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Berkshire Hathaway holds annual shareholders meeting
Last Updated: 2019-05-07 17:26 | Xinhua
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Warren Buffett's Berkshire Hathaway Inc. held its annual shareholders meeting during the past weekend in the city of Omaha in the U.S. state of Nebraska.
At the CHI Health Center in downtown Omaha, sitting side by side on stage, Buffett, chairman and CEO of Berkshire, and Charlie Munger, the vice chairman answered shareholders' questions.
On Berkshire's stock buybacks, Buffett said in response that "we will buy stock when we think it is trading below a conservative estimate of its intrinsic value."
Berkshire bought 1.7 billion U.S. dollars of its own stock during the first quarter of 2019, according to a quarterly report released Saturday.
Buffett said that the intrinsic value is not a specific point. "It's a range in my mind that will have a range or band of probably 10 percent."
"We want to be sure when we repurchase stock that those people that have not sold are better off than they were before," he added.
Publicly-traded companies reduce the number of their outstanding shares in order to bolster stock prices, which in turn benefits shareholders.
Munger said that "I predict we will get a little more liberal in repurchasing shares."
As of the end of the first quarter, Berkshire's pile of cash and cash equivalents amount to 114.2 billion dollars, up from 111.9 billion dollars at the end of the previous quarter.
Answering a question about whether Berkshire should spend a large portion of its over 110 billion dollars of cash in a stock market index fund, Buffett said the idea makes sense in the future, adding that the cash pile will enable Berkshire to seize potential large investment opportunities.
"They'll come in clumps and when other people don't want to allocate capital," he said.
Over the past few months, the scandal-ridden packaged food giant Kraft Heinz and Wells Fargo's misdeeds have drawn the corporate community's attention. Berkshire has invested heavily in both companies.
Buffett and Munger appeared to be defending Kraft Heinz, which has faced federal investigation into alleged procurement mishandlings.
Buffett said it is "not at all inconceivable" that Berkshire could be partners in some transaction in the future with 3G Capital, the Brazilian-American investment firm that currently manages Kraft Heinz's day-to-day business.
Berkshire teamed up with 3G in 2013 to buy H.J. Heinz, which merged with Kraft Foods in 2015 and became Kraft Heinz. Berkshire holds a 27-percent stake in the combined company.
Munger said he doesn't think the problem with Kraft Heinz "was that they cut research," echoing a point made by Buffett that under 3G's management, Kraft Heinz is doing well operationally.
Shareholders also raised questions concerning Wells Fargo. The bank has in recent years been engulfed in a slew of regulatory probes, which revealed that it mistreated customers with falsified accounts, excessive mortgage fees and force-placed insurance.
"When you find a problem you have to do something about it, and I think that's where they probably made a mistake at Wells Fargo," Buffett said. Berkshire owns some 9 percent of Wells Fargo's shares.
Wells Fargo announced on March 28 that its CEO and President, Timothy Sloan, decided to resign immediately and retire from the company on June 30.
Munger offered his support for Sloan. "I wish Tim Sloan was still there," he said.
Occidental Petroleum Corporation announced in a statement on April 30 that Berkshire has committed to a 10 billion-dollar preferred stock investment in the Houston, Texas-based oil company, contingent upon Occidental entering into and completing its proposed acquisition of Anadarko Petroleum Corporation.
Asked by a shareholder if Berkshire will engage in more such deals in the future, Buffett said yes.
Occidental proposed on April 24 to acquire Anadarko for 76 dollars per share, higher than rival Chevron Corporation's initial bid for 65 dollars per share.
Anadarko said in an April 29 statement that it intends to resume negotiations with Occidental, that its board of directors unanimously decided Occidental's proposal could reasonably be superior to Chevron's, and that its agreement with Chevron remains in effect.
Buffett and Munger also took a question from a Chinese shareholder asking if and when Berkshire plans to set up a company in China. "We've got one now, Dairy Queen is all over in China," Munger replied. "And it's working fine."
"We've done well in China," Buffett said. "We haven't done enough."
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