Going to Omaha

From one quiet, large country town to another

I decided to go to the Berkshire Hathaway Annual Meeting when Charlie Munger died late last year. I had always wanted to go - less so for the substance than the symbolism - and the fact that one of the two main draws to the event is no longer going to be available gave me the urgency to book the trip. After all, Buffett is 94, and most of his forward looking commentary now is accompanied with the rider ‘I supposed Greg [Abel] will have to deal with that’.

Well 18 hours worth of flights later, and here I am - in the green and gentle surrounds of Omaha, Nebraska. When one hears the term ‘middle America’ I could hardly think of a more appropriate place to encapsulate such an idea. Once when asked why he lives here, Buffett replied:

I’ve never had a bad experience in Omaha.

Omaha and Nebraska are home to me. Everything about it seems like home. It’s a pace. It’s relationships. There’s a lot of continuity. There’s a lot of community. There’s a lot of friendship. It’s a very solid place, and a friendly place in which to grow up, and in which to conduct a business.

Certainly for the broadly Christian, family-orientated businessman this seems like a paradise. There’s a natural orderliness, which is accompanied by what I would assume is quite a bit of self-selection. It doesn’t strike me as a place that the overtly ambitious, ostentatious, or otherwise non-conforming elements of society would find comfortable. It’s certainly a place that seems free from distractions not of your own making. I will note, however, that the first business I saw coming in from the airport was The Spearmint Rhino.

My kind of town.

To be clear, I did not decide to come to an obscure place on the other side of the planet because I’m a fawning fanboy to a 94 year old billionaire. I’ll admit that encountering this kind of person was unsettling. During the opening of the AGM, I sat next to a gentlemen who had been to every meeting, bar one, since 1997. I couldn’t help but recoil listening to him tell his wife about a litany of obscure Buffett trivia. Scenes:

This experience was only topped in its unpleasantness by encountering a group of people who attended purely because of the hype. While lining up to claim my credential I spoke to a very nice venture capitalist who, only days before, had become aware of Buffett, Munger, and Berkshire. When I asked her why she decided to travel from London to attend, her response was that she thought it would be a good networking opportunity. I was also a little bemused when she mentioned that her boyfriend paid for her sojourn. Different strokes for different folks, I suppose.

The irony, however, was not lost on me. Despite the fact that Berkshire had been explicitly built on indifference to the crowd, many, many people attended the meeting just because of it! I cringed a little when I saw early entrants literally sprinting to secure a seat in the arena. They weren’t going to see or hear anything that they hadn’t heard 100 times before. Certainly none of them were there to hear how the insurance subsidiaries had performed in the previous quarter. As Munger would have gleefully observed, when you’re amongst 50,000 other people, it’s hard not to be a lemming.

In any event, I can’t claim to be much better. I attended to see the great man in person. There are few men alive today who have contributed and achieved so much to a particular field. Fewer still who have done so in a domain that I’m interested in. I do not, however, have any illusions about Buffett, the meeting, or for that matter Berkshire. I think - like Munger did - that money management is a low calling. There’s nothing selfless, or innovative, or particularly value added about it. It’s a very stimulating and enjoyable game, made extraordinarily lucrative by the highly levered nature of capital. Many of us operate within a wrinkle of the broader economic system that dolls out disproportionate rewards for allocating capital well. That’s all.

I don’t mind saying that the kind of groupies that adore Buffett as a hero on a moral level are completely detached from reality. While he certainly made many outside investors rich a long the way, to say he created significant value for society broadly isn’t quite correct. He has been very adroit at buying durable cashflows on the cheap. To say this another way, he has been very good at getting other people to make bad deals for themselves. As Alice Schroeder wrote in The Snowball, many entrepreneurs felt hard done by Buffett over the years. This led the great Mrs B starting a competing business to the Nebraska Furniture Mart after Berkshire acquired a controlling interest. Note that Buffett only won that offer by playing off the fact that the competing bidders were German (the Blumkins are Russian Jews).

All kinds of elements of Buffett’s private life are likewise less than ideal, and I doubt many out there would strive to emulate them. Nor his politics, if you don’t mind me saying. While he’s celebrated for his philanthropy, I have always found it unsettling that most of the early money he spent in this arena was aimed at population control. Emblematic of the boomers who have come after him, he has supported a number of luxury causes that effectively pull the gangplank up after the incumbents are already onboard. The list could go on and on.

Berkshire itself is so large and diversified now that the businesses that dominate its operations hardly get a devotee of Buffett’s investment approach excited. The insurance operations, the energy assets, and the railroad - which get the lion’s share of the attention - do not the resemble the Gross Profit Royalties of old. While the equity portfolio has stronger tinges of this, there’s not much new ground being broken on the likes of Coca Cola, American Express, or Apple.

The lack of dynamism could equally be extended to Buffett’s chosen successors. He has explicitly derided the idea of ‘one 65 year old handing down to one 60 year old’ in the past. Perhaps a 94 year old handing down to a 61 year old is somewhat different, but not categorically so. Equally, Ajit Jain is 72 years old, Ted Weschler 61 years old, and Todd Combs, being the most spritely of the bunch, is 53 years old. A constant critic of ‘winners of the ovarian lottery’ Buffett has also mentioned his son’s succession to a non-executive Chairmanship at Berkshire.

The substance of the meeting, in a broad way, encapsulated most of my observations. Despite a lifelong commitment to not getting involved in the operations of its subsidiaries, it’s now looking like that may have been something of a mistake. Geico and the BNSF Railway seem to be definitively lagging in their respective industries. This is to say nothing of the fact that many of Berkshire’s energy investments seem to be completely at the mercy of parochial, two-bit State regulatory bodies.

I did, however, buy some peanut brittle, a copy of Poor Charlie’s Almanac, and get a photo with the Geico Gecko. Money and time well spent. I now have a new appreciation for how great a business See’s Candies is. The sheer number of people gleefully paying $25 for a small box of candied peanuts was something to behold.

In truth, I was simply born too late to attend the meeting when it would have been at the height of its dynamism. The meetings I have most enjoyed watching online are from the 1990s. I’m confident that those from the 1980s would have been even better. To have been able to have attended when Buffett was at the peak of his intellectual powers, when Berkshire was able to invest in very high-grade businesses, and when fellow attendees were more independent enthusiast than lemming would have been a real pleasure.

In spite of everything I have mentioned, it has been an experience that I will never forget. Although, this will very likely be the first and last time I attend. I’m happy to have made the trip, and to have been able to pay respects to a man whose ideas have changed a good portion of my life.

Larry.