Oakmark Funds’ Bill Nygren learned this major lesson from Warren Buffett
Everyone can learn something from Warren Buffett — including Oakmark Funds’ Bill Nygren.
One practice that sticks out is the utilization of adjusted GAAP accounting for non-tangible assets, the value investor said during an interview with CNBC Friday.
“I think GAAP accounting was really intended for a tangible world,” he said. “You can touch and feel it, it goes on the balance sheet. If you can’t touch or feel it, expense it.”
But that setup isn’t “representative of the economics” that exist and the investments in the business world for things like research and development, and brand value.
“Those things are all on the balance sheet at zero,” Nygren said. “If you aren’t making adjustments for that as a value investor, you’re unnecessarily restricting your universe.”
Although Oakmark Funds does not own shares of Berkshire Hathaway, Nygren called it an attractive investment opportunity for many.
“Berkshire rarely exhibits the level of controversy that is required to create a really attractive value stock, but it’s a great business,” he said. “It’s extremely well run and that’s probably why it isn’t cheap enough to meet our criteria.”
— Samantha Subin
Berkshire’s auto insurer Geico pulls off a big turnaround
Display showing Gecko character for GEICO Insurance during the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska.
Yun Li | CNBC
Berkshire’s auto insurer Geico experienced a big turnaround in the first quarter, after benefiting from higher average premiums and a reduction in advertising costs. Geico posted an underwriting profit of $703 million. The auto insurer suffered a $1.9 billion pretax underwriting loss last year as it lost market share to competitor Progressive.
Ajit Jain, Berkshire’s vice chairman of insurance operations, previously said the biggest culprit for Geico’s underperformance was not keeping pace with rivals in telematics programs, which allow insurers to collect clients’ driving data, including their mileage and speed, to better price policies.
— Yun Li
Berkshire operating earnings pop in the first quarter
Profit from insurance underwriting came in at $911 million, up sharply from $167 million a year prior. Insurance investment income also jumped 68% to $1.969 billion from $1.170 billion.
Berkshire’s cash hoard also swelled to $130.616 billion from $128 billion in the fourth quarter of 2022.
— Fred Imbert
Warren Buffett’s successor Greg Abel is winning over shareholders
Greg Abel, chairman of Berkshire Hathaway Energy, center, during a shareholders shopping day ahead of the Berkshire Hathaway annual meeting in Omaha, Nebraska, U.S., on Friday, April 29, 2022.
Dan Brouillette | Bloomberg | Getty Images
Warren Buffett’s successor Greg Abel will be joining the Oracle of Omaha and Charlie Munger on stage Saturday, answering questions about non-insurance operations.
Abel has taken on many responsibilities at the massive conglomerate, while increasing his stake in the company, which has given shareholders hope that the culture at the company will continue.
“He does all the work, and I take the bows – it’s exactly what I wanted,” Buffett said in a CNBC interview in Japan on April 12. “He knows more about the individuals, the business, he’s seen them all. … They haven’t seen me at the BNSF Railroad for 10, 12 years or something like that.”
— Yun Li
NetJets pilots protest outside of arena, saying they’re being underpaid
A line of pilots from NetJets held a protest outside of CHI Health Center.
A number of pilots from Berkshire’s private jet company NetJets lined up outside of CHI Health Center as shareholders waited to get into the arena. They held signs that read “overworked” and “underpaid,” saying they were looking to renegotiate their contract. NetJets became a Berkshire subsidiary in 1998.
— Yun Li
Shareholders start lining up in downtown Omaha
Some of the people lined up at the CHI Health Center in downtown Omaha for the Berkshire Hathaway annual meeting have been in the line since 2 a.m. for the event.
— Sarah Min
Berkshire Hathaway has outperformed during recessions and bear markets, Bespoke data says
Berkshire Hathaway has a history of outperforming the S&P 500 during recessions, and performing especially well during bear markets, according to data from Bespoke Investment Group. Since 1980, Berkshire shares have beat the broader market over the course of six recessions by a median of 4.41 percentage points.
Berkshire Hathaway’s class A shares are up about 5% year to date, as investors see it as a safe haven.
Even more impressive is the stock’s performance during bear markets. During the same time period, the conglomerate outpaced the S&P 500 each time it dropped 20%, beating the broader index by a median of 14.89 percentage points.
″[One] stock that has gained a reputation for safety is Berkshire Hathaway (BRK/A), and based on the last several decades, the distinction has been earned,” read a Bespoke note from earlier this week.
— Sarah Min
What to expect from Warren Buffett and Charlie Munger
Charlie Munger ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska.
David A. Grogan | CNBC
On a cloudy Saturday morning, throngs of Berkshire Hathaway shareholders are waiting in a light rain to get inside the CHI Health Center in Omaha.
The economy and the markets are always top of mind at these events, but this year’s meeting comes at a particularly challenging time. On Monday, First Republic became the third American bank to fail since March, further fueling fears that a recession is imminent. As ever, investors will look to the 92-year-old Warren Buffett for folksy wisdom in uncertain times.
Buffett promised in Berkshire’s shareholders guide to field more questions this year. With that in mind, CNBC Pro looked at what some of the most pressing topics are likely to be. Questions could range from a discussion of what types of acquisitions the company might make to what is Buffett’s outlook for the banking sector. What’s next for auto insurer Geico also could be fair game.
Here’s the schedule for CNBC’s coverage of the Berkshire Hathaway annual meeting
CNBC will be livestreaming Berkshire Hathaway’s annual shareholder meeting on Saturday, beginning at 9:45 a.m. ET. Often called “Woodstock for Capitalists,” investors flock to Omaha, Nebraska, to listen to Warren Buffett’s thoughts on the market. He often recounts the many lessons he has learned during his decades of investing.
Here is a rundown of the day’s events:
9:45 a.m. – 10:15 a.m.: Pre-show hosted by Becky Quick and Mike Santoli
10:15 a.m. – 1 p.m.: Berkshire Hathaway morning Q&A session with Warren Buffett, Charlie Munger, Greg Abel and Ajit Jain
1 p.m. – 2 p.m.: Halftime show, hosted by Becky Quick and Mike Santoli
2 p.m. – 4:30 p.m.: Afternoon session of annual meeting
4:30 p.m. – 5 p.m.: Post-show anchored by Becky Quick and Mike Santoli
Note: Schedule reflects Eastern Time
—Christina Cheddar Berk