24/7 Wall St. wanted to preview the annual meeting, with more than just what to expect. In short, there are several things that investors should be on the lookout for. We have broken these out individually, but they are not in any specific order or listed in this order for any primary reason.
Will Buffett keep adding stock positions, even as the market reaches new highs?
Buffett recently told CNBC that he has added to his position in International Business Machines Corp. (NYSE: IBM). The amount was not specified on top of the 68 million or so that he owned for Berkshire, but here is the rub — Buffett has signaled this before, yet no real changes have been seen. IBM remains in a no-growth mode, where the only great driver is a low P/E ratio that is aided by the endless stock buybacks and cost cuts.
Another question will be whether or not Exxon Mobil Corp. (NYSE: XOM) will continue to be raised. The position has been very profitable for Team Buffett, and Exxon Mobil is perhaps the only real way for him to be able to easily get in or out of the oil sector. The surprise was that the stake was only raised to 41.129 million shares from 40.089 million shares previously.
And what about Wells Fargo & Co. (NYSE: WFC)? This position keeps growing at Berkshire Hathaway, and it is the largest holding now. The one thing that stands out is that the rate of additional shares seems to be slowing. This stake was recently shown to be 463.458 million shares, after having been 463.13 million shares previously. This stake is worth 10% more than it was at the end of 2013.
Will Buffett’s silence against activism hurt his firm’s credibility?
Buffett may not have done any favors for his public opinion nor for the public opinion of Coca-Cola Co. (NYSE: KO) in the latest proxy fight. The holder Wintergreen had been challenging Coke’s aggressive pay and compensation when the performance was poor, asking why shareholders should be diluted and why stock awards be free. Buffett abstained in the formal vote, yet later said that he was not in favor of the company’s action but did not want to create dissent. So, the question is this: Will Buffett play a puppet on other large holdings? Berkshire Hathaway owns some 400 million shares of Coca-Cola, making it the largest Coca-Cola shareholder almost twice over.
Should Buffett “right-size” the Berkshire Hathaway portfolio of private companies?
The new 2014 full Berkshire Hathaway holdings still have way too many “tail holdings” of positions that have been sold off other than a small piece that is too small to bother with for a mega-cap titan like Berkshire Hathaway. The real question is how many of these old tiny companies that Buffett purchased along the way should still be held. After all, they cannot make a sizable difference when compared to the likes of the huge buyouts like BNSF, Heinz and many others. The list of subsidiaries will highlight how many small companies are still under the company’s fold that perhaps could be sold off to free up cash — likely at huge profits.
Will Buffett hint at any more “whale acquisitions” ahead?
The latest annual report showed that Berkshire Hathaway remains interested in large purchases that are new or could fit inside one of the existing units. These are companies with consistent earning power, with good returns on equity while employing little or no debt, with a management team in place. But Buffett also maintained that “the larger the company, the better” – with a desire to make an acquisition in the $5 billion to $20 billion range. So, is any company (or companies) next in line to be acquired?
Can Berkshire Hathaway Keep outperforming the market ahead?
Berkshire Hathaway’s share price ended 2013 at $177,900.00, up from $134,060.00 at the end of 2012, for a gain of 32.7%. While Buffett keeps talking about the gains in intrinsic value, the raw math simply shows one conclusion: Berkshire’s share price rose by 32.7% in 2013, but the book value rose by 18.2%. And as of Friday, Berkshire Hathaway’s share price was above $194,000, for even higher gains of 9%. That exceeds the broader market yet again.
Any hint on a Buffett CEO succession?
Buffett has signaled that his board knows what to do if he were to fall over dead or become incapacitated. That being said, who would replace Buffett is ultimately a guessing game of one of several members of the team. Investors and the media may ask this succession question all over again, but our bet is that Buffett downplays it and the media and investors just say “Aw, shucks, it’s just Warren’s way” like they always do.
The reality is that Buffett’s “Woodstock of Wall Street” is attended by thousands of shareholders, many whom just want to see if there is anything new they can learn from the greatest investor of modern times. Investor will have their own lists of key things they are hoping for.