explained.

"Our exposure goes up every year because of what's going on in the atmosphere, even though we don't fully understand what's going on," Buffett added. This "could increase expectable losses from any given hurricane season by a factor of two, three, four or five."

"On balance it's probably getting more negative for us and we have to be careful," Buffett said. "It would be crazy to offer catastrophe reinsurance at the same rate in 2007 as we did in 2006."

Alistair Barr is a reporter for MarketWatch in San Francisco.

Buffett stays on message, and shareholders like itSunday May 6, 1:36 pm ET By Jonathan Stempel OMAHA, Nebraska (Reuters) - His voice was hoarse. Most of his message was the same. Some jokes were retreads.

If you're among the 27,000 people who on Saturday attended Berkshire Hathaway Inc.'s (NYSE:BRK-A - News; NYSE:BRK-B - News) annual meeting here, you may not mind when the speaker is Warren Buffett.

Attendance has grown from 7,500 just a decade ago, as the 76-year-old Buffett burnished his reputation for integrity and continued to build Berkshire into a $169 billion conglomerate.

Berkshire owns 50-plus companies offering such things as car insurance, Ginsu knives, ice cream, paint and underwear, and invests in well-known companies such as Coca-Cola Co. (NYSE:KO - News) and Procter & Gamble Co. (NYSE:PG - News).

At the meeting, Buffett and top lieutenant Charlie Munger, 83, snacked on Coke products, fudge and peanut brittle as they fielded hours of questions on such matters as Berkshire, the economy, Corporate America, private equity and even abortion.

Buffett again termed the slow-speaking Munger "hyperkinetic," and joked that the two needed each other because "he can hear, I can see."

"We enjoy Uncle Warren and Grandpa Charlie," said Jerry Jones of Omaha, a retired vice president of a travel agency. "That's the way most Omahans look at him. He's such a down-to-earth person. He talks about value investing, and walks the talk."

Szabi Gyongyosi, a Hungarian native who is an investment manager in Chapel Hill, North Carolina, attended his third meeting -- "I knew what I was getting," he said -- and his wife accompanied him for the first time.

He was intrigued when Buffett, who has unwound most of a $21 billion bet against the U.S. dollar, said Berkshire is betting on one currency, and that "it will surprise you what it is. We'll tell you about it next year."

"He's been saying for a long time he expected the dollar to go down. That wouldn't be news," Gyongyosi said. "On the other hand, the yen has been very weak recently. Maybe he's thinking the yen is going to strengthen. Or something about the Chinese currency. It made me think, what is this secret trade?"

A HAPPENING

While parts of the weekend are a media circus, Marcia Schwiebert, a schoolteacher from Omaha who attended her fifth meeting, said Buffett's understated nature adds to his appeal.

That even extends to the house he's lived in for half a century, and which is valued at just $710,000, according to the Douglas County Assessor.

"Oh my word, Warren Buffett is like a god in town," she Schwiebert said. "Everybody listens to his advice. Also, it's a social function. Omaha is a small, little, I don't want to say cow town, but it's a very laid-back, simple little town. But this is a happening. This is something that happens.

Along with the College World Series, Berkshire's meeting is the biggest annual event in Omaha, a city of 415,000.

"He's done a lot of good anonymously," Schwiebert said. "I was talking to my neighbor, and she said he's given all this money to the underprivileged children's hospital, and no one knew about it. But she knew about it because she worked in the system."

John Hoekstra, a Union Pier, Michigan resident and former ABN AMRO commodities trader, attended his first meeting. Like many shareholders, he's eyeing Buffett's succession plans.

"I just wanted to see Warren, especially since he's getting up in years," he said. "The way he's talking about splitting his role into two jobs, figuring it's too much for one person now that the company is this big, I think he's on the right track. Whether it succeeds or not, time will tell."

Live From Omaha: The Berkshire Hathaway Meetinghttp://www.fool.com/investing/value/2007/05/04/live-from-omaha-the-berkshire-hathaway-meeting.aspx

Matt KoppenhefferMay 4, 2007

Many investors -- and value investors in particular -- consider it the pilgrimage of a lifetime to head to Omaha, Neb., in the late spring. Their destination? The annual meeting for Motley Fool Inside Value star Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B).

This year's meeting takes place tomorrow in Omaha's Qwest Center, and investors from all walks of life will gather to pepper Warren Buffett and his business partner Charlie Munger with questions on a whole host of topics. Berkshire subsidiaries, from GEICO to Nebraska Furniture Mart, will be on hand with displays and discount deals for shareholders. Borsheim's, Berkshire's jewelry business, will even be serving up a cocktail reception tonight. Many shareholders, meanwhile, will trek to Buffett's favorite restaurant, Gorat's, where the Oracle's signature order is a T-bone, rare, with a double order of hash browns and a Cherry Coke.

If you can't make it to the big event, fear not! The Fool has sent yours truly to the land of steaks and corn to join the other 20,000-plus attendees and keep you abreast of the happenings. On Saturday, keep your eyes on Fool.com to read my live coverage.

For the uninitiated, Berkshire Hathaway is the multi-faceted dynasty that investing superhero Warren Buffett set in motion back in 1965 when he took control of a struggling textile company. Over the 41 years from 1965 to 2006, Berkshire Hathaway's annual increase in book value has beaten the S&P 500 index on all but a handful of occasions, and in the aggregate has trounced the index by a considerable margin.

On tap this yearBuffett always gets asked general questions such as what makes a good manager, how Berkshire makes asset-allocation decisions, what publications he reads, and what his outlook is for the stock market. Some other timely topics sure to come up include:

Housing. Buffett and Munger had long warned about the growing residential real estate bubble. Now that homebuilders are hurting and nonconforming lenders are on the canvas, investors will likely want Buffett's thoughts on how long the pain will last.

Buyouts. If it's not another massive, multibillion-dollar buyout, it's more talk about buyout funds and other alternative-asset managers going public. With TXU (NYSE: TXU) leading the pack and set to become the target of the largest private-equity buyout in history, and other firms darting an amorous eye toward the public markets, questions on these topics are bound to arise.

Sudan. At the end of 2006, Berkshire owned 1.3% of PetroChina (NYSE: PTR), a massive, China-based oil and natural gas player. There is a shareholder resolution up for vote that would force Berkshire to sell its stake, and invitations to the annual meeting have been offered to non-shareholder protestors. Some have alleged that PetroChina has connections to Sudan and is contributing to the genocide there, but Berkshire holds that PetroChina has no direct involvement in Sudan and that selling its stake wouldn't make things better there.

Subprime defaults made worse by securitization: BuffettBy Barbara KollmeyerLast Update: 1:34 PM ET May 5, 2007

OMAHA, Neb. (MarketWatch) -- Rising defaults in the subprime mortgage business have been exacerbated by securization of these loans, Berkshire Hathaway Chairman Warren Buffett said on Saturday during the company's annual meeting. Subprime mortgages are offered to poorer people with blemished credit records. The loans are often packaged up and sold on again to investors as mortgage-backed securities. "Once you package those things and sell them through major investment banks, discipline leaves the system," Buffett said. Subprime borrowers have been missing their first and second monthly payments recently, he noted. "That shouldn't happen. Securitization has made the problem worse," he added. A slowing housing market has triggered turmoil in the subprime mortgage business this year. Legislators have been discussing possible new regulations to deal with the crisis, including making investors in mortgage-backed securities more responsible for future delinquencies.  

Buffett says may hire 4 CIOs, insurance to weakenSaturday May 5, 3:39 pm ET By Jonathan Stempel OMAHA, Nebraska (Reuters) - Warren Buffett said on Saturday he might hire up to four people to succeed him as chief investment officer of Berkshire Hathaway Inc. (NYSE:BRK-A - News; NYSE:BRK-B - News), and cautioned that recent strong results from the company's insurance operations were unsustainable.

The 76-year-old billionaire said he has received 600 to 700 inquiries for the CIO job since lamenting in his February 28 annual shareholder letter that Berkshire has no internal candidates young enough to serve a long time.

Buffett has said Berkshire has three candidates to succeed him as chief executive.

"I don't think it's at all impossible to think we'll find three or four" CIOs, Buffett said at Berkshire's annual shareholder meeting. "We will come up with, probably, a couple of people."

Attendance was expected to top 24,000 for the meeting, including many watching by video outside the main arena.

The meeting was held one day after Berkshire reported a 12 percent jump in first-quarter profit to $2.6 billion, helped by strong performance in insurance, which usually accounts for more than half of earnings. Insurance operations have benefited from a lack of major storms after 2005.

"Insurance earnings are going to go down, there's no question," a somewhat hoarse Buffett said. "As natural catastrophes occur, we will be paying out lots of money."

Buffett also said Berkshire's residential construction businesses may be pressured amid the U.S. housing downturn, though problems in U.S. subprime lending will not likely drag down the overall economy.

The annual meeting is the centerpiece of a weekend that Buffett calls "Woodstock for Capitalists," featuring events throughout Omaha. Hundreds of people waited outside in a thunderstorm before the arena's 7 a.m. opening.

"Everyone who owns Berkshire should come once to experience it," said Brian McCarthy, a real estate property manager in New York City attending his seventh. "It's a good reminder to go back to the basics of investing."

He said he had waited in line since 4:30 a.m.

A shareholder proposal to require divestment of Berkshire's stake in PetroChina Co. (HKSE:0857.HK - News) because of the alleged ties of the Chinese oil company's parent to Sudan looked set for an overwhelming defeat.

PRIVATE EQUITY

Berkshire ended March with $46.03 billion of cash, leaving it with much firepower to make large purchases that Buffett covets.

Many may be international. Berkshire last year took a controlling stake in Israel's Iscar Metalworking Cos., and bought stock in British retailer Tesco Plc (LSE:TSCO.L - News) and South Korean steelmaker Posco (005490.KS).

"The entire world is definitely on our radar screen, and we hope to be on its," Buffett said.

Buffett said the recent "frenzied activity" in private equity takeovers is unlikely to end soon, especially given the "compulsion" to raise more cash and generate higher fees.

"It will be quite some time before ... disillusionment sets in and the money quits flowing," he said. "What could slow down the activity is if yields on junk bonds became much higher than yields on high-grade bonds."

On executive compensation, Buffett said he was untroubled by many large pay packages for top corporate executives, though not when they are awarded simply to keep up with rivals.

Buffett, whose net worth Forbes magazine estimated in March at $52 billion, takes a $100,000 salary to run Berkshire.

"Compensation sins are generally of minor importance compared to the sin of having someone mediocre running a huge company," Buffett said.

He also said he did not foresee a "credit contraction" and that corporate America appears unusually healthy now.

Before the meeting, Buffett milled around with shareholders in a hall with booths featuring many of Berkshire's more than 50 companies, such as Dairy Queen, Fruit of the Loom and Geico.

The meeting opened with the usual cartoon-and-clip montage film by Buffett's daughter, Susie, followed by a surprise appearance by pop singer Jimmy Buffett, who is not related to Warren Buffett.

The singing Buffett, who performed a version of his hit "Margaritaville" adapted for the meeting, stumbled through lyrics placed at his feet. "Warren gave me a really big budget for a teleprompter here," he joked.

Buffett: Subprime problems not big economic threatSaturday May 5, 1:29 pm ET OMAHA, Nebraska (Reuters) - Warren Buffett said on Saturday problems in the U.S. subprime lending industry were unlikely to pose a major threat to the overall U.S. economy.

"I don't think there's going to be any huge danger to the economy," although the crisis is a "very big problem" to many in the industry, Buffett said at the annual meeting of Berkshire Hathaway Inc., his insurance and investment company.

As long as unemployment and interest rates did not rise significantly, Buffett said "it's unlikely that that factor triggers anything of a massive nature in the general economy."

Earlier in the meeting, Buffett said the U.S. housing downturn was hurting results at Berkshire's residential construction businesses.

"My guess is that perhaps continues, perhaps for quite a while," he said.

Global warming may increase hurricane losses, Buffett saysBy Barbara KollmeyerLast Update: 1:04 PM ET May 5, 2007

OMAHA, Neb. (MarketWatch) -- Global warming could increase hurricane losses for Berkshire Hathaway, therefore the company's catastrophe reinsurance businesses will charge more in future for such coverage, Chairman Warren Buffett said on Saturday. Global warming could materially change the probability of catstrophes, increasing both the frequency and intensity of storms, he explained. "Our exposure goes up every year because of what's going on in the atmosphere, even though we don't fully understand what's going on," Buffett added. This "could increase expectable losses from any given hurricane season by a factor of two, three, four or five. On balance it's probably getting more negative for us and we have to be careful. It would be crazy to offer catastrophe reinsurance at the same rate in 2007 as we did in 2006."

Buffett plans more overseas exposure for BerkshireBy Barbara KollmeyerLast Update: 12:00 PM ET May 5, 2007

OMAHA, Neb. (MarketWatch) -- Berkshire Hathaway plans to increase its profile as a buyer of businesses outside the U.S. in coming months, Chairman Warren Buffett said during the company's annual meeting on Saturday. Berkshire can be validly criticized for not getting "on the radar screen" of overseas companies in the past, he added. However, Berkshire made one of its largest acquisitions last year when it bought 80% of Israeli metal cutting tool manufacturer Iscar Metalworking Cos. for $4 billion. Buffett said on Saturday that he's planning a "little procedure to get us better known outside the U.S. within the next six to eight months" with Iscar Chairman and Chief executive Eitan Wertheimer. "The entire world is definitely on our radar screen and we hope to be on theirs," Buffett added.