top of page

The Oracle of Omaha

This year I decided I would attend the Berkshire Hathaway Annual meeting in Omaha, having read and studied extensively the history of Warren Buffet and in particular his early investments. From what I could tell there were about 80 People from Australia who made the trek to Omaha. To put it in perspective, its a long way to go. Omaha is in the middle of America and its a relatively uninspiring place.

Prior to going to Omaha we had a pretty full list of companies to visit. We saw the new James Hardy, Hardy plank manufacturing facility. This was an impressive site and while now operating we did see the old plant which is a great cash cow for the company. It produces ~200 million square feet of board a year and supplies 85% of new homes in the region. There is such great demand for the product that the combined output for the two plants will 500 million square feet of plank a year.

We also went to Portland for the day to see Schnizter Steel. This is a US$800m NYSE listed company that competes with Australian Listed Sims Metals in the recycling of metal. This company trades on a much cheaper multiple than Sims and operates in the same markets.

While in Portland we took he opportunity to take a visit to the Nike Campus. Nike is capped at US$90 billion. It was an impressive facility and we were lucky to have the global head of investor relations show us around for the day. There wasn’t really enough information provided to make any informed decisions about Nike other than it does show how much money can be made selling sporting goods. No expense spared is the only way I could describe that place.

The Meeting

If you bought Berkshire Hathaway shares and put $10k into the shares when they listed they would be worth $50 million now. Thats a long time!! Which does make me wonder why GC1 has any sellers at all. Investing is a long term game. As long as you think the Australian economy will continue to grow and businesses will grow then you will benefit from that growth. This was the same message that Warren kept making though out his presentation.

I was surprised at how sharp Charlie and Warren were. Charlie is 93 and sharp as a tack. Its a pretty slick affair, starting with a movie full of celebrities played to the 40,000 or 50,000 people who attended. The movie is only available to the people who attend in person, its entertaining but not overly insightful. The meeting started with a great story about the first shares Warren bought into a company that went on to be a 5 bagger over the next few years, except that Warren sold out after making a 15% return.

The key take-away for me was this statement on investing from Warren……. “Have a philosophy that you stick with and forget about doing things that you don’t know!!”

Nebraska Furniture Mart

We took a trip to see Nebraska Furniture Mart, this is a furniture retailers owned by Berkshire Hathaway. The best way to describe it is a Harvey Norman on steroids. One thing a did notice was how many more sales people were on the shop floor, possibly because they are incentivised by commission and earn considerably lower base wages. The family who founded the business are still involved, owning 20%, the rest owned by Berkshire Hathaway.

On Bitcoin

As a final note, it was pleasing to hear Warren and Charlie talk about Bitcoin. They share my sentiments, which many of you know. I didn’t go as far as Charlie who referred to them as “turds”. You can find the transcript of the entire 7 hours of meeting online.

Any information has been prepared for the purpose of providing general information only, without taking account of any particular investor's objectives., financial situation or needs, It is not an offer or invitation for subscription or purchase, or a recommendation of any financial product and it is not to be relied on by investors in making an investment decision. Past performance is not a reliable indicator of future performance. To the extent any general financial product advice is provided in this document, it is provided by Glennon Capital Pty Ltd ACN 137 219 866, AFSL No. 338 567. An investor, before acting on anything construed as advice, should consider the appropriateness of such construction and advice having regard to their objectives, financial situation or needs.

bottom of page