Warren Buffett’s Views on Banks, Streaming & More
In his first extensive comments since the annual meeting in April, Warren Buffett, the CEO of Berkshire Hathaway (BRK.A, BRK.B), discusses his hands-off management style, the decision to sell most of the company’s bank stockholdings, and his surprisingly negative view of the streaming business and Paramount Global. Buffett’s recent comments about Japanese stocks and the U.S. banking system generated headlines, but he also shared insights about a wide range of topics relevant to investors in Berkshire Hathaway.
Buffett’s Criticism of Norfolk Southern’s Handling of Ohio Train Derailment
Buffett criticized Norfolk Southern’s handling of the Ohio train derailment and disclosed that he has “99% and a fraction” of his net worth in Berkshire stock, which is currently worth $110 billion, even after giving away more than half of his holdings since 2006. Berkshire’s Class A shares have increased by 4.3% year to date, currently valued at $488,350.
Greg Abel, Berkshire’s Vice Chairman and Heir Apparent, Speaks Publicly
Investors got to hear from Greg Abel, Berkshire’s vice chairman and Warren Buffett’s heir apparent, who runs the company’s vast noninsurance operations and who rarely speaks publicly. Abel addressed his decision to purchase some $100 million of Berkshire stock since late September.
Buffett’s Decision to Scale Back Bank Stockholdings
Buffett’s decision to drastically scale back the company’s bank stockholdings has been a topic of concern among many Berkshire investors. The company sold off its holdings in Wells Fargo (WFC), JPMorgan Chase (JPM), and Goldman Sachs Group (GS) in 2020 and 2021 and sharply reduced a longstanding holding in U.S. Bancorp (USB) in 2022. Buffett stated, “I didn’t like the banking business as well as I did before,” citing some of the problems that have been apparent since the failure of Silicon Valley Bank. However, Berkshire still holds its $29 billion stake in Bank of America (BAC), and when asked about it, Buffett responded, “I like [CEO] Brian Moynihan enormously. And I just don’t wanna, I don’t wanna sell it. But I did sell banks that we’d owned for 25 or 30 years. And if they asked me why I did it, I told them–I just think the system isn’t set up quite right in terms of connecting punishment to culprits on something that’s important.”
Read More: Buffett’s Annual Meeting’s Potential to Impact the Stock Market
Buffett’s Surprisingly Negative View of the Streaming Business and Paramount Global
Berkshire has accumulated a 14% position in Paramount Global (PARA), the owner of CBS and the Paramount studio, starting last year, and that stake is now worth over $2 billion. When asked about the company, Buffett responded, “Streaming, you know, it’s not really a very good business. And, you know, it’s the people in entertainment that make lots of money, the shareholders really haven’t done that great over time. It’s a glamorous business…It’s a great way to meet girls, for all I know.” Buffett added, “They’ve been able to attract subscribers, but they attract ’em at a terrible price.”
When asked why he purchased a stake in Paramount Global despite his negative views, Buffett responded, “Well, we’ll see what happens.” The investment was likely made by Todd Combs or Ted Weschler, who run about 10% of Berkshire’s $350 billion equity portfolio. The Paramount investment has been a loser for Berkshire so far.
Abel’s Impact on Berkshire’s Management
Buffett praised Greg Abel’s work in overseeing Berkshire’s non insurance operations, saying that he has done an “extraordinary job.” Abel, who has been with Berkshire since 1992, has been widely seen as Buffett’s successor as CEO. According to Buffett, he and Abel share similar values and management styles, with both taking a hands-off approach to running their businesses. Buffett also commented on the idea of splitting Berkshire Hathaway into smaller companies, which some investors have suggested. He said that he has no plans to do so, stating that the company’s scale is one of its strengths.
Insights and Investment Strategy Overview
Overall, Buffett’s comments covered a wide range of topics relevant to investors in Berkshire Hathaway, including the company’s recent investments and divestitures, his views on the banking and streaming businesses, and the future of Berkshire Hathaway under Greg Abel’s leadership.
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