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A Trip to Omaha for Berkshire Hathaway's Annual Shareholder Meeting
Plus: 3 Key Takeaways for Companies & Agencies Engaging Shareholders
Members of the Stakeholder Labs team had the privilege of spending last weekend in Omaha, Nebraska attending the Berkshire Hathaway Annual Shareholder Meeting. Earlier this year, we profiled Berkshire Hathaway’s ‘shareholder festival’ in a Roundtable Roundup on the evolution of shareholder events so we wanted to experience it for ourselves to better understand how it evolved, key learnings that other companies can replicate and how our technology might accelerate that process. Special thank you to the Seven Seven Six team for making it happen!
👩👩👧👦 A family trip to Omaha
Traveling into America’s heartland to walk in Warren Buffett and Charlie Munger’s shoes is foundational to the Berkshire Hathaway shareholder experience. BRK owns or has large positions in companies such as BNSF Railroad, Dairy Queen, Kraft Heinz, Fruit of the Loom, GEICO, and Coca-Cola, and traveling to Nebraska brings many shareholders out of their normal routines and up close to different way of life.
Despite being billed as ‘Woodstock for Capitalists’ and CNBC broadcasting the event like it’s their Super Bowl, one couldn’t help but be struck by the event feeling more like a family reunion with multiple generations traveling together from places like Kansas City, Buffalo, Thailand, Australia, Brazil, Israel and everywhere in between.
The 40,000 in attendance included business luminaries and celebrities such as Bill Gates, Tim Cook, Glenn Close and Bill Murray, but Buffett and Munger were clear throughout the afternoon that the purpose of the annual gathering was to maintain a loyal shareholder community and not to cater to a small number of institutional investors (quotes are paraphrased).
The first Berkshire Hathaway shareholder meetings were attended by our families and neighbors and we’ve tried to maintain that environment
Come to Omaha and enjoy making friends
Berkshire Hathaway has more long-term shareholders than any other company
We like to have fun with the people who trust us with their money
Not a faceless group of people…this event gives us real meaning to what we do every day
Buy our stock with the intention of holding it for a lifetime
I am most interested in what owners think about Berkshire Hathaway, not analysts
We want to be the most shareholder orientated company in the world
Celebration is important for a group of people to work well together
Buffett and Munger's business principles have been profiled endlessly but their ability to speak directly to shareholders and make them feel like they are part of something special cannot be overstated in developing Berkshire Hathaway's shareholder community.
Buffett has repeatedly attributed Dale Carnegie's "$100 public speaking course" for accelerating his ability to get others to follow his ideas and it could be the best investment he has ever made. The thoughtfulness and charisma that both Buffett and Munger possess in their communication skills (even in their nineties!) are amazing to witness in-person and foundational to their success.
🛍 Shareholders are the best customers
Video: CNBC’s Yun Li covers the Berkshire Hathaway ‘Shopping Extravaganza’
The Berkshire Hathaway on-premise shopping experience offered shareholders a variety of discounts, commemorative merch and interactive demos. With many limited edition items selling out on Friday, the Berkshire Hathaway shareholders appear to be some of the portfolio’s most loyal customers.
In this year’s annual letter, Buffett highlighted some of last year’s impressive shopping numbers and the virtuous cycle between shareholders and the products and companies they love:
From the opening bell, we went straight for your wallet. In short order, our See’s kiosk sold you eleven tons of nourishing peanut brittle and chocolates.
In our P.T. Barnum pitch, we promised you longevity. After all, what else but candy from See’s could account for Charlie and me making it to 99 and 92? I know you can’t wait to hear the specifics of last year’s hustle. On Friday, the doors were open from noon until 5 p.m., and our candy counters rang up 2,690 individual sales. On Saturday, See’s registered an additional 3,931 transactions between 7 a.m. and 4:30 p.m., despite the fact that 61⁄2 of the 91⁄2 operating hours occurred while our movie and the question-and-answer session were limiting commercial traffic.
Do the math: See’s rang up about 10 sales per minute during its prime operating time (racking up $400,309 of volume during the two days), with all the goods purchased at a single location selling products that haven’t been materially altered in 101 years. What worked for See’s in the days of Henry Ford’s model T works now.
Berkshire Hathaway shareholders are not the only evangelists of their portfolio’s products and services - Buffett himself is known for investing in companies he personally uses.
This approach has helped him to identify companies with strong business models, competitive advantages, and long-term growth potential and numerous companies have benefited from being introduced to Berkshire Hathaway’s loyal shareholders as consumers.
One example of this is Buffett's investment in Coca-Cola. He has long been a fan of the company's products and has said that he drinks five cans of Coke each day. When he first invested in the company in 1988, $KO was trading at ~$2.40 and many investors were skeptical because of concerns about health and changing consumer tastes. However, Buffett saw the value in the company's strong brand, distribution network, and loyal customer base, and the stock is trading at over $63 today.
Another example of Buffett's personal investment strategy is his investment in See's Candies. Buffett first tasted See's Candies in the 1950s and love the quality of the product and the efficiency of the company's operations. He eventually acquired the company in 1972, and it has since become a profitable part of his investment portfolio.
🤝 Core values are the cornerstone of BRK’s success
Video: Warren Buffett speaks to Congress in 1991 after rescuing a scandalized Salomon Brothers
Warren Buffett has not traditionally evoked descriptions such as ‘conscious capitalist’ or ‘socially responsible’ investor but it’s clear when attending a BRK shareholder festival that there are core values at the heart of BRK’s business strategy. These values include:
Frugality is a core tenet of Buffett's personal life and business approach. Living in the same modest home he purchased in 1958, he is known for his simple tastes and aversion to ostentatious displays of wealth. This frugality extends to his investment strategy, as he seeks to acquire undervalued companies with strong fundamentals and reliable cash flows.
Integrity is another crucial aspect of Buffett's values. Known for his straightforward and honest communication, he believes in transparency and fairness when dealing with investors, employees, and business partners. This commitment to ethical practices has earned him respect and trust in the business world, helping to solidify Berkshire Hathaway's reputation.
Patience and a long-term perspective are essential components of Buffett's investment philosophy. He is famously quoted as saying, "Our favorite holding period is forever," reflecting his preference for holding onto investments for extended periods to allow their value to compound over time. This patient approach has enabled Buffett and Berkshire Hathaway to reap substantial rewards from their investments.
Buffett addressed a question from a young shareholder with some of the wisdom that inspired people to purchase shares in the first place and travel long distances to listen:
You should write your obituary and then try to figure out how to live up to it. That’s something you get wiser on as you go along… You just want to make sure you don’t make any mistakes that take you out of the game or come close to taking you out of your game. You should never have a night when you’re worried about investing, assuming you have any money to invest at all.
BRK: Where Brand Loyalty Meets Equity Participation
The Berkshire Hathaway Annual Shareholder Meeting is a unique event that showcases the power of a loyal shareholder community. Below are 3 takeaways from BRK’s shareholder meeting that other companies can apply to their shareholder engagement strategies.
Create your Omaha and bring shareholders into that world
The special trip to Omaha brings people out of their day to day routine and opens them up to a unique shared experience. While few companies could expect thousands of people to travel to a remote destination for an annual meeting, BRK only started with a few dozen people in a breakroom in the 1960s and companies can now accelerate building their shareholder community with Stakeholder Labs technology by identifying their most loyal customer / shareholders and engaging them around an annual event. Issuers shouldn’t hesitate to create a unique experience that attracts fewer, more passionate shareholders.
Communicate effectively and transparently; love the products you sell
The ability of Warren Buffett and Charlie Munger to communicate effectively and transparently with their shareholders, as well as their evangelism for companies they personally use, has helped create a sense of unity and shared purpose among the Berkshire Hathaway shareholders.
Executive management of consumer-facing brands are in good position to replicate this strategy and should prioritize offering shareholders unique shopping experiences. Stakeholder Labs technology is designed to support the customer <> shareholder virtuous cycle.
Define your values and lead with them
Warren Buffett’s personal values of frugality, integrity and patience have withstood the test of time and have been integral to the successful culture / business practices surrounding Berkshire Hathaway.
These values are not defined by outside arbiters and Berkshire Hathaway does not chase cultural trends; in fact, an activist shareholder proposed that Berkshire Hathaway and its operating units take no positions on controversial social and political issues unless it was necessary for business and it got less than 1% of shareholder support. Values are a core feature of BRK and there is little hesitation to lead when required.