Warren's World

Just after 9:30 a.m. on Monday, Apr. 26, Warren E. Buffett walked onto the stage of Omaha's Orpheum Theater, sat down at a table with his partner, Charles T. Munger, and opened the annual meeting of Berkshire Hathaway Inc. For three and a half hours, the multibillionaire fielded questions from a 2,200-strong audience that included former Federal Communications Commission Chairman Newton N. Minow, Chicago billionaire Lester Crown, the parents of Microsoft Corp. founder William H. Gates III, various money managers, and plenty of just plain folks.

This is not your typical company's annual meeting. The business is over in six minutes. Then, it's part lovefest, part investment seminar, part . . . sui generis. What other CEO, greeting shareholders, would be besieged for his autograph? Besides the fun--such as a Sunday brunch for 150 "out-of-town friends" and knocked-down prices, champagne, and hors d'oeuvres for all at Borsheim's, Berkshire's jewelry store--shareholders come for Buffett's wit and wisdom.

Even if they've heard it before. When a shareholder noted Berkshire's $12,500 price and asked about a split, another whispered, "Here comes the pizza story." Buffett said that the price speaks to the "question of who we want as shareholders"--namely, those who have the same time horizons as his. Then, he told of the diner who tells a pizza maker to cut his pie into four, not eight, slices, since "he couldn't possibly eat eight."

A dozen years ago, Berkshire's confab drew a dozen or so shareholders. Now, it's a mecca for the company's mostly individual investors. This year, Milton Macken, who owns six shares, came from Santa Cruz, Calif., to his first-ever annual meeting: "He's an interesting man, and I wanted to hear what he had to say." Many are veterans, coming again and again to the meetings.

Buffett usually lets a young shareholder ask the first question. This year, Douglas Reed, 17, who owns 60 shares and whose father, William G. Reed, is a Microsoft director, asked why Berkshire didn't have a larger international component. Buffett pointed out that many of its stakes, such as Coca-Cola Co., do a lot of business overseas, and he mentioned the tax disadvantages of foreign investments. Then, he passed the ball to Vice-Chairman Munger, who said: "I've got nothing to add." Rejoined Buffett: "Sometimes he subtracts."

And so it went. What would the syllabus for an investment class he taught include? Is the stock overvalued, since Buffett has forecast lower returns in the '90s? Will generic goods hurt Coke? Will Lloyd's of London's troubles influence Berkshire's insurance business?

NO INSIDE TIPS. Most of the answers are in the annual report or in Buffett's value-investment credo. The Oracle of Omaha strives not to reveal anything that could be a stock tip. One questioner, noting a government filing, did elicit the fact that Berkshire would set up a life insurance company "very soon."

Berkshire's annual meeting is no paradigm for Corporate America. Nor are its other governance practices--Buffett picks its four other directors, and the board meets in person just once a year. Buffett escapes complaint because he owns almost 45% of a company whose stock consistently outperforms the Standard & Poor's 500-stock index by far. And Berkshire's meeting does have one big plus. Shareholders attend not only when they want to complain, as at most big companies, but also when they just want to know more about their investment. "They come because we make them feel like owners," Buffett declares. Nowadays, that's no small feat.

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