Welcome again. Thank you. On behalf of the Gabelli organization, I'm delighted to be able to host this event. This is our 17th annual event here in Omaha. >> >> I I think like you, we are very intrigued about what's going to happen with this new format change. We're going to get into that in a second. Um I just want to offer two things. On your tables, the glass displays, you'll see uh some information on our group. If you have any questions, please reach out to our teammates. Um also, the Wi-Fi information is there, too. So, if you need to get access to the bios of all the speakers, we're not using paper for that. Um it's on there. Uh but, we're going to get right into this. We hope to get some questions from the audience throughout the day. Um if we don't get to you, I apologize. Uh and again, um thank you on behalf of the Gabelli organization. All right. With this is uh one of our distinguished panels this morning. Um we're going to get right into Berkshire Hathaway. Um everybody knows Chris Bloomstran, Semper Augustus. Uh I would just point out, you know, he puts out his book every year or his his paper every year on his website. And if you don't read that, you're really uh missing something about this weekend. Adam Mead, uh another great author, just put out a new book that'll be for sale in the Bookworm. See him tomorrow. Uh Brett Gardner, a wonderful book as well. And then, uh Peter Sleepers, who you know uh through Compound and Compounding uh quality compounding, I apologize. Uh you know, amazing website, lots of detail, uh but also uh great feedback as well as the weekend. Okay, so we're going to get right into it. Um Um We're going to go with Chris to start off. Uh the big surprise last year's meeting was the timing, I think, of of Buffett's change um at the end of the year. Greg Abel took over. Um we know all a bunch about Greg. We've seen some interviews. Uh what what are your Why don't you give us your impressions of him sort of taking charge of the organization? And what do you think this means overall for capital allocation going forward? It's been great. We've got to know Greg a little bit at the last handful of meetings. Warren's had him on stage with Ajit. Uh we had his letter this year, but he's essentially Greg's essentially been the CEO for since 2018 when he was named vice chairman of all of the non-insurance operations. And you can see if you if you put together the financials of what you call their manufacturing service retail group, you can see his can see his his thumb print on the business. He's gotten a lot more involved in the operations, interacting with the CEOs and the managements than Warren ever did. Warren was just complete abdication of responsibility. I bought you guys, you're doing great, pat them on the head, go get them. Do it right. The feedback you get from various of the the the managers of the operating companies uh has generally almost universally been pretty terrific. I I think there are some that don't like anybody in their kitchen at all uh and and like the way it ran, but Greg has really done a marvelous job. Um the capital allocation is the million-dollar question. Uh you know, we saw uh he filed an 8-K announcing that Berkshire was buying back its stock for the first time since the spring of 2024. And if you go through your intrinsic value workup as I do in my letter each year, when Warren stopped buying the stock at a fundamental valuation relative to intrinsic, uh the stock is now slightly below where Warren stopped buying, and so you know, it roughly matches kind of how I think about where intrinsic is. We have clients in the last 2 years that I like owning Berkshire at 20% in a normal period. Uh and we had a couple of years where we were not buying it at 20% and as we grew increasingly close to the annual meeting last year and the stock raced higher and higher, it traded at its all-time high uh on this day a year ago, the day before the meeting and and Warren's announcement, but fundamentally on the back of a very strong insurance market, Berkshire was overvalued for the first time relative to intrinsic uh since I've owned the stock in early 2000. And so, we took our buy model weight down to 15% and then 12 and then 10. And in the in the week and a half 2 weeks leading up to the meeting, had it at 1% just because if new cash is coming in, you've got to buy a token to hold position. We put it on our sell list for the first time in 25 years. Now, it didn't rise sufficiently to where when when when when when when I was buying something else, I usually sell something and Berkshire was not at the top of the sell list, but it was on my list of sales and uh the stock has fallen, it's down five and change this year. It fell from the high and so we're I'm buying the heck out of it here in the last few weeks. We bought a bunch last week. But on capital, the million-dollar question is um can Greg spend the cash? Warren acknowledged in 2008-09, despite getting 3 billion and 5 billion in GE and Goldman with preferreds, a little bit of the Dow preferreds, the Bank of America preferreds and Warren's were a little bit later, he didn't do enough. And if you look at at the activity in the stock portfolio, there was not a lot that happened in '08-'09. And that was really in my 35-year career about the cheapest the stock market had gotten and Warren didn't do anything. And so, I think Greg gets that and so of Berkshire's 370-plus billion dollars of cash, 100 billion is needed in the insurance operation. So, Greg's got 270 billion dollars of current cash to put to work plus an ongoing 40 or so billion dollars to come in every year from the operating companies. And I think he'll do it, but he needs to do it in Berkshire style, opportunistically. And so, whatever the next deep recession or financial crisis or pandemic, whatever comes down the path through some combination of leaning very heavy into the stock market. There may be 150 companies in the public stock market that Berkshire could buy outright. Those are more unlikely, but 270 billion is is is a is a big number, but there's sufficient liquidity in the largest businesses in the US and some in the world where they can put a heck of a lot of money to work, but you want to do it at the right price. And I think Greg's charge is to do it and we'll judge him how well he does at that next opportunity, but I think he's going to do it. I think it's his charge and I think he gets it. Um so, we'll see, but I'm I'm pretty happy. I'm elated with what I've seen so far because I think operationally Berkshire's frankly in a better place than it was with Warren running it. So, if the market doesn't go down, Adam, what are they going to do? Well, and that's just it. I mean, I think you know, again, last year you're sitting at this sort of confluence of high Berkshire stock price, high price for deals, high stock market, you know, there was no outlet for the cash. And so, I think I think we'll be surprised in the next 5 years when some of those factors reverse, we might even see three of those capital allocation avenues open up and I think Greg will will take advantage of them fully. And he's already doing that. I mean, you saw the the buyback announcement. I think the Tokyo Marine insurance deal is under appreciated. So, this was the 1.8 billion that they the headline was that Berkshire bought 1.8 billion of of Tokyo Marine common stock. Well, there were other layers to that. So, in addition to the the common, they I think they bought 2.49% of Tokyo Marine. They also secured a whole account treaty arrangement with Tokyo Marine in addition to an M&A agreement. So, this is this is not just an investment, it's a platform for future expansion. And you've seen that in the past if if you look through Berkshire's history, they have a current reinsurance agreement with IAG Insurance Australia Group. So, there are there are these these these things that are happening in the background and I've no doubt that that things are happening in the background now that we're going to hear about, you know, 6 or 12 months from now. But I I think Greg Greg will allocate the capital and you know, we've we have seen him in action. I mean, in addition to being on stage, I mean, if you go back 10 years, I mean, there there are times, you know, Warren would call on Greg, "Hey, what's going on with the energy business?" And he would stand up with a microphone. I mean, he's he's been in the spotlight. He's been he's been doing capital allocation. And I believe 2008 Berkshire had a a deal to buy Constellation Energy and that deal it didn't didn't work out, but Berkshire walked away with a billion-dollar breakup fee. I believe that that was Greg. So, he he's he's an enterprising manager and you know, out west, we'll see what happens with the utility the utility business, but that that's a business that could take hundreds of billions of dollars of capital and if the political and regulatory environment calms down and becomes clear enough that Berkshire can invest with confidence, Berkshire has a platform to deploy huge amounts of capital in the energy business if if if if that's available. So, I think it's generally too early to have a strong view on Greg. We're only 4 months into his tenure. I think that in terms of capital allocation, deploying this amount of sums is going to be very very difficult for anybody. Um I think the obvious outlet for significant chunk of it is going to be um buying back Warren's stake when he passes. Um I think that Berkshire will probably negotiate a transaction with um and buy back pretty much all of that stake. And my And I imagine that'd be fairly quickly after Warren passes. Okay. Now, from my opinion, I think Yeah. Most people will agree that there will be no next Warren Buffett, right? But, I think the most important thing is is maybe two things. One, well, that's maybe a little bit of a sad thing, but the most fun part to some extent for people in management, people on the board has been the one right now, right? It has been working with Charlie Munger, working with Warren Buffett, and so on. That's uh Charlie Munger passed away. Warren Buffett is not the CEO CEO anymore. So, let's see how that evolves. But, on the other hand, well, for decades, Berkshire Hathaway has built on its culture, working on a very very strong culture, and that's not something that will that I see changing over the next 5 years, 10 years, 20 years. And the best example of that is that I think Morgan Housel said that, well, if you put $10,000 in Berkshire in 1962 versus the S&P, in the S&P, you would have something like 6 million. With Berkshire, you would have 3.8 billion. So, in other words, you could take away 99% of all the returns of Berkshire, and you would still have outperformed the market. Obviously, due to the law of large numbers, this kind of performance of almost 20% per year is is just impossible, I would say. But, the culture is there, the flywheel is there, and now it's up to to Greg Abel to execute that. And, I think he's doing a great job so far. So, he's reinvesting all his salary in in Berkshire stock. Well, show me the incentive and I'll show you the outcome. So, for me as well, I'm very I'm very confident about the the capital allocation skills for Greg Abel, but he will have a more difficult job than a Warren Buffett had. All right. So, the we heard from Chris on the valuation. Why don't you raise your hand if you're considering buying Berkshire today based on your own analysis? Okay, how many people are just going to hold their shares? Uh and how many people think it's overvalued today? Okay. All right. So, interesting. We we heard from Chris. Adam, why don't you talk about how you're thinking about the valuation and buy, sell, or hold here? Yeah, I'm I'm I'm kind of in the hold category at this point. You know, Chris and I were talking a little bit earlier about, you know, our treatment of retroactive reinsurance accounting and adding it back, not adding it back. And I think, you know, there are there are spots within Berkshire and, you know, everybody should read Chris's letter. I mean, he does a great job walking through the framework, multiple frameworks, how to think about Berkshire. But, I I think there's room for uh disagreement and and differing opinions. I I I put a a slightly lower value on Berkshire. I think right now it's probably worth a little over a trillion. Um I would put a lower multiple on some of the operating businesses. I think the uh the energy business has some uncertainty around it where um you know, that that needs to to out before we can we can really see what what kind of opportunities come there. So, you know, I think we'll probably see tomorrow that they purchase, you know, a few billion of stock is probably my guess for when they started buying it back at, you know, maybe a trillion won, but you know, Greg's going to have a different opinion. He's inside the business, you know, if anybody's right, you know, it's it's probably Greg. He's he's lived it. So, but but I think Berkshire probably was buying back stock at, you know, 95% of of intrinsic value. I I think I think Greg is probably going to to push that envelope a little bit closer to intrinsic value than than maybe Warren has, but I do expect to see uh repurchases, you know, really ramp up when when the stock becomes demonstrably cheap. And I mean, Berkshire deployed over 70 billion in a matter of 5 years after the pandemic in its own stock. And, you know, a couple of years of 10, 20, 30 billion of buybacks, you know, that that really starts to add up. Here's a fun fact for you, Max. So, if if Berkshire buys 2 and 1/4% of its shares over the next 15 years, the share count will get back down to a million 17 thousand shares that Warren started with in 1965. So, it won't take much to get there. 3 and 1/2% will get us there in 10 years. And if they do 6 and 6.7% over 5 years, they'll get back to the same share count by Warren's 100th birthday. So, that's not out of the realm of possibility, but I would expect to see those share repurchases moderate based on Berkshire stock price as well as the opportunity set that they have in front of them at at any given time. I think Berkshire is set up to, you know, compound over the next decade at high single digits, maybe maybe low double. Um if uh things go right, uh some of the businesses and the capital allocation. I think that um it's probably going to outperform the S&P 500 over over that time just because I think the S&P is overvalued. Um I think the you know, to Adam's point with the opportunity to be a uh to capitalize on shares is is pretty attractive and um I think it's trading at a slight discount to intrinsic, but um roughly fairly valued. Yeah, regarding the intrinsic value, I would highly recommend everyone to to read Chris's book or letter, I think, depending on how you look at it. And maybe you will put some color on that. What I do know is that 10 years from now, 20 years from now, 30 years from now, Berkshire will probably be worth substantially more than it is today. And and Mac, you just asked the question, would things Berkshire Hathaway overvalued? Well, so far up until now, it has always been undervalued to some extent, right? If you said it was overvalued, well, Berkshire Hathaway kept compounding and I expect them to keep doing so. And one interesting thing that I see and I yeah, since Greg Abel became the CEO, Berkshire Hathaway underperformed the S&P by 40%. And don't get me wrong on this, it's not because of Greg Abel or because I think he's a bad capital allocator, but I do think that times are currently quite strange in the market. The last time that Berkshire underperformed by 40% in a year was in 1999. Once again, I don't want to make any analogies or something like that, but it's a strange market, the market is expensive. And I think there is a very interesting point to make is I'm from Belgium. In Belgium, passive investing is becoming very, very popular. Everyone is investing in ETFs, in the S&P 500, in the MSCI World, and so on. But, in today's market, I think it's way better and could be way smarter to look at Berkshire Hathaway as the index. You are well way better diversified there. Valuation is way more reasonable. Um you have a huge cash pile, which can be used during market turmoil. So, I would think, well, don't do passive investing. Invest in Berkshire instead, and now you probably can expect I don't know. My guesses would be a return of of hopefully 10 11% per year. So, so outperforming the S&P 500. Definitely from from these valuation levels. And I I would just offer that, you know, his announcement to put in his own wages in back in the Berkshire stock. I think that gives confidence. Um and also, I would think his biggest core competency is knowing his own businesses. Uh and the safest capital allocation is being the most knowledgeable of your own businesses. And also, I don't think that politically uh people against that allocation as opposed to perhaps a $100 billion acquisition. Uh so, I think conservatively, that is a a smart thing to do. I I expect probably the biggest capital allocation, as you mentioned, Brett, too. Uh if we look back in 10 years, we'll probably end up being Berkshire stock, so. Um I I wanted to uh switch to AI because that's what everybody's talking about. Um and you know, we've heard from the managers over time about durability uh of the businesses and wanting to own competitive moats and durability. And as we've seen recently in the markets, you know, a lot of durability questions have been uh come up. Um maybe we could just start with uh Brett um on this in terms of some of those businesses that at Berkshire Hathaway um that could be impacted by AI. And why, you know, actually could continue to be uh pretty strong franchise conglomerate. So, some your thoughts on AI as in terms of the durability of the businesses. Yeah, I I don't think that um AI is going to materially impact any most of the businesses um at Berkshire because they're almost like impossible to disintermediate. Like one of the things that Buffett did so well was buying these businesses, railroads, utilities, insurance that are going to be around pretty much forever. Um I mean, I think there's opportunities maybe on the cost side that AI can lessen the amount of employees, maybe AI helps a little bit on the underwriting, but um that doesn't really impact the competitive advantage or remote of the businesses and AI just like can't move freight, so you know, BNSF is going to be in a good position. Um it doesn't really impact uh any of the core businesses of Berkshire in my view. Yeah, regarding AI, it's what Buffett said once again, right? Everyone will be drinking Coke in 10 years from now, brushing their teeth, and so on. How will the market for AI look like? I don't know. Uh and it's very hard to make a big guess. But, what is an important thing, or at least to me, but I might be wrong, is I see a little bit I look at AI like spreadsheets in the in the '70s, and it might sound like a very weird analogy. But, in the '70s, uh spreadsheets came out, the the early version of Excel, and so on. And all of a sudden, well, what took an accountant a week could be done in a few minutes via a computer. And then all those kind of accounting stocks, well, they completely plummeted. Well, I think today, 50 years later, we all know in hindsight that the need for accountants is higher than ever, right? And I see something similar happening with AI. So, yes, AI will have a huge impact on our economy. It will have a be very beneficial for the productivity, and so on. But, right now you see a lot of software stocks really selling off. While I personally think that it will be the the larger companies, well-established companies with all the data that will benefit from that AI. So, coding might be become a commodity, but implementing that coding into your clay client data will be very important. And also, how will everything related to AI evolve from here? I have no idea. I have no clue. What is the smartest thing to do, in my opinion? Use a pick and shovel strategy. It's like with the gold rush, the people who who became very rich is not the people who were looking for gold, but it's the people who were selling the picks and the shovels to to dig for the gold. And Greg Abel is the CEO right now. He has a wild He is a very experienced in energy, energy infrastructure, and so on. So, to some extent, you could see Berkshire Hathaway as a pick and shovel strategy on AI and the energy needs there. So, so that makes me quite positive. Um Yeah, for Berkshire right now. Uh I think everybody in the room, uh either individually or as business owners, are trying to figure out how to use AI in our lives, in our operations, and any of Berkshire's subsidiaries would be the same. There are clear use cases. Uh the railroad, anybody in logistics, uh McLane, uh or obviously and they're they're clearly they're doing it, but their competitors are doing it and I think there's so much capital in the AI world that I've written in the letter and have talked a little bit recently. I mean, I don't I think it's going to be very difficult given the CapEx dollars being spent for the those that are spending the dollars to necessarily get a return on that capital um $400 billion of of CapEx last year by the hyperscalers, $700 billion this year, maybe $3 trillion cumulatively by 2030. Well, if you're spending $3 trillion of new capital CapEx, even at a 10% uh a 10-year uh straight-line depreciation schedule, uh it's $300 billion of depreciation expense. Now we've got some net leverage being introduced in the equation, so these hyperscalers are potentially becoming EBITDA stories, which is incredible. Uh but to make a 15% return on 3 trillion of capital, you need $450 billion of profits. Microsoft is a $300 revenue company generating a 30-some percent margin, so each of the hyperscalers uh the big ones are are doing $150 billion of cash from operations. Meta is a little bit smaller. Uh Oracle's a different story. And so these numbers are so vast that that you're essentially going to replace their entire assets with more capital intensity. And if you're a logistics business and you're an early adopter of a technology, you win until your competitors catch up. But if you're in an industry that competes on a return on capital basis and you're not an oligopoly and you're not a monopoly, you're going to you you you'll use the productivity for a time, but everybody adopts it and there's not necessarily a win. And if there's a surplus of capacity, if you've got seven models or five LLMs uh that are redundant, all of your end users will force price lower. Um so a little bit of a tangent. I don't think Berkshire's got businesses they're not they're not writing software, they don't have programmers. I don't think there's any immediate disruption, uh but but we'll all use and Berkshire subs will all use uh AI to its benefit and we'll generate some productivity, but I it it's not a game changer in the Berkshire world, but it'll make some of the businesses better. Yeah, it's it's the productivity. It's uh the businesses that have defensible moats. Uh you know, those those will be enhanced. You know, what to go go off of Brett said, it autonomous vehicles may come. We may have autonomous trucks at some point, but that doesn't change physics. BNSF can can move 1 ton of freight 500 miles on 1 gallon of fuel. A truck can't do that even if even if it has an AI mind sitting in it. So So these kinds of things I think will will will see the enhancement. I'm I'm I'm kind of interested in in the you know beyond the storm, right? All this excitement about AI, you know, if and when it it it crashes could create market disruptions for Berkshire to buy its own stock to buy other stocks. Um we may see you know Ajit last year talked about cyber insurance. And how Berkshire's you know, holding back letting others make mistakes. I think you're going to see Berkshire do that with AI. I mean, there's no doubt that insurance companies are trying to implement it. I think it works on short line, Geico, the Progressives, that kind of thing where you can iterate makes sense. I think you're probably going to see some some reinsurers implement AI, have additional confidence in their models because of the computer spit out, you know, that the answer. And meanwhile Ajit's going to be there and just saying, you know, we'll we'll we'll take a pass. Berkshire will step in with with a reinsurance agreement, retroactive reinsurance agreement, cleaning up some of the mess. So that could be five, eight years down the road, but Berkshire will be there when when this disruption happens post disruption, but I think on balance Berkshire's probably helped by by AI. So um in addition to Buffett last year there was a little bit of uh abnormality in HR at the business and with respect to the securities portfolio, we now have Todd Combs moving to JP Morgan. Uh Warren is is still coming to work five days a week and helping out with the securities and Ted's, you know, the sole portfolio manager at this point uh with Greg starting with Peter. Maybe you could just weigh in on the outlook for the securities portfolio as well as just some of the companies there and you know not having you know Todd there and as well as well as um what do you think Greg should do in terms of staffing that? Should he add more managers etc. Like what what what would you expect to happen there? Yeah, sure. So so just be cut before I uh came here I visited my grandfather. He's 92. And the only thing I could think of is Warren Buffett is even 3 years older. So how can he still be involved in Berkshire, come to the office 5 days in a week, right? So first of all I would say that's very remarkable. As as you mentioned that Todd left to to GPM and to some extent as mentioned well the most exciting thing is working together with or used to be working together with Warren Buffett with Charlie Munger and so on. So that's finished or about to finish. And if you look at the situation before Warren and Charlie used to take all the capital allocation decisions and then we used a very decentralized structure. And if you compare Warren to to to Greg for example well Warren was obviously a very good operator but also an amazing investor. I think Greg's experience or at least back story is more in the operational side of things. So in terms of taking the investment decisions I think there there probably will be or at least in my opinion there will be a need for for some more experience, some more knowledge within the within the team there. So I would expect that that we could see some some new hires there. Uh Berkshire concluded Warren concluded I think Greg concluded uh that you've got to have the CEO in charge of capital allocation which includes the stock portfolio. Immensely logical that if you have a deep recession, you're going to have an opportunity set to buy businesses entirely or you're going to have to lean in and buy stocks. And those roles can't be segregated. I think with Ted, he's a perfect Berkshire guy. I think he's I think he's wired for the role he's in. When Berkshire buys an OxyChem, I guarantee you Ted helped vet the deal, the Bell deal, the road and business. He would have vetted that deal. Any acquisitions, he's involved in that. Essentially in my to my mind, he's running a farm team portfolio of which Berkshire could could make one or two of his holdings materially larger either on on the scale that Warren would buy a stock at the 30, 40, 50 billion dollar level, 100 billion dollar level depending on the size of the business or buy it entirely. It's It's just a It's a It's It's It's the structure that you need and when those opportunities come you can't have separate groups thinking on behalf of the stock portfolio or thinking behalf on of buying business. It's got to be a single role. And And what what the portfolio managers, what we do running a little over a billion dollars with a whole for a whole bunch of different types of clients, that's a totally different thing than allocating 370 billion dollars of cash and a 500 plus billion dollar almost 600 billion dollar portfolio. Berkshire's universe and its pond that it swims in is so vast and so large. There are not that many businesses in the world either public or private they could buy entirely. And so this is not an allocation of 3% of a billion dollars. This is I've got to spend 50, 70 billion dollars on a deal, 100 billion dollars on a deal. Greg does not need to have 30 years of portfolio management experience to allocate capital and buy either fractional chunks of big businesses or businesses entirely. He's been buying businesses his entire career in the energy operation. Everything that got rolled up inside of what's now BHE had Greg's doing and so I think the structure is ideal and I don't think it's too much money. I don't think she I wouldn't be I wouldn't want to see a dividend a special dividend paid anytime soon because I think they can fairly easily deploy the capital. But again, like I said earlier, they're going to do it when it makes sense for Berkshire and not because some journalist says, "Hey, you've got too much cash. This is a terrible thing." Yeah, I'm I'm perfectly comfortable with with Ted and and I think I think Greg should be the the the decider. He should be the the capital allocator which includes investments. I don't think a lot of people probably outside of you know, this weekend fully appreciate Ted's role. I mean, he he I believe still chairs Detlev Louis, the motorcycle accessories retailer in Germany. As Chris mentioned, he's involved in deals that come across the transit. So, you know, I think I think that's a dynamic duo right there with with Ted and and Greg. And so, that's um You know, what's what's the difference in BNSF you know, in 2009 when Berkshire owned you know, 20% of it as a stock versus 2010 when they owned 100% of it. You know, to Chris's point, it's it's a business. And so, I you know, Warren Warren said it succinctly and and and perfectly. You know, Greg Greg knows businesses and that's you know, so I'm perfectly comfortable with him overseeing that that war chest and um I think he has the experience and and the capability to do it intelligently. I don't think that they should hire another investment manager. I don't think Greg wants to, but I feel very strongly they should absolutely should not. I think that turning Berkshire into like a fund of funds and picking investment managers is would be foolish. And I actually just think that finding investment manager who can effectively manage the tens of billions of dollars necessary to actually make an impact on Berkshire is almost impossible. I think that there's maybe three or four people I can think of that I would want running tens of billions of dollars, one of which is Warren Buffett. The other people I don't think want the job. So, I absolutely don't think they should hire another investment manager. I think it's good that Greg has full capital allocation control. Again, I think as we discussed earlier, I think the easy opportunity over the next decade is cannibalizing shares and that's going to eat up a big chunk of it. And individual stock picks might not be the biggest driver a big driver going forward of creating value. Okay, so lots of stock pickers in the room. Chris, we'll start with you. Two-minute pitch of any what you would increase in holdings of their existing holdings or what they should consider buying in their equity security holdings today. That's hard. Um Again, there are maybe 50 or 60 or 70 companies that that Berkshire could really buy and scale. Um anybody that's being disrupted now by AI and you've got this rolling ongoing anthropic is going to kill an industry and the stocks all get cheap. And Berkshire, if if they thought that that the the Microsoft wasn't going to be disrupted, you could you could get I mean you could put $200 million in Microsoft and do it in a matter of weeks. Uh the ratings agencies, I don't know if there's a conflict with the position that Berkshire has in Moody's, but they could buy S&P Global, uh which is probably uh from a perception standpoint been disrupted, but it's really not going to be disrupted, at least most of its core businesses. So, uh I think there's a lot they can do. Uh it it's really going to boil down to the price level of the 50 or 60 or 70 companies that Berkshire could buy that are generally too expensive today. You can proportionally buy all of those uh and put $300 billion to work pretty easily. It'd be St- stop Warren was the best stock picker of all time. You know, even without the leverage of float, if you look at when he bought the Washington Post, uh when he bought GEICO initially, uh when he bought Coca-Cola in '88, '89, I mean, uh he bought outstanding businesses when they were cheap. The valuations all got better, and they were just great businesses. The way Berkshire's set up today with its insurance capital, the stock portfolio is is within the insurance operation. Insurance is at the point of the cycle today where they're going to write a lot less reinsurance. There's too much capacity, too much competition. There are a lot of the the lines within Berkshire Hathaway primary, the specialty lines, uh with with corporate uh property and casualty lines, where there's too much capacity, and Berkshire's going to write less premium volume. Their earnings were too high. They they they were extremely profitable. And so, Berkshire sent over the last 2 years $100 billion of cash from the insurance capital up to the holding company. So, that's not capital that's necessarily going into the stock market unless Berkshire buys stocks for its own portfolio and not the insurance operation, which is generally not how they've done it. And so, uh i- i- if Berkshire just matched the S&P 500 on the stock picking front for the next few years, it it's the float that you get from insurance and the ability to to to buy full businesses when they're cheap that really matters. They They don't have to beat the market anymore for Berkshire to earn 10 or 11 or 12% on equity. Uh but if Greg can put capital to work on the front end of a big deal at a great price, then you do beat the S&P 500. And and and and and they'll do it the Berkshire opportunistic way. So, it not not wouldn't so much of a stock pitch, but S&P you mentioned. Adam. Um if the regulators would allow it, just buy Occidental already. You know, picking away at it and just just bring it in under the fold. Um >> >> that's one of the existing portfolio I think they should do. Uh one company that I've owned in the past, I don't own it currently, but it's been It's gotten very interesting lately, is uh is Copart, which uh it's an online uh salvage vehicle auction platform. Uh My friend Andrew, who's here, said it's the undertaker of the auto industry. So, between five or six million cars a year in the US have to be um totaled. It's about a 23% uh total loss rate. Those have to get taken in and dispersed throughout the ecosystem to a dismantler, to um overseas buyers and so forth. I think it's it's a great business for Berkshire. I mean, it just hits all of the all of the marks, you know, mid-30s return on capital. They have about uh 975 million shares outstanding, trading at about $33 a share. Um you get about a $32 billion market cap. At least as of the last quarter, they had 5 billion of cash on the books. Now, if you read through the 10-Q, after the quarter, they bought back almost a billion dollars worth of their stock. They haven't They haven't started repurchasing stock. Uh this is the first time they're repurchasing shares since 2019. So, it's it's a sizable acquisition. Uh it would move the needle in terms of uh of earnings. It's not crazy cheap. I mean, it's probably trading at about 18 times earnings, but you have a a business that a clear defensible moat, two-sided network. Um There's basically one competitor in the IAA, which um between the two, they probably have about a 80 to 90% market share. Copart doesn't publish it, but they probably have about a 50% market share. So, I it it fits Berkshire perfectly, and uh it's it's gotten very interesting now. The The stock price has got cut in half uh since about a year ago, year about 18 months ago. So, uh I think it it could be one in the crosshairs for Berkshire. So, unless everybody goes out and buys it today and runs the price up. Um So, Adam took my idea of uh Occidental. I Um I think I said last year I thought that they were going to buy the whole thing, and they haven't yet. Um I continue to think they should just take it out at this point. I mean, first of all, it would be very challenging for them to just deploy all the capital they have, right? So, the easiest answer would just be buy more of the current positions on on weakness. Um One company that I truly like today, and maybe a small disclaimer, I'm personally invested in the company, is just Kinsale Capital. But, that's also an insurance company. It's a smaller company. And to be more specific specific is ENS uh insurance, so excess and surplus lines, so specific risks that traditional insurance don't want to to take. And this might be a bold statement, but just when I first found out about Kinsale like a year or two ago, reminded me a little bit about what Buffett used to write about about Geico two or three decades decades ago in the sense that you have Yeah, you have a company that is active in excess and surplus lines. So, this specific niche within the insurance market is growing faster than the insurance market as a whole. Second point is they are taking market share. So, they are planning they want to double their market share over the the next 10 years. Basically, and then the most important thing and that's also the secret of of Warren Buffett. We all know that is investing the the float um in in stocks and in bonds and so on. Well, that's also something that that Kinsale Capital does. Another very important thing for insurance companies is the is the combined ratio. So, the lower the combined ratio, the more profitable you are as a as an insurance company. And I think you're about to to talk with uh with Tom Gayner as well from Markel after this one. Well, last year Markel or Tom Gayner at the Omaha branch here um he said, "Well, one company or he made some kind of table where he compared the combined ratio of Markel, Kinsale Capital, and some other um peers. Kinsale Capital is by far the most profitable insurance um company. So, that I think that's something that's very interesting and to my knowledge there were even some people who work at Markel who are invested in Kinsale. So, that tells uh a lot, I think. And then maybe the last point regarding Kinsale Capital, well, very fair to say that we are currently in a soft market. So, in a challenging market for insurance companies. Um but it also means, well, those companies they they sold off quite sharply. So, Kinsale used to be a quite expensive um company, especially compared to peers, but the valuation levels became way more reason a way more reasonable, recently. So, Adam, we've already touched a little bit on this, but I want to go back to it um in terms of the the outlook for buying controlled subsidiaries. We talked about the just how many companies he can buy. Um I'm curious, 5 years from now, 10 years from now, when we look back, what is your prediction for them having executed on more uh uh controls um acquisitions. And then secondly, within that, you know, Warren was known for getting the facts, looking at the terms, and deciding in 30 minutes. My guess it was a little more than that, but that's how he advertised it. Um but we did see some quick deals. Maybe you could talk about um how that may change for Greg. Is he going to be more conservative, or does he still have that ability um like Warren to be able to affect deals pretty quickly? Yeah, I I I I would expect in 5 years I I I hope in 5 years we'll we'll get that that Berkshire elephant, you know, 25, 50, 75, 100 billion-dollar acquisition. Um Greg, um I lost my train of thought here. Um I I I think over time we we will we will see that. Greg, uh he had mentioned in one of his interviews that, you know, he's uh preparing part of preparing is, uh you know, reading reading reports, and I mean he I think he's doing the work on the back end so that when the phone rings, he will be able to answer that call and act quickly. I mean, he still has Berkshire's reputation behind him. He still has all that capital behind him. Um and and it may it may even turn out that he gets more calls in Warren. I mean what Warren, you know, if if folks are smart, you know, they they'd know not to not to call and and pitch these ideas to Warren cuz he'll turn them down really quick. Greg may get more more calls because of that. So, I don't know, but you know, again, going back to that Tokyo Marine Insurance deal, I think it's not just going to be sitting back and and waiting for the phone to ring. I mean, I think Greg's going to be out there looking for deals. And we may see we see we we may see a big partnership between the Japanese trading houses and Berkshire at some point. Right. Yeah, I think um I think Berkshire becomes less attractive of a home for for for seller without Warren Buffett there. Um I think that you know, one working for Warren Buffett's probably pretty cool and people want to sell to him and to do that. And then second, I think that Buffett's decades-long track record of not being interventionist or activist in the in the business. Um Let people know that they can just run and operate and be fine. Uh Greg's indicated publicly that he that he's going to be a little bit more hands-on and I think until you get a track record of of uh Greg showing that, you know, he's calibrating that correctly, meaning intervening when it's it's really necessary and like being a little bit hands-off at the right time is I think it's just a little bit less attractive a home than it was 5 or 10 years ago. Um and I think um I think the biggest opportunities are obviously going to be in crises when somebody actually just needs Berkshire's cash. Only only Berkshire has that amount of cash to actually deploy and buy a whole business because um I mean, there's nobody has that war chest. I think that probably makes Berkshire still an attractive home. Um but I think it's going to be very difficult to buy um Um, big control businesses. Um I thought over time that they might like IKEA or Mars which hasn't happened. Uh, that that could still happen if those businesses run into trouble and need cash but um, I think it's going to be much tougher over the next 5 10 years. The other big question is is can Greg bet heavily when when the odds are in your favor when the market is crashing, right? But but he has been trained all his life for this and and to I think he will. So so I tend to agree on what has already been said. Could we see more share buybacks going forward? Yeah, we probably will. I don't expect any dividends because it would be a weak signal, right? Because it just tells you, "Okay, we are not able to generate more than $1 in market value for for every $1 we would distribute." So I don't expect any any dividends um, there. And to my knowledge, well, we all know that well, the the cash pile of Berkshire right now, there has never in corporate history been a company that has such a high cash pile pile as Berkshire has today. And if they keep piling that up over let's say the next 5 years, you you might have a problem. Roughly 1/3 of of Berkshire is is is cash right now. So I think we could expect or I hope to see some some large acquisition over the next um, 5 years going forward by Greg Abel. And I think the most likely scenario, well, always stay within your circle of competence, right? For Greg, it's more infrastructure, energy, so so I would I would expect to see it there in that case. I hope 5 years from now uh, when Warren's 100, he's still coming to the office 5 days a week. Uh, he and Greg talk all the time. Uh, as long as as long as Warren's chairman, Berkshire can go very fast still. I think Greg will have the latitude to go fast. He's got an outstanding board with a lot of investment experience. You've got Ted with uh, a lifetime of investment experience. Um, Berkshire is still going to do deals quickly. I think bringing in house counsel and some of the the the beefing up of of staffing and some of the help Greg's getting from guys like Adam Johnson realize I mean Greg realized he needs he needs help and having help with the 32 subsidiaries in the consumer and the service and the retail businesses is just immensely logical but but Adam's got experience doing deals um So I think I think I think they can still I think they can still move quickly move money. I think the the the the old notion of people selling their businesses to Berkshire on a handshake because they want to find the right home for capital and not having auctions is probably a quaint thing anymore. There's so much capital slashing around that still needs to be put to work in private equity that nobody's going to sell their business for for a big discount to what they think it's worth so it can go inside of Berkshire and report to Greg. That's not going to happen. As far as doing big deals, they may not be able to do it. Again, there aren't that many companies they can buy entirely. I do hope Greg I I do hope his charge is to those companies under his purview outside of the insurance operations and even in the insurance operations maybe a Kinsale deal. If you have places to do bolt on acquisitions that aren't material to the holding company but that that are material to your businesses where we can generate good returns there's been a very real sense among the the Berkshire CEOs that Berkshire's bought me Warren's bought me. I report to him. I'm just going to send the money to Omaha and I think there's been a pretty serious degree of lack of reinvestment in some of the businesses inside of Berkshire's empire and there there are very well likely places that can use capital and invest it so that Omaha and Greg don't have to do it. So um Charlie Munger lived to almost 100 so I'm sure Warren wants to beat him to that. Um and then Maybe Warren Warren had joked that athletes don't live that long and neither neither of the them have ever done anything athletically, so they have that. Then he noted that women tend to outlive men, so he was encouraging Charlie to get a sex change operation. Maybe Warren'll do it. Uh and then, you know, with respect to cash, I mean, we were reminded that Greg is getting he's generating almost $900 million a week. Um which is just uh amazing. Um So, tomorrow we we have a slightly different format. You mentioned Greg Johnson and then Katie Farmer. Maybe you could starting with Brett, we just comment on the change in the format tomorrow. What are your impressions of that and also finish up with uh what's one question you would hope would be answered tomorrow. Yeah, sure. I think I think the format's great. I think I think that hearing more from Berkshire's senior CEO's is is a good thing. I don't know if you know, Greg has Warren's star power yet to carry a full day, so I'll look forward to hearing from um you know, the new lineup. Um so, I'm going to cheat a little bit. I have a couple questions that I'd love to hear about. First was you know, Greg spent time in his letter talking about BNSF and and the uh operating margin and the opportunity there. I'd love to hear from him to quantify it. I see some people kind of like look at Union Pacific's margins which are higher and and kind of think that BNSF should get there. My personal view is that there's some structural reasons why BNSF's margins are going to be going to be inferior to um UP's and I kind of just love to hear that. Um The next thing is, you know, GEICO has culturally gone through a tough time in recent years due to the amount of layoffs. Um and I you know, think it's been a pretty tough place to work. Um I think employee morale is is is is fairly poor there. Uh I'm curious if they are going to fix that. Um next, I'm curious on whether Greg will kind of be a buy and hold forever guy. Um and Warren has said that, you know, Berkshire is a forever home. Uh I'm curious if Greg would want to sell or jettison underperforming assets and uh and uh you know, if if there are anything is there's anything in in the near future that um he might do. Um Fourth, uh this is my last one, is um I'm curious on how Greg thinks about the calibration between intervening in underperforming businesses and um balancing that with letting people run their own and what are the risks associated with jumping in too quickly. And in his mind, look, where are the potential opportunities to increase uh performance at the subsidiary level. Uh and I'd love for him to quantify that, but my guess is he he won't. Um So, for the >> Peter. So, for the meeting tomorrow, I think when when Warren was still there, Charlie was there, it was some kind of Muppet Show, right? So, it was very informative, but it was also very amusing to to watch. Well, last year, obviously Charlie wasn't there anymore. For me personally, my favorite part was when uh Warren asked the opinion of Charlie, but obviously he was not uh not sitting there anymore. So, I think it's fair to say that or at least in my opinion, unfortunately we are evolving a little bit more to some kind of traditional AGM where all the the jokes are gone and it's more like a normal AGM or a normal normal earnings call. Um so so that's a pity if you ask me. And the main thing I would like to learn from from Greg tomorrow is well, obviously he took the helm, he became the CEO since the beginning of the year. What is one thing that you truly surprised you? Did you maybe made made a mistake um somewhere um already did Wa- Warren Buffett correct you there, or what did you learn from that? That kind of insights would be very insightful for me. Yeah, I think having the the the additional management on stage is going to be great. GEICO was so far behind Progressive on technology, so telematics. Uh and as Ajit has said, matching rate to risk. Uh they fixed it. And Ajit talked about it, he didn't go into great depth, but he was pretty candid about it. And then all of a sudden, GEICO 2 years ago was writing at an 80 combined, 81 combined, and they're still they were 85 in the last quarter. Uh you've got Katie Farmer on stage. The railroad is way behind its class one peers in North America. They're not doing precision scheduled railroading, maybe they should. So, having Katie, who's running the railroad, who's been working closely with Greg, addressing addressing that is going to be fantastic. You So, we don't have a movie. Some people came for the movie, they came for the folksy banner with Warren and Charlie. We're not going to get that. But, this is going to be a business meeting, and we're going to address the concerns. Energy is a huge issue at the moment for a lot of reasons. They've been dealing with the PacifiCorp wildfires, where we we we didn't start the fire, but we've got the had potential liabilities of 53 billion. PacifiCorp's already paid and set aside $3 billion. They're starting to settle a lot of those lawsuits, mercifully. And so, I don't think the diminution of value is is is as great as some might have thought when Walter Scott's estate got bought out and the foundation got bought out and some family the valuation of the business got marked down from $87 billion, which is roughly where I carry it to high 50s, which is about equity in the business. But that was the unknown liability for lawsuits. And the regulatory climate's changed with the leg- legislation last year. The tax credits for uh renewables production are going away if you don't have shovels in the ground by 2027. We're not going to do it. And so Berkshire just sold some of their PacifiCorp assets uh in Washington state. The energy operation may not be a place where Berkshire can retain its earnings and invest in renewables because if you're not going to get the credits, some of these things may not make economic sense. So so that that's a big big big issue what's going on with the regulatory front. And and and that'll be a great issue. So but to have a whatever it's going to wind up being hour and a half hour and a half three hours of of just business discussion for those that kind of worry about and and and and presume that the the operations of the company are going in the right direction, this is what you want to talk about at a business meeting. And so I'm thrilled. And sadly, we miss Warren and Charlie in that show, which was fun. But it's a business meeting for a lot of us. And hearing what the businesses are doing is is what it's all about. Yeah, I think I'm excited for it. I think we're going to get more substance in 3 hours than we would uh you know, in a normal uh even even Warren and and and uh Greg meeting for 6 hours. I mean, I think it's going to be it'll be a lot of business. The one question I do have for Greg, and I hope I get a chance to ask it or or Becky gets to to ask it. In in his first letter, he he put an enormous amount of emphasis on operating cash flow. He compared it to uh you know, he went through a number of the businesses, Berkshire itself. Um he compared current operating cash flow to the five-year average. I wanted I want to get behind his thought process thought process on why he's using that. And you know, it's it's too close to EBITDA for my liking. I mean, it's it's it's after interest, but it's it's you still add back the depreciation. So, I know Greg knows the importance of depreciation, but there's a big difference between some of those businesses. BNSF being capital intensive. So, I just love to know his his thought process there. And if that's that's the metric that >> >> Excuse me. If that's the metric that we're going to we're going to see him assess Berkshire's slate of businesses over time. And and just a little bit more clarity on that that front. On that note, thank you panelists. We're going to get set for our next meeting. All right, thanks, Mac. Howard Amaranji is the co-CIO and president, and Mac Sykes is a portfolio manager at Gabelli. The above webcast is an excerpt from Gabelli's 17th annual Value Investor Conference, which occurred on May 1st, 2026. GAMCO is providing these links as a matter of general information. We do not intend for these links to be a complete description of any security or company, nor is it a research report with respect to any of the companies mentioned herein. As of March 31st, 2026, affiliates of GAMCO Investors Inc. beneficially owned 31.2% of Atlanta Braves Class A, 5.4% Class C, 11.3% of Sinclair, 5.8% of E.W. 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