April 29 (Bloomberg) -- Billionaire Warren Buffett, who entertained shareholders at past Berkshire Hathaway Inc. annual meetings with musings on baseball and Paris Hilton, will focus investor attention this weekend on his efforts to turn around the company after its worst year in four decades.

Buffett needs to reassure shareholders of his Omaha, Nebraska-based firm after a 34 percent stock decline since Dec. 31, 2007, an ill-timed investment in oil producer ConocoPhillips and downgrades by ratings firms.

The annual meeting, scheduled for May 2, gives Buffett and Vice Chairman Charles Munger a platform to discuss markets, the economy and Berkshire’s businesses. Shareholders aren’t screened, resulting in questions on sports and Buffett’s relationship with Jesus Christ. The format was changed this year to ensure half the questions will pertain to Berkshire.

“It’s going to have a much more serious tone,” said Bill Bergman, an analyst with Morningstar Inc. in Chicago. “Berkshire shareholders aren’t used to a 40 percent decline, and we’re in a serious moment for our economic climate.”

Berkshire has posted five straight profit declines on deteriorating results at insurance units and liabilities from derivative bets on world stock markets. Buffett will announce first-quarter results May 8, the company said today in a statement. Berkshire said Feb. 28 that book value, a measure of assets minus liabilities, had dropped by about $8 billion from $109.3 billion on Dec. 31.

Wells Fargo

Book value per share, a measure Buffett highlights in his yearly letter to shareholders, slipped 9.6 percent in 2008, the worst performance since Buffett took control in 1965, on the declining value of the derivatives and holdings in financial companies including Wells Fargo & Co. The Standard & Poor’s 500 Index has declined about 37 percent in the past 12 months.

“This thing we’re in is as bad as anything since the Great Depression,” said Andrew Kilpatrick, who wrote the two-volume “Of Permanent Value: The Story of Warren Buffett” and has attended every annual meeting since 1984. “He knows he’s a business leader for the world, an icon, and I think he’ll want to address that and give us some sort of insight into where we’re headed.”

Buffett told shareholders at last year’s meeting that the firm spent $4 billion investing in municipal auction-rate bonds, taking advantage of payouts that topped 10 percent after regular bidders fled the market. This year, he may discuss Berkshire’s purchases of preferred shares or debt of companies including Goldman Sachs Group Inc. and Harley-Davidson Inc. paying as much as 15 percent.

‘Market Dislocations’

“When there are market dislocations we’re always going to take advantage of them,” he said at last year’s gathering.

Buffett and Munger have used recent meetings to promote Berkshire as a buyer of non-U.S. businesses and distinguish their operations from what they consider the sometimes reckless behavior they see on Wall Street. Their pronouncements reach shareholders, potential customers and ratings firms.

Buffett, in his “Visitor’s Guide” for attendees, cited a paucity of inquires about Berkshire at the 2008 gathering as the reason for restructuring the five-hour question-and-answer session at the annual meeting, which is expected to draw 35,000 attendees, surpassing last year’s record by 4,000.

The new arrangement, in which half the questions are pre- screened by reporters, may ensure more discussion on succession planning, the $37.1 billion in derivative bets tied to stock markets and the loss of the top AAA credit grade in the last two months from Moody’s Investors Service and Fitch Ratings.

‘Big Thinker’

“It will probably be the most worthwhile annual meeting in recent times,” said Jeff Matthews, who wrote in his book, “Pilgrimage to Warren Buffett’s Omaha,” about the lack of inquiries about Berkshire businesses. “The questions he’s been getting lately are big-picture things, what-would-Warren-do questions. Those answers are interesting to hear, because he’s a big thinker, but there are issues at Berkshire that will make for some good questions this year.”

Matthews, the founder of hedge fund Ram Partners LP, and Miami-based investor Marcelo Lima compiled separate lists of topics suggested by readers on their Web sites. Their questions cover the firm’s 20 percent stake in Moody’s parent company, an investment in Chinese rechargeable-battery maker BYD Co., and Berkshire’s reliance on Ajit Jain at its reinsurance operation.

‘Sign of Respect’

“He’s the world’s most accomplished investor,” Lima said. “I think it’s a sign of respect to scrutinize his record and ask new, tough questions and engage him on these things.”

Known as the “Oracle of Omaha,” Buffett has grown into a cult figure among investors who admire him as much for his homespun aphorisms as for his stock-picking savvy. He told the audience last year that a commitment from Berkshire was good even if Federal Reserve Chairman Ben S. Bernanke “runs off to South America with Paris Hilton.”

Visitors from 43 countries will fill the arena and the overflow rooms at Omaha’s Qwest Center, and students from 45 universities have been invited to watch from a ballroom in the Omaha Hilton across the street.

Investors in years past queued up in front of the arena before midnight to be first to put a question to Buffett. Attendees still have a chance to ask unscreened questions, though under a second change in policy, they will be picked by lottery instead of the speed at which they can sprint to the microphone once the arena’s doors open.

Not So Fast

“At age 78, I’ve concluded that speed afoot is a ridiculously overrated talent,” Buffett wrote in the program for this year’s meeting.

The three reporters -- Carol Loomis from Fortune magazine, Andrew Ross Sorkin of the New York Times and CNBC’s Becky Quick -- took questions via e-mail and are under instruction from Buffett to ask only about Berkshire.

Tom Russo, a partner at Gardner Russo & Gardner who has attended every meeting since 1986, said he favored the changes, though he found reason to appreciate the repetition of investor questions and Buffett’s answers from meeting to meeting about holding stocks for years and buying companies with durable advantages over competitors.

“It’s kind of like doing your beatitudes,” said Russo, whose largest holding is Berkshire shares. “It’s amazing how constant his message has been over periods of time when entire sectors have come and gone. He didn’t bend or yield to the times. And that, I think, is a message of its own.”

To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.

Last Updated: April 29, 2009 16:49 EDT