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A Tribesman Visits Warren Buffett’s Annual Meeting 2013

Janardhanan Vembunarayanan (Jana), a long time Safal Niveshak tribesman, recently attended Warren Buffett’s 2013 shareholder meeting in Omaha.

He sent me his notes from the trip, which I requested to be used on the Safal Niveshak website.

Jana agreed, and here are his (unedited) notes from his trip to Omaha.

My Visit to Berkshire Hathaway Annual Meeting 2013
by Janardhanan Vembunarayanan

In 2006, I got interested in investing. I read a lot about Warren Buffett and his investment style. I wanted to become a shareholder of Berkshire Hathaway and attend the shareholders meeting.

Finally in Jan. 2012, I purchased the Class B shares. In 2013, I got an invitation to attend the shareholders meeting and I was on my way to Omaha. It was a dream come true after 7 years.

I landed in Omaha on 3rd May around 2:00 p.m. I checked into Travelodge hotel and immediately headed to ‘3555 Farnam Street Omaha, NE 68131’.

Why? It is the headquarter of Berkshire Hathaway. I could not get into the building but I took a picture of the address. I can see my reflection on the address!


Then I went to ‘5505 Farnam Street Omaha, NE 68132’, where Warren Buffett lives.

It is about 2 miles from his office. He purchased the house in 1958 and it costed him US$ 31,500. I did an estimate on Zillow and its value is around US$ 709,433 now. In 58 years, the compounded growth rate comes to 5.83%. It is a single family home with built up area of 5,830 sqft and the lot size of 31,363 sqft. It is me standing in front of his house.

I headed to the shareholders reception which was in ‘Boreshims’, a Jewellery shop and a subsidiary of Berkshire. Shareholders were busy purchasing jewellery and they were partying as well. The place was electrifying.


Finally I went back to the hotel around 9:00 p.m. As usual I started browsing the internet. This time I found a treasure, ‘Becky Quick’ from CNBC interviewing Charlie Munger, before the shareholders meeting. I strongly recommend you to watch the video. The part I really liked are…

Economy

I’ve never made the least effort to predict short-term swings in macroeconomics. When things are awful, I predict that some day they will be better. When things are wonderful, I predict some day they will be awful. But apart from those general feelings, I never try and predict. I think it’s a waste of time.

High Frequency Trading

Well, I think the long term investor is not too much affected by things like the flash crash. That said, I think it is very stupid to allow a system to evolve where half of the trading is a bunch of short term people trying to get information one millionth of a nanosecond ahead of somebody else. It’s legalized front-running. I think it is basically evil and I don’t think it should have ever been allowed to reach the size that it did and I now see that people are starting to talk about cutting it back. Why should all of us pay, a little group of people, to engage in legalized front-running of our orders?

Bankers

A banker who’s allowed to borrow money at x, and loan it out at x + y, they will just go crazy and do too much of it if the civilization doesn’t have rules that prevent it. They are like heroin addicts.

Had a great sleep after watching the video. On May 4th, I went to ‘Century Link Center’ to attend the annual meeting. I was there at 7:00 a.m. expecting to get the front seats. The front rows were full and I had to go all the way back.


The meeting was scheduled at 8:30 a.m. I had more than an hour so after reserving my seat I went to the Exhibit hall. Subsidiaries like ‘Sees Candies’, ‘Fruit of the Loom’, ‘Diary Queen’, ‘BNSF’ and several others were displaying/selling their products. I went to the bookstore called ‘Book Worm’ and purchased the following books…

  1. The Great Crash 1929 – John Kenneth Galbraith
  2. A Few Lessons for Investors and Managers From Warren Buffett – Peter Bevelin
  3. Investing between the lines – L.J. Rittenhouse (Recommended by Warren in his Annual Letter)

Peter Bevelin is the author of one of my favorite books ‘Seeking Wisdom’ and I had the privilege to meet him.


I came back to my seat and at 8:30 a.m. movie of Berkshire was played. Several videos were played in the movie. Some of them which I really liked are

  1. Buffett lobbies for the role of the villain in “Terminator 5”, but Charlie Munger gets it instead.
  2. Buffett’s testament on Salomon Brothers. Lose money for the firm I will be understanding. Lose a shred of reputation for the firm and I will be ruthless.

At 9:00 a.m. Buffett went through the results of Q1. Then the Q & A session started. It went until noon 12:00 p.m. It resumed again at 1:00 p.m. and went until 3:30 p.m. Buffett (82 years) and Munger (89 years) answering questions for 5 1/2 hours with topics ranging from Health Care,Insurance,Real Estate, etc… is mind blowing. The ones I liked are…

Which ratios to look for when analyzing companies

Understanding the business is more important than looking at ratios like p/e. Buffett mentioned he was not sure how Berkshire would have been if they just looked at ratios. Munger response was ‘It would have been poor’

Will kids’ behavior be affected by inheritance amount they receive from their parents

Buffett: “Parents behavior impacts their kids more than the amount of inheritance they may receive from them.”

Best one for the day

Munger: “The game of life is a game of everlasting learning. At least, it is if you want to win.”

About the current environment

Buffett: “This environment makes it clear that owning business is better than fixed-dollar investments

Bitcoin

Munger: I have no comment whatsoever on Bitcoin being some kind of universal currency.
Buffett: Of our $49 billion, we haven’t moved anything into Bitcoin.

It was all over by 4:00 p.m. I was stunned by the duo’s breadth and depth of the knowledge. Clearly they were not born genius. They made themselves genius by being a Learning Machine. The take away for me was “There are no silver bullets” and “Keep Learning”

Next day on May 5th on the way to the airport I went to Nebraska Furniture Mart. It is a subsidiary of Berkshire and is the largest home furnishing store in America.


What is so special about this store? Read the Excerpt from Buffett, 1983 Annual Letter.

Last year, in discussing how managers with bright, but adrenalin‐soaked minds scramble after foolish acquisitions, I quoted Pascal: “It has struck me that all the misfortunes of men spring from the single cause that they are unable to stay quietly in one room.”

Even Pascal would have left the room for Mrs. Blumkin. About 67 years ago Mrs. Blumkin, then 23, talked her way past a border guard to leave Russia for America. She had no formal education, not even at the grammar school level, and knew no English. After some years in this country, she learned the language when her older daughter taught her, every evening, the words she had learned in school during the day.

In 1937, after many years of selling used clothing, Mrs. Blumkin had saved $500 with which to realize her dream of opening a furniture store. Upon seeing the American Furniture Mart in Chicago ‐ then the center of the nation’s wholesale furniture activity ‐ she decided to christen her dream Nebraska Furniture Mart.

She met every obstacle you would expect (and a few you wouldn’t) when a business endowed with only $500 and no locational or product advantage goes up against rich, long-entrenched competition. At one early point, when her tiny resources ran out, “Mrs. B” (a personal trademark now as well recognized in Greater Omaha as Coca‐Cola or Sanka) coped in a way not taught at business schools: she simply sold the furniture and appliances from her home in order to pay creditors precisely as promised.

Omaha retailers began to recognize that Mrs. B would offer customers far better deals than they had been giving, and they pressured furniture and carpet manufacturers not to sell to her. But by various strategies she obtained merchandise and cut prices sharply. Mrs. B was then hauled into court for violation of Fair Trade laws. She not only won all the cases, but received invaluable publicity. At the end of one case, after demonstrating to the court that she could profitably sell carpet at a huge discount from the prevailing price, she sold the judge $1400 worth of carpet.

I boarded the flight around 2:45 p.m. back to California. On the way back I immersed myself into the book ‘Predictably Irrational’ written by ‘Dan Ariely’.

This is one of the best books in Behavioral Economics and Decision Making.

To the left of me I saw a passenger reading a report on ‘Coca Cola’. I sneaked into the report and saw words like Buffett and Munger. Out of curiosity to find out what the report is, I introduced myself as a Shareholder of Berkshire. I asked him what report he is reading. It was ‘1988 Valuation of Coca-Cola’ by Bud Labitan.

He told me that he is also a shareholder and his name is Cialdini and he is an author of a book called as Influence. Yes this is one of the best books on Psychology I read several times and it has changed by way of thinking. Influence: The Psychology of Persuasion – Robert B. Cialdini. I cannot believe my Serendipity. Several years back Charlie Munger gifted him 1 share of Berkshire as the book Influence helped him to decide on an investment decision for Berkshire. I took some tips from Cialdini on…

  1. Notes taking
  2. Avoiding Procrastination


I came back home at 7:30 p.m and ordered the copy of ‘1988 Valuation of Coca-Cola’ by Bud Labitan.

It was a dream come true!



Thank you Jana! I can imagine the great time you must’ve had on this pilgrimage to Omaha.

Anyways, here’s the transcript of 2013 Berkshire meeting as shared by another tribesman, Manish Sharma. Thanks Manish!

But as the author of the transcript warns, these are based on his recollections only, and without the aid of a recording device. Thus, they should not be relied upon. 🙂

Happy weekend reading, guys!

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. Hey Jana.
    I am so jealous of you 🙂

  2. shankar s says:

    Vishal,

    Thanks to Jana for sending this and thanks to you for posting this. Wonderful to read, now im going to order Cialdins book 🙂

  3. Mahesh Krishnan says:

    Thank you Vishal and Jana. Looking back, I am sure this would be one of Jana’s ‘moments of joy’.
    As usual, Vishal, your editing is crisp and easily digestable and so well presented 🙂

    If I am not mistaken, you also have a side business related to content writing ? Just wondering if there could be opportunities to collaborate. Happy to discuss.

    Almost thru the first read of the magnum opus of Taleb – Infragility. Probably needs many reads and discussion with like-minded folks to fully grasp his wisdom. Lots of areas were a total bouncer. One needs a lot of patience as he tends to meander around too often ( I read he has done this consciously!) but yes lots of wisdom. One has to have a separate informal session to discuss Taleb and his eccentric and wise ways. He indeed lives life in his own terms.

    Regards,
    Mahesh Krishnan

    • Agree, Taleb is a heavy read. His books are interesting, at times beyond grasp, but very readable. I have not yet tried Infragility.

  4. That’s a wonderful post Jana, thanks for taking time out to pen it down and sharing with us..:)
    And again, Vishal, you are super fantastic..:)

  5. Bhavesh Chauhan says:

    Nice insights. Thanks for sharing Jana and Vishal

  6. Harshad Parulekar says:

    Jana,
    Getting to meet Gods on investing and the foremost expert on behavioral science , Robert Cialdini in one single trip.
    Its a dream come true.

    Thanks for your efforts for making those notes.

    -Harshad

  7. Im sure it would be a dream for most of us to go for the legendary BH AGM. Id like to ask how can we own a foriegn company’s shares ?? Wouldnt we have to pay a high transaction charge and the frictional costs would also be higher I presume. Have been following this blog for 6 months now and I have received a lot of knowledge from all of the tribsemen/women here. Great work . 😀

  8. Wow Jana, must have been multiple dreams come true. A share can get you not just returns but so much to soak in to. Greatly thankful for sharing. I have saved all the book names and hope to be reading them soon.

  9. Congrats, Jana! on meeting Cialdini on the flight, must have been the pleasant surprise and also meeting Peter Bevelin. Really, would have been a great experience. I have read The Great crash and Bevelin’s book on WB. And, although I have got Influence long ago, but still haven’t read it. Your post is an inspiration to finally open the book 🙂

    Thanks for sharing your experience with everyone.

  10. Prakash says:

    Thanks Jana.. for your graciousness in sharing your notes and various titles, Thanks Vishal for posting the same for fellow tribesmen..
    What stands out is the way Jana utilized every bit of opportunity and got the max out of it, On a lighter note Jana could even ‘influence’ Cialdini for a pic 🙂
    Great run Jana.
    Prakash

  11. karthik says:

    Thanks Vishal, Jana for bringing this excellent post…

  12. Thanks a lot everyone for taking the time to read my experience.
    Thanks to Vishal for sharing this in ‘Safal Niveshak’

    Regards,
    Jana

  13. What a great story. Would you mind sharing Cialdini’s advice on note taking and avoiding procrastination?

    Thanks for sharing your trip with everyone.

  14. R.K.Chandrashekar says:

    Thanks to Jana, it was a vicarious pilgrimage to the most famous AGM! Very gracious of him to share the insights and to capture the ”átmosphere” at the meet. Hope it is a regular feature!!

  15. Jana Vembunarayanan says:

    Thanks Jordan.
    Advice I got from Cialdini

    1. Notes Talking

    He was reading a research paper in the flight. He was taking notes on the material itself. After he completed a chapter, he pulled out a white paper and wrote a single page summary on what he read. He filed the page in a separate folder. This way he got his learning deeper and can refer to the summary in future if needed.

    The essence of his technique is captured in the book
    ‘The Little Book of Talent: 52 Tips for Improving Your Skills:’
    http://www.farnamstreetblog.com/2012/09/a-simple-tool-to-help-you-learn-better/

    2. Procrastination

    He gave an example on how to continue writing blogs without procrastination. If you are writing about ‘Margin of Safety’ for example, stop at the paragraph which you know very well, what to write. This way you will come back to it the next day because of the urge to complete what you already know. This is the trick he uses for himself and I have been practicing it for the last 1 week and it is very effective.

    Regards,
    Jana

  16. Many Thanks to Jana and Vishal ji,
    for describing such a wonderful trip to omaha….!
    however Vishal ji & Jana ,
    i had got one query for you both, as i tried my best to get answer from local brokers and frnds…but they all failed…!
    how being an indian citizen & residing in india , i can buy berkshire hathway series B share…!
    I request all to please pen down their advise….as i plan to buy series B shares of Hathway….!

    thanks to all in advance.
    Kishor.

    • hi,

      There are a few brokers offering this service. ICICI Direct offers an american platform. So does kotak mahindra.
      There are a lot of caveats in buyng american and all non indian securities. We should definitely have a separate forum discussion for this subject. We need to be specially careful in considering the tax implications and find out about if India and Usa have a double tax treaty as potential gains may get wiped out in exchange rates and multiple taxes.

      Vinay

      • ok many thanks Vinay,
        your point well taken…i’ll check this at personal front and also dig in more with icici direct / kotak.
        many thanks once again.
        Kishor.

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