Tuesday, June 01, 2010

2010 Pilgrimage, Part IV: Wine, Wayne and Other International Issues


It is Saturday morning, May 1, 2010, and the Berkshire Hathaway annual meeting has been under way for a little less than an hour—or two hours, if you include the movie that traditionally kicks things off at precisely 8:30 a.m.

And already things here seem very familiar: Warren Buffett and Charlie Munger are doing what has evolved over the years into something like an extremely intelligent comedy act. Buffett plays the ebullient, eager-to-please elucidator of all things financial; while Munger provides the dryly cantankerous Voice of Reason…and all to the crowd’s amusement and pleasure, not to mention intellectual stimulation.

This is, after all, a shareholder meeting with 17,000 people hanging on the two men’s words—not a comedy club.

Nevertheless, so familiar are some of the routines that I find myself at times writing a kind of short-hand when Buffett’s answers drift into familiar ground.

This ranges from the substantive—such as “Gen Re Derivatives Story,” when Buffett rehashes his account of the 23,000 derivatives contracts Berkshire inherited when it acquired Gen Re, an experience that gave Buffett an early heads up into the dangers of those instruments—to the mildly amusing, such as “Mae West Joke,” when Buffett retells a hoary line from that vaudeville-era actress.


It is a joke he has used over many years, in annual letters and here on stage, and it gets fewer laughs each passing year.

Having come early to Omaha—three days ago—to deal with book-related issues as well as to get prepared for today’s meeting, hearing old stories getting dredged up is a bit of a let-down, particularly after the most interesting topic (Buffett’s investment in Goldman Sachs) has been entirely dispensed with in the first 45 minutes.

But it was worth coming early, before the Friday crush.



Indeed, arriving Thursday morning at Eppley Airfield—that is the official name of Omaha’s airport, and I find the term ‘airfield’ to be a pleasant reminder that we are in the Midwest, where established nouns, such as soda ‘pop,’ hang on longer—had a very different feel.

The pace was quite relaxed, and the shareholders getting off the planes all seemed to hail from long distances, far away from both Omaha and America.

In fact, the very first person I met after checking in with Jim—the friendly and hyperactive Hudson manager at the airport Hudson Bookseller, where Buffett and Munger book titles crowd the shelves—was a young, professional Buffett follower from Sydney, Australia.

The investor introduced himself as “Wine”—at least that’s how his name sounded to ears still plugged from connecting flights and a brain groggy from a 4 a.m. wake-up call—and I repeated it dutifully, as in, “Wine, it’s nice to meet you.”

Now, putting aside the unusual name—at least as I caught it—the fact that a mutual fund manager from Sydney, Australia, was the first person I met in Omaha was not nearly as exotic as it might seem in the first place.

Buffett’s patient, informed, long-term style of investing—with its particular premium on family-owned and run businesses—seems to resonate especially forcefully with non-U.S. business owners.

Chalk this up perhaps to America’s brand of naked capitalism and Roosevelt-era trust-busting, which fostered Buffett’s cherished American ‘meritocracy’ while outside the U.S. capital was able to remain far more concentrated, with a larger portion of important businesses to this day under family control.

Indeed, the non-U.S. contingent of investors has grown so large that Buffett cancelled the meet-and-greet with international investors he and Munger used to hold Saturday afternoon. As he explained the change in his February shareholder letter, at last year’s international gathering “my simply signing one item per person took about 2 ½ hours.”

But that hasn’t stopped them from coming.

And as the world has grown smaller, degrees of separation have diminished. For example, “Wine,” it turned out, knew a friend and terrific analyst from Sydney. Turns out they had been on opposite sides of a somewhat controversial but immensely successful financial company whose CEO reminds Wine and others of Warren Buffett.

We chatted about what Wine does for a living (he runs a mutual fund), where he’d been before coming to Omaha (in Canada visiting Fairfax Financial, the aforementioned company), and where he was going afterwards (to Los Angeles, along with a healthy minority of fellow international Berkshire shareholders, to watch Charlie Munger hold forth at the Wesco Financial meeting the following week).

Wine’s extended stay in North America is not, it turns out, at all unusual. Most of the international investors use the annual Berkshire meeting as a chance to visit friends, investors, and other companies here in the United States and elsewhere.

Hence, the extraordinary portion of international fliers coming in early, including “Wine.”

Before leaving the Hudson bookstore and heading to my hotel, I said goodbye to “Wine.” When he smiled at my pronunciation, I asked if I’d gotten it wrong.

“Well,” he said, “it’s ‘Wine.’”

“Wine,” I repeated.

“No,” he said, and then he Americanized the pronunciation for me: ‘Wayne.’”


Somewhere here at the Qwest Center, among the sea of 17,000 shareholders listening to Buffett and Munger holder forth, Wayne is listening, along with hundreds—perhaps thousands—of others from countries around the world.

In fact, one of them—from Bonn, Germany—is right now asking Buffett about how he plans to protect Berkshire from fallout over the financial implosion in Greece.

Buffett, who knows how to play a crowd for laughs, answers:

“What happens in the Greek situation and what may fall out from that is gonna be very important, and Charlie’s gonna explain what that might be.”

To be continued…




Jeff Matthews
I Am Not Making This Up

© 2010 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews, who also acts as an advisor: clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

7 comments:

Anonymous said...

I thought that family-controlled businesses were less prominent in Australia than in the US?
Wine should have clarified that.
Maybe I'm mistaken.

Anonymous said...

The correct spelling is "Sydney" (Australia)

Anonymous said...

'Sydney' Australia - not 'Sidney'. It's even easier to confuse homophones.

Jeff Matthews said...

Corrected...my apologies!

JM

BobE said...

http://articles.moneycentral.msn.com/Investing/top-stocks/blog.aspx?post=1765417&_blg=1,1765417

The unwashed, the ignorant and the media are coming out of the woodwork to express displeasure with WB. Interesting. The adulation of the last couple of decades created the "Buffett premium" in BRK shares, effectively valuing cash flows more highly as a part of Berkshire than they would have been had they been independent. Perhaps this new light in which Our Hero is being seen will create an opportunistic discount.

Anonymous said...

jeff - Are you going to finish the pilgrammage to Omaha thread?

Jeff Matthews said...

Yes, we are going to finish. Right now we're involved in some interesting issues relating to "Pilgrimage to Warren Buffett's Omaha," and once those are cleared up, will resume this.

My apologies for leaving loyal readers hanging.

JM