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Right now, big-time kudos to DealBook for doing one of the toughest tasks in journalism
OMAHA — Greetings from Berkshire Hathaway’s annual shareholder meeting, here in the cavernous CenturyLink Center....EARLIER
In a matter of hours, tens of thousands of shareholders will take their seats and listen to Warren E. Buffett deliver his pronouncements on his massive conglomerate, the global economy and whatever else tickles his or investors’ fancy. DealBook’s Andrew Ross Sorkin will be one of the reporters on stage to ask questions as well.
Hanging over this year’s festivities is Mr. Buffett’s disclosure that he has received a diagnosis of prostate cancer. He has taken pains to emphasize that the disease was caught early and that he plans to keep working for a long time. But shareholders, analysts and the media will be sure to scrutinize any hints Mr. Buffett may give about his eventual successor.
A shareholder says that he's investing in Berkshire not for the glamour, but that the stock has been beaten by gold in terms of returns in recent years.
12:18 P.M. Who Doesn't Love Gold? Here's One Guy
Known to be dismissive of gold as an investment trend, Mr. Buffett argues that his company has beaten gold over the long run, as have the equity markets as a whole.
Becky Quick asks on behalf of a shareholder about Berkshire's book of derivative investments "Who will managed these weapons of mass destruction after you're gone?" she asks, adding that people don't don't want a situation like the American International Group after the ouster of its longtime chief executive.
12:12 P.M. Berkshire's W.M.D.'s
(For some context, Mr. Buffett has long derided derivatives as weapons of mass financial destruction. But he has entered into a number of derivatives bets, notably some tied to the equity markets.)
Mr. Buffett says that some of Berkshire's businesses, like its utilities, will need to use derivatives as a hedge. But in general, derivatives likely won't be a big part of Berkshire's profits or losses by the time he leaves. While he won't stop his two new investment managers, Todd Combs or Ted Weschler, from investing in them, Mr. Buffett doesn't think they'll be a major source of financial comfort or woe.
Also earlier in the Q.&A., Becky Quick passes on a question from a shareholder in Brunswick, Ga., who says that his 84-year-old father won't invest in Berkshire because of his opposition to the Buffett Tax.
The man who gave his name to the higher-tax-rate proposal responds pithily, "I don't think employees of Berkshire should in any way have their citizenship restricted."
He adds that he doesn't necessarily know the politics of executives at companies he has invested in, like Muhtar Kent of Coca-Cola or John Stumpf of Wells Fargo.
Then Mr. Buffett slides in a political jab: If people don't like his politics, he says, "it sounds like they should own Fox."
A bit earlier in the Q.&A. session, an analyst asked Mr. Buffett about deal-making, and whether Berkshire would again use stock in buying a company, as it has done infrequently.
11:53 A.M. Asking the Deal Question
Mr. Buffett answers that he had looked at a potential $23 billion deal opportunity some time ago, but had to pass. Why? The price was too rich, given Berkshire's current cash position. "I would have had to sell securities I didn't want to sell," he says.
The WSJ's Deal Journal is "Live-blogging Buffettpalooza" (BRK.b)
Morningstar is Live Blogging the 2012 Berkshire Hathaway Annual Meeting (BRK.b)