Berkshire week 2026

Each year I look forward to the Berkshire Hathaway annual meeting and write up my notes. I have highlighted speaker comments I found interesting or challenged me using bullet points. Non bulleted comments are my thoughts. There were other speakers at many of these sessions and I don’t mean to disparage them by not noting them directly.

The content of this newsletter is meant to be educational and thought provoking. Nothing in it should be interpreted as investment advice.

Questions I tried to ask

I submitted 3 questions to Becky Quick (CNBC). She did not select any of them, but I think they are interesting to think about. This varies by year but only about 30 questions were asked.

1. Charlie Munger pooh-poohed the need to prepare for climate change because it moves slowly and insurance contracts reprice each year. Now BHE is being challenged by the impact of global warming, drought and wildfires, with behavior changes by juries a higher order effect. Pandemics, demographics, technology, deficit spending and geopolitical upheaval are examples that impact all types of firms. Do you think a larger role for the impact of emerging risks is warranted by value investors and how are you scanning for these risks today?

2. Berkshire previously said you would invest $30 billion towards updating the electric grid. Given the sales of some utility assets and jury reactions to wildfires can you provide an update?

3. There is a cottage industry trying to decipher Berkshire’s buyback strategy, waiting with bated breath for any reports. Two years ago, Mr. Buffett shared the touching story about Mrs. Gottesman’s donation to the Albert Einstein College of Medicine and other buybacks from long-time shareholders. It made me wonder what percentage of buybacks were bought in the open market. Can you share approximate levels over the last few years and your process for determining the price for a non-public transaction, especially when the trade is with an insider? This is likely to come into play when Mr. Buffett’s estate sells its shares, hopefully many years from now!

Regarding number 3, during the Abel presentation he noted that 33 A shares and over 400,000 B shares had been purchased during 1Q26. Many analysts noted that this was a small amount, especially given that Berkshire put out a press release about buybacks restarting. Could this have been a smoke screen to allow BRK to purchase the 33 A shares from one of the original partners? I wonder how many families are still invested from the original group?

April 30 CFA Nebraska Value Investing Dinner – Meb Faber

· Meb suggests shareholder yield is a good way to look at investing, combining dividend yield and buybacks.

I brought home the 2^nd edition of Faber’s Shareholder Yield book, and read it, learning along the way that I had read the first edition when he offered it as a free kindle! I also signed up for the new book he is releasing this summer titled Investing in America.

I like to use the PEG (price/earnings divided by expected growth) metric and define growth as 5-year projected growth (1-year growth if something longer is not available) plus dividend yield. I agree that shareholder yield would be better, but it’s not perfect. I don’t know where to get the historical data, and even if there is a plan for future buybacks they are not guaranteed.

May 1 Gabelli conference

Adam Mead, Chris Bloomstran, Brett Gardner, Pieter Slegers (Adam, Chris and Brett have good Twitter feeds)

· Next big negative market event is when Greg Abel’s skills will be tested.

I’m optimistic that if he has the patience to wait good opportunities will be revealed.

· Will Abel get more cold calls about acquisitions that Buffett did? Arguments both ways

· Operationally Abel has already improved subsidiary performance

· Adding in-house counsel and making Adam Johnson the manager of many subs is smart.

· One panelist thought BRK should hire another investment manager to replace Todd Combs.

· Tokio Marine deal is more than stock purchase – includes strategic cooperation

· Could grow utility business in the future

· Uncertainty risk in utilities today due to wildfires

· Berkshire takes in $900 million each week in free cash flow

· Could use cash to buy back Buffett’s shares from his estate

· Is BRK a pick and ax company?

· Consider BRK as an index and use it for passive investing

· Berkshire tends to buy businesses that will be around for a long time.

· AI is growing but companies that use data will need more people for analysis

· Reinsurers could rely too much on AI, leaving BRK with profitable clean up later on

At some point Berkshire will need to convert all remaining A shares to B for liquidity purposes. Even today the ratio between A and B shares drifts away from 1500.

I hear concerns about Abel’s skill set as an investor, but the data points we have so far are amazing. He sold his BHE stock back to Berkshire in 2022 with an implied value of $87 billion, while the Scott estate sold their BHE stock in 2024 at a value much lower (implied $49 billion total value). Abel made a large purchase of Berkshire shares in late 2022 (168 A shares for $68 million) at a market price just over $400,000. This was a local minimum with the current price above $700,000 about three and a half years later.

A question that I continue to ponder is how to create an intrinsic value around a cash position. If I have $100 cash, is the intrinsic value equal to, less than due to inflation, or more than $100 if capital allocation is expected to be disciplined and return more than a hurdle rate? Should I use the same methodology for all companies or are some, like Berkshire, special? Is Berkshire still special in this way under Abel?

How much will Berkshire return over the next market cycle? The subsidiaries are incented to return about 10%, so that provides a base with outperformance generated through capital allocation and tax arbitrage. A poor market scenario is a good opportunity to deploy cash.

Berkshire’s cash pile could be built up until the next downturn. Private equity firms are highly leveraged and currently rolling over debt at higher rates than when the deals were initiated. Marmon’s current structure has over 100 subsidiaries and could support additional companies as needed. Utilities, a business Berkshire is very familiar with, are leveraging up as data centers are built in bulk. They may not be profitable. Either PE, utilities, or another highly leveraged firm could create opportunities for someone with cash and temperament to wait for bankruptcies.

Share buybacks are an interesting topic. In the 1990s these were used, especially at technology companies, to award shares to managers. If you buy back shares because you don’t have anything better to do with the cash that’s fine but I don’t see people assign a time horizon to the opportunity cost. It’s the reason why, given the Buffett indicator’s (side comment - when this summer’s big IPOs join this index there will be an artificial discontinuity) level at record highs, I’m comfortable with BRK’s large cash pile. I don’t want to maximize my wealth today – my time horizon is 20 years from now and I think having cash during a correction will add to net worth in the long run.

Capital allocation is the most important thing a typical CEO does. They have several options:

1. Invest organically in current businesses

2. Add-ons internally (e.g., utilities, bolt-ons)

3. Acquisitions of firms (full and partial)

4. Invest in external vehicles like stocks

5. Pay down debt

6. Pay dividends

7. Buy back shares

Tom Gayner (CEO Markel)

John Rogers (CEO Ariel Investments)

May 2 Berkshire Hathaway Annual Meeting

https://buffett.cnbc.com/2026-berkshire-hathaway-annual-meeting/

Comments are shared in the order they were made

The Warren and Charlie show reminded me of the two old guys, Statler and Waldorf, on the Muppets. I miss that, and the movie, but I do like the focus on questions about the business this year. There were very few children in the arena and only one high schooler who asked a question. I liked the movies about individual subsidiaries, describing their business and strategy.

There was a fun reminder in the initial video transition that referenced when Munger did not attend the special shareholders’ meeting at the Orpheum to approve the GenRe purchase. Buffett had a cardboard cutout of Charlie and a recording saying “Nothing to add”. I attended along with a few hundred others.

· Abel spoke about float. In his example, for $100 premium $70 goes to claims over about 4 years, $23 goes to expenses and $7 is underwriting profit. Investment income is separate from this calculation, as is taxes.

Abel’s comment was that $70 goes to float. While much of the $23 in expenses are paid at or before issuing the policy, some is not paid immediately so is invested. The underwriting profit is returned to Omaha and loses its insurance home on the balance sheet. A conservative liquidity policy is also important, with cash available in a reasonable stress scenario of 2 standard deviations. If policy retention is high this leads float to be a permanent investment that uses a cash flow ladder and allows new premiums to be invested over longer periods. The shape of the yield curve comes into play with short term investments made when the yield curve is inverted and longer investments more appropriate when the curve is steep. This is how BNSF and BHE can support the insurance lines of business on the balance sheet.

· Abel recognizes the growing importance of technology within the subsidiaries.

This has long been needed but can’t be just one person working across all of them. I hear brokers talk about how far behind the Berkshire insurers are for basic things like online applications. It needs to become part of the culture and understand that this is part of basic customer service.

· BRK needs to balance risk vs. return for the utility business in a regulatory compact. Can’t allow a role that transfers risk to utility from regulator due to deep pockets.

This is a topic that Buffett has talked about in the past at the annual meeting but did not make the case with the population at large. Much like Clayton mortgages, where his argument was that his incentive is to write business that does not default because BRK retains all the risk. Media had reported that Clayton was offering mortgages to subprime borrowers who should not have qualified. It was an easy fix to adjust incentives once management recognized the problem.

For utilities, Berkshire views their business as an outsourced provider, doing what the regulator asks and is willing to pay for. They will bury power lines in the forest, but only if rates are adjusted to pay them to do so. Prosecutors encourage juries to look at utilities as if they are the lone decision maker, which is not true. Berkshire agrees to provide the service but, in return, expects limited volatility and a 10% return. This partnership could evolve over time so that utilities have a business where they originate energy and the regulator accepts the risk to move it to the end user. It has been interesting to watch Berkshire move assets out of this subsidiary, walling it off so walking away becomes an option that could be threatened or even implemented.

· Precision Castparts is finally a positive story. Ten year backlog due to improved efficiency that makes it better to retire an old plane and buy a new one, either Boeing or Airbus.

· Abel made reference to various subsidiaries working together, something Buffett always discouraged. It always seemed inconsistent with a forever holding period to keep walls up between them. Synergies, even if just brainstorming, add value. Trading between subsidiaries is obvious but achieving economies of scale by banding together is also very useful.

· The quality of Clayton Homes is high enough to qualify for 30-year mortgages.

· Abel referred to the ABCs that kill a company – arrogance, bureaucracy and complacency.

· Ajit Jain – BRK is avoiding the currently soft cyber market.

· Ted Weschler manages just under $20 billion.

· Jain story – your job as a capital allocator is to say no almost all the time!

· Jain – top 3 lieutenants have been with him for 35 years

Is this an issue for succession planning?

For the second year in a row the same local high school student asked about fossil fuel use without understanding the renewable resources Berkshire already has built and is building.

· BRK is not involved with data center insurance due to pricing.

The CNBC half-time show highlighted the number of major company CEOs who are retiring. They talked around it but it has to be hard to lead a firm and build a strategy when government policy is chaotic, whether tariffs or geopolitical concerns. It’s easier to take the money and retire.

The final session (Greg Abel, Katie Farmer – BNSF, Adam Johnson – NetJets and vice chair role) was interesting but nothing seemed new or surprising enough to comment on. I did not stay for the formal part of the meeting.

Guy Spier’s ValuexBRK – others also spoke. (I did not attend – May 1)

“Chapters” are set up on YouTube to quickly find each speaker

Adam Mead 60 Years of Berkshire by the Numbers

· In last 30 years BRK has only had three years with positive cost of float!

· Intentional compounding – BRK price has gone from 14 to 750,000 since 1965.

· Record high P/BV in 1998 when GenRe was bought with shares and came with a large portfolio of bonds that diversified equity positions that had grown (Bloomstran analysis).

· The share count is nearly down to 1965 levels despite using shares to buy many companies in the 1990s when P/BV was high (6.7% annual buybacks over 5 years would get it done for Buffett’s 100th birthday).

· Scott Fetzer was big acquisition in 1986, but rounding error today (e.g., Kirby, World Book) as part of Marmon.

· Will Berkshire buy its shares back from Buffett estate (question from Brett Gardner)? Adam thinks no because it is set up to be sold over 10 years so the market should have enough liquidity.

I have not finished Adam’s first edition of The Complete Financial History of Berkshire Hathaway. I made it to 1995 and note that the second edition shows 1995 on the same page so I am going to assume that few changes were made to the earlier years. Adam, like most value investors, is a good example of someone whose process I agree with but the specific equities he has in his portfolio are outside my circle of competence.

Bryan Lawrence Meet Marvin and Vicki, Our AI Agents at Oakcliff

· AI agents drift toward confident mediocrity absent human oversight.

· Overreliance on agents is bad and makes you less intelligent over time.

Gisela Baur Thirty Years of Interviewing Warren Buffett

· German journalist who clicked with Buffett over the years

I don’t have takeaways but she was worth listening to

Chris Bloomstran (CEO Semper Augustus) Berkshire Could Fall 99.3% and Still Have Beaten the S&P500

· 99.3% fall in Berkshire price would be needed to fail to beat S&P since 1965.

· Buy at peak or buy at low, it still works out for you in the long run.

· Best point to buy was June 1, 1932. You would have done better to leave it in cash from 1932-65 and invest in BRK when Buffett took over.

· GenRe purchase was made at a point when KO had grown and BRK was (over)valued – KO has earned 4% since then but overall this pivot has worked out. The KO experience may be why BRK sold part of the AAPL position after large gains made the portfolio top-heavy.

· GEICO’s combined ratio was higher in 2025 because they turned advertising and new business back on after pricing updates. Accounting requires this expense to be written off immediately rather than across policy retention period.

· Retreating from many P/C lines of business – soft market – disciplined underwriting will reduce BRK share of losses.

· Learned from holding KO rather than pay tax, reducing AAPL position now with 21% federal tax rate (down from recent 35%).

· Next downturn Bloomstran expects Abel to go big and reduce cash pile

Vitaliy Katsenelson (CEO Investment Management Associates) The Intellectual Investor Breakfast (May 3 – did not attend)

· In the current environment the range of outcomes is very wide relative to the recent past. There is more uncertainty.

I believe his thoughts are similar to mine, with comments about high debt and tariffs.

He has written books about investing in a sideways market, and I plan to read his Substack this year, but I disagree with his comment that we are currently in a sideways market unless your time horizon is long. I see great volatility in results as he does, due to government deficits and central planning artificially adding to current returns but also see this collapsing into a major correction of 50%. I don’t think it is a muddle through scenario.

· Attendance is down in Omaha because many nationalities don’t want to come to the US or are not able to. He notes Canada and Europe.

I would add China/Asia and that this will not improve in the near future. It’s Buffett’s comment about slowly building reputation and losing it quickly. Our reputation internationally is poor due to things like immigration and tariff policies, loss of USAID and poorly thought out medical policies. With Buffett gone there were very few people who brought their kids with them, as that was likely a bucket list item to have their kids exposed to their hero. Each of my kids have attended once.

· Concentrated bets only work if you have a personality with ice water in your veins. It’s not for everyone.

· There is value in mindful scarcity, especially when raising children, such that everything is not given to them and they learn a work ethic and have to make choices based on limited resources.

· He originally would set a selling price when he bought, now is more nuanced. Some companies have great optionality like Google but others do not.

While I have an intrinsic value calculation at purchase, I regularly update the calculation and focus sell strategy more on the story than a preset price. I will note that historically many of my sales were mistakes in outcome, although the process was fine. I sold DECK when they seemed to rely on Tom Brady as their primary spokesperson and sold INTC two days before the US invested in the firm, where the share price had recently gone up 20% but that was likely to insider trading on the advance news.

· Good question/comment – will trigger on markets occur when IPOs on AI/SpaceX have their share restrictions released early in 2027?

Seems reasonable to me, but I have seen potential market correction triggers for over ten years.

· He doesn’t have a benchmark. Focuses on preserving and growing wealth of investors.

I would be uncomfortable with this.

· He expects the S&P500 to have a zero return over the next decade.

During past major corrections I have found the S&P500 returns 7% over the full decade.

Jim Campbell Radio – podcast interview with Valeriy Katsenelson

https://investor.fm/interview-with-jim-campbell-ep-103/

· He’s come to 17 meetings so thinks he knows Berkshire

· He doesn’t understand that a tax arbitrage benefit is a reason to manage BRK as a conglomerate.

This seems like a good opportunity to think about how Berkshire Hathaway is organized. It is a conglomerate with various subsidiaries that zig when others zag so there is a benefit from diversification.

The incentive schemes for the subs seem to be set up so they will return about 10%, and any excess funds are sent to Omaha for the capital allocator in chief to move to other subs that think they can earn 10% on greater capital.

Another benefit is the insurance business, where combined ratios (claims and expenses divided by premium) are almost always below 100% with a normalized rate about 95%. This is unheard of and provides a form of leverage without the excess risk. For example, if a cohort each year pays $100 and has no reserve requirement, it can all be invested because the claims and expenses can be paid out of current year premiums with permanent capital left over. Policy holders can’t ask for their money back as there is no cash value in the policy so this differs from a loan that requires liquidity.

By paying taxes at the corporate level Berkshire can use tax credits in one business to offset earnings in another. This is a form of aggregate tax arbitrage. Recently the energy sub has generated tax credits that were used to offset profits elsewhere. Berkshire’s aggregate tax rate has been less than 20% each of the last 3 years.

Australian Broadcasting Corporation interview with Alice Schroeder

Thanks to Kingswell for posting (Twitter) this May 2025 interview with the author of The Snowball. Nothing earthshattering, but interesting to hear Schroeder’s perspective right after Buffett’s announcement at last year’s annual meeting.

https://www.abc.net.au/listen/programs/the-radio-national-hour/alice-schroeder-warren-buffet/105275112

Mental Models for Exceptional Capital Allocation (May 1 – Monish Pabrai at University of Nebraska-Omaha, hosted by Dr. Jane Liu) did not attend

· Good companies should be held forever even when they become overvalued (move away from Graham and toward Munger).

· Peter Lynch – avoid cutting the flowers and watering the weeds - then Pabrai goes on to tell the audience that you should not try to come up with independent investment ideas, the opposite of Lynch’s idea of owning what you know.

While we all have sales we wish we still owned, Pabrai notes that he has quite a few.

· Ideas need to be simple enough so explaining to a child is easy.

I disagree – while complex investments should be avoided, thinking about future prospects and long time horizons is important and beyond the skillset of most children.

· Reaching escape velocity, where one holding does so well it comes to dominate a portfolio, can be a good thing and you don’t need to automatically diversify.

My thoughts on this have changed over the years and it is based on qualitative analysis and sleep at night metrics. I limit concentration in one position, buying only when the market value percentage (have also considered using intrinsic value) goes below a threshold (which isn’t very often, especially now that we aren’t adding new money). When a position grows so much that I am thinking about it a lot, but the story hasn’t changed and my modified Graham filter still says hold, I might lighten the position. I used to sell it all and have gotten burned doing that a couple of times.

The world is littered with people who remained concentrated and ultimately died penniless. Elon Musk resembles this profile. When he has a company that is not performing from a cash flow perspective (e.g., Tesla, Twitter) he rolls them into one that is doing well based on hype and hope (e.g., SpaceX). If this fails one time the business case study will refer to it as a Ponzi scheme.

Full diversification and concentrated strategies are extremes that help explain the risk but are not good choices, especially once you are rich. There is no reason to take large risks that could force you to start over. A young investor can learn to invest with small amounts of cash, keep track of relative returns, building over time as they gain confidence and understand the process that earned those returns.

· Avoid leverage and understand why the firm’s moat will continue.

· Pabrai recommends a documentary Turn Every Page but it is not available right now with a streaming subscription.

· Pabrai says it’s important to have someone to talk to about investing ideas.

It would be great to find others with the same value investing mind as mine, but it’s not possible. The process is the same but I focus on things within my circle of competence that interest me and there is limited overlap with others on specific opportunities.

· Be open to new ideas.

· An uber cannibal is a company with aggressive buybacks (new term for me).

Munger’s lollapalooza concept is worth understanding. Find those big winners, and avoid big losers like those that come from selling a stock short.

What’s next for Max

I taught my ERM classes for both Creighton and Nebraska in spring 2026 and continue to partner with Dave Ingram on our Crossing Thin Ice vehicle, using podcasts and Substack to share our experience and thoughts about current topics. I hope to continue that through the current Fourth Turning. I also post, as I am here, on my own Substack. I am scheduled to speak at the Kansas City Actuaries Club in August and my plan is to focus on extending my research about economic growth and demographics to consider where we are today relative to the period of stability that got us here.

I want to thank my friend and actuary Frank Ruiz de la Pena Olea for traveling to Omaha again this year from Mexico City to attend the Berkshire annual meeting. I learn more and enjoy the experience when I have a fellow traveler to share the experience with. Thanks Frank!