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.
Sinclair for The Wall Street Journal
Berkshire's Warren Buffett, after largely shunning
analysts, will take their questions at an investor
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
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
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
That's where the
three insurance-industry analysts—Jay Gelb of Barclays Capital, Cliff
Gallant of Keefe, Bruyette & Woods and Gary Ransom of Dowling &
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.
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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