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For more about the evolution of the Berkshire Hathaway shareholder communications practices supporting its widely observed annual meetings, see


Wall Street Journal, November 21, 2011 article


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BUSINESS    |   NOVEMBER 21, 2011

Buffett Invites Analysts to Berkshire Annual Meeting



After decades of largely shunning Wall Street analysts, Warren Buffett is preparing to give them a prominent voice at his company's biggest event.

Three research analysts will join Berkshire Hathaway Inc. shareholders in questioning the billionaire and his business partner, Charlie Munger, at the conglomerate's annual meeting next year. The event started with 12 attendees 30 years ago and now draws tens of thousands of people to Mr. Buffett's hometown of Omaha, Neb., each spring to pay homage to the world's most famous investor and hear him speak.

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Stephanie Sinclair for The Wall Street Journal

Berkshire's Warren Buffett, after largely shunning analysts, will take their questions at an investor meeting.



After decades of largely shunning Wall Street analysts, Warren Buffett is preparing to give them a prominent voice at his company's biggest event. WSJ Money & Investing Editor Colin Barr has details on the Markets Hub. Photo: AP.


The next meeting, set for May 5, will mark the first time in years that Berkshire's longtime chief executive will have a dialogue with analysts who follow his firm. The shift could broaden Berkshire's appeal to investors at a time when much discussion of the company centers on who will eventually replace the 81-year-old Mr. Buffett atop Berkshire and as the overseer of its more than $110 billion portfolio.

"We're trying to broaden the conversation," Mr. Buffett said in an interview. "The whole idea is to have a good time [at the event], but also to deliver the maximum amount of information to shareholders."

Known as Woodstock for Capitalists, the Berkshire meeting is the largest gathering of shareholders in the country, drawing an estimated 36,000 attendees earlier this year. The daylong event is best known for a question-and-answer session in which Messrs. Buffett and Munger spend hours discussing everything from the economy and markets to regulation and the state of America's schools.

While shareholders at past meetings have sometimes probed about Berkshire's operations, the focus has often drifted onto other subjects. Mr. Buffett has been asked whether he believes in Jesus Christ, how he would solve the country's biggest problems, and what advice he would give to entrepreneurs, according to Jeff Matthews, a hedge-fund manager who has written a book about Berkshire's annual meetings.

Though Mr. Buffett entertains almost any question, he prefers to keep his attention on Berkshire, which has morphed over almost half a century from a struggling textile company into a sprawling conglomerate that owns insurers, railroads, manufacturers, retailers and utility companies.

Berkshire now ranks among America's 10 largest corporations by market value, but it is covered by few brokerage analysts and doesn't hold conference calls with the investment community. The company is unusual and complex and, by virtue of its six-figure stock price and Mr. Buffett's scorn for Wall Street's commission-driven culture, has tended to generate little trading revenue for securities firms. The last time Mr. Buffett had any meaningful contact with a research analyst was between 1998 and 2003, when he regularly talked with Alice Schroeder, a former analyst at PaineWebber and Morgan Stanley who later wrote a biography of Mr. Buffett called "The Snowball."

Though Mr. Buffett is perhaps the most well-known businessman in the U.S., there are signs he views his company as overlooked by investors. In September, Berkshire unveiled its first-ever share-buyback program after its shares fell to their lowest valuation relative to the company's book value in years. The shares rose on the announcement, and the company has bought back only a small amount so far, but the news was a clear signal that Mr. Buffett thought the shares were deeply undervalued. Berkshire's Class A shares closed Friday at $112,890, down 6.9% from a year ago versus a 1.3% gain in the Standard & Poor's 500-stock index over the same period.

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Some Buffett watchers think adding analysts to the mix is the billionaire's way of broadening Berkshire's base. "Everything he does is purposeful. This is not a casual invitation," said Tom Story, a Berkshire shareholder and principal of Thomas Story & Son LLC in Oak Brook, Ill. "For a long time Berkshire was all about Warren, and now that the business is more complex" it's harder for people to understand, he said.

A few years ago, at Mr. Buffett's behest, a panel of three journalists started filtering half the shareholder questions in a bid to sharpen the discussion of company business. At the most recent meeting, the journalists' questioning focused in part on Mr. Buffett's view of his former aide, David Sokol, who bought shares of a company that Berkshire subsequently acquired. Mr. Sokol, who left Berkshire this past spring, was widely viewed in the media as a leading candidate to succeed Mr. Buffett.

The inclusion of the analysts, who together will ask a third of the questions at the coming meeting, is likely to make the meeting even more Berkshire-focused. "We don't want to eliminate the possibility that a 16-year-old can ask me what's the best thing to do in life, but we want a majority of the audience to find the meeting useful and feel it was worthwhile to be there," Mr. Buffett said.

That's where the three insurance-industry analysts—Jay Gelb of Barclays Capital, Cliff Gallant of Keefe, Bruyette & Woods and Gary Ransom of Dowling & Partners—come in.

Mr. Gelb, 40 years old, said he has begun preparing questions and is likely to poll his clients about the most important issues for Berkshire. "It's really exciting to be part of the process," he said. Mr. Gelb began covering Berkshire in April 2010 and has the equivalent of a buy recommendation on the stock. He has a price target of $85 for Berkshire's more widely traded class B shares, which are down 5.9% this year at Friday's close of $75.37.

Mr. Gallant, also 40, has been covering Berkshire for more than two years and has an "outperform" rating. He said analyzing the company is difficult but noted that the stock "had gotten pretty cheap." He said he is looking forward to asking questions about Berkshire's operations.

Mr. Ransom, 58, has covered Berkshire for most of the past decade at different firms and currently also rates it a buy. A representative for him declined to comment, citing Dowling's policy.

Mr. Buffett said the analysts' participation at Berkshire's annual meeting doesn't mean he will be engaging them at other times. "The analysts can say whatever they want to say … but our goal is to write an annual report so that no analysts' reports are necessary," he added.

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