Some 30,000 rapt shareholders are descending on Omaha for what’s been called “Woodstock for Capitalists.” Pandemic lockdown apart, it will be the first without Munger, Buffett’s longtime partner who passed away in November about a month shy of his 100th birthday.
“The meeting will only have one comedian up there” this year, said David Kass, a finance professor at the University of Maryland and a Berkshire shareholder, who has attended more than 20 annual meetings. “There’ll be, let’s say, a more serious, less humorous background.”
The annual meeting will be exclusively broadcast on CNBC and livestreamed on CNBC.com. Our special coverage will begin Saturday at 9:30 a.m. ET. For the first time, Berkshire will broadcast its annual meeting movie that had previously always been reserved only for those in attendance in Omaha. Many speculate this year’s will be a tear-jerker tribute to Munger.
Vice Chairman of Non-Insurance Operations Greg Abel, Buffett’s designated successor, will fill Munger’s seat in the afternoon session, helping answer shareholder questions. Vice Chairman of Insurance Operations Ajit Jain will join Buffett, the CEO, and Abel in the morning session. Buffett has said they expect to field about 40 to 60 questions Saturday.
“The tone of the meeting is certainly going to be a lot different without Charlie,” said Steve Check, CEO of Check Capital Management and a longtime Berkshire shareholder. “He was the one that really made it funny. It’s getting closer and closer to the transition, so it’s good to see Ajit and Greg on the stage.”
Warren Buffett and Charlie Munger at a press conference during the Berkshire Hathaway Shareholders Meeting, April 30, 2022.
CNBC
Munger’s investment philosophy rubbed off on Buffett early on, giving rise to the sprawling conglomerate worth $860 billion that Berkshire is today. Generations of investors also appreciated Munger’s trademark bluntness and humor, rare to come by on Wall Street.
If anything, the sea of Buffett admirers will cherish his folksy wisdom even more as the “Oracle of Omaha” turns 94 in less than four months.
Here are some of the big topics shareholders want Buffett to discuss:
Inflation: Price pressures have proved sticky lately. What impact is inflation having on Berkshire’s businesses? Which businesses are being hurt (and helped) the most?
Apple: Why did Berkshire trim its Apple stake in the fourth quarter? Investors will look for Buffett’s outlook on the tech stock given its challenges in China and recent news of a giant, $110-billion stock buyback.
Secret stock pick: Berkshire has been buying a financial stock for two quarters straight. What is it?
Record cash: Does Buffett plan to put his record level of cash to work?
A slowdown in buybacks: With Berkshire shares outperforming this year, will Buffett continue to slow down his own buyback program?
Life after Buffett: More details on Berkshire’s succession plan.
Macro commentary
The annual meeting comes at a tricky time for markets as a pickup in inflation puts the brakes on the Federal Reserve’s plan to cut interest rates this year. While the Berkshire CEO doesn’t make investment decisions based on daily headlines, investors still are eager to hear any market commentary and guidance from the protege of the father of value investing, Ben Graham.
“They don’t time their investments,” Kass said of Berkshire. “The economy goes through cycles. They totally ignore cycles. They invest for a long run, and they really ignore what pretty much what the Federal Reserve is doing. I believe that will be his answer.”
Apple
Shareholders may seek an explanation as to why Berkshire sold about 10 million Apple shares (1% of its massive stake) in the fourth quarter. At the end of 2023, Berkshire owned 905,560,000 shares of the iPhone maker, worth more than $174 billion and taking up more than 40% of the portfolio.
The move came as a surprise to many because Apple has been Buffett’s favorite stock for years, and he even called the tech giant his second-most important business after Berkshire’s cluster of insurers. What’s more, the last time Buffett trimmed this bet, he admitted it was “probably a mistake.’
In the third and fourth quarters of 2023, Berkshire requested that the Securities and Exchange Commission keep the details of one or more of its stock holdings confidential. Many speculated that the secret purchase could be a bank stock as the conglomerate’s cost basis for “banks, insurance, and finance” equity holdings jumped by around $2.37 billion.
“He will comment as late as possible…. Charlie would be the only one that would let it slip once in a while. It’s not going to happen with Warren,” Check said.
Succession
Berkshire’s succession could be front and center at this meeting after Munger’s passing. Abel, became known as Buffett’s heir apparent in 2021 after Munger inadvertently made the revelation.
Abel has been overseeing a major portion of Berkshire’s sprawling empire, including energy, railroad and retail. Buffett revealed previously that Abel’s taken on most of the responsibilities at Berkshire.
Still, some questions remain as to who will be helping allocate capital at Berkshire, and the roles of Buffett’s investing managers Ted Weschler and Todd Combs, who is also the CEO of Geico.
Check out the companies making headlines in premarket trading. Disney — Shares of the media and entertainment company advanced more than 7% after surpassing Wall Street’s second-quarter estimates. Disney reported adjusted earnings per share of $1.45 on revenue of $23.62 billion, while analysts polled by LSEG were looking for $1.20 per share and $23.14 billion, respectively. The company also raised its full-year earnings outlook to $5.75 per share, while Wall Street was looking for $5.43 per share. Separately, Disney agreed to partner with Miral to build a theme park and resort in Abu Dhabi . Super Micro Computer — The stock pulled back more than 6% after the server maker missed expectations for the fiscal third-quarter and offered weak guidance for the current quarter. Super Micro posted adjusted earnings of 31 cents per share on revenue of $4.6 billion, while analysts surveyed by LSEG had penciled in 50 cents per share and $5.42 billion in revenue. Wynn Resorts — Shares of the hotel and casino company rose about 3% after an upgrade to buy from neutral at Bank of America that focused on the company’s casino project in the Middle East. The move came despite Wynn’s first-quarter report that showed weak results in Macao. Las Vegas revenue saw smaller declines. Wynn earned $1.07 per share after adjustments in the latest quarter, below the $1.19 per share expected by analysts, according to LSEG. Logitech — Stock in the computer accessory company ticked up more than 1% following an upgrade to buy from UBS. Analyst Joern Iffert suggested that the stock has already pulled back aggressively and could now represent an attractive entry point for investors. Uber Technologies — The stock dropped 3% after the ride-sharing company reported revenue of $11.53 billion for its first quarter, missing the $11.62 billion LSEG consensus. However, Uber’s earnings topped expectations. Advanced Micro Devices — Shares of the chipmaker gained more than 1% following stronger-than-expected first-quarte results . AMD notched earnings per share of 96 cents on revenue of $7.44 billion, while analysts polled by LSEG forecast 94 cents per share and $7.13 billion. Novo Nordisk — U.S.-traded shares of the Danish drugmaker advanced almost 5% after the company said it sees sales of weight loss drug Wegovy growing in the second half of the year as compounded drugs are phased out. Sarepta Therapeutics — Shares tumbled 18% after posting a steep loss in the first-quarter, and slashing its full-year net product revenue forecast to a range of $2.30 billion to $2.60 billion. Analysts polled by FactSet were looking for that metric to be between $2.90 billion and $3.10 billion. Upstart Holdings — Stock in the artificial intelligence lending platform fell 17% after just barely beating Wall Street’s revenue outlook for both the full-year and current quarter. The company issued a beat on the top and bottom line in the first quarter. — CNBC’s Hakyung Kim, Michelle Fox, Jesse Pound and Sean Conlon contributed reporting.
The New York Stock Exchange is seen during morning trading on July 31, 2024 in New York City.
Michael M. Santiago | Getty Images News | Getty Images
Last year, banks quickly raised interest rates to record levels and added new monthly fees on credit cards when a Consumer Financial Protection Bureau rule threatened a key revenue source for the industry.
Now, they’re far more reluctant to reverse those steps, even after bank trade groups succeeded in killing the CFPB rule in federal court last month.
Synchrony and Bread Financial, two of the biggest players in the business of issuing branded credit cards for the likes of Amazon, Lowe’s and Wayfair, are keeping the higher rates in place, executives said in recent conference calls.
“We feel pretty comfortable that the rule has been vacated,” Synchrony CEO Brian Doubles said on April 22. “With that said, we don’t currently have plans to roll anything back in terms of the changes that we made.”
His counterpart at Bread, CEO Ralph Andretta, echoed that sentiment, “At this point, we’re not intending to roll back those changes, and we’ve talked to the partners about that.”
The CEOs celebrated the end of a proposed CFPB regulation that was meant to limit what Americans would pay in credit card late fees, an effort that the industry called a misguided and unlawful example of regulatory overreach. Under previous Director Rohit Chopra, the CFPB estimated that its rule would save families $10 billion annually. Instead, it inadvertently saddled borrowers with higher rates and fees for receiving paper statements as credit card companies sought to offset the expected revenue hit.
Retail cards hit a record high average interest rate of 30.5% last year, according to a Bankrate survey, and rates have stayed close to those levels this year.
“The companies have made a windfall,” said David Silberman, a veteran banking attorney who lectures at Yale Law School. “They didn’t think they needed this revenue before except for [the CFPB rule], and they’re now keeping it, which is coming directly out of the consumer’s pocket.”
Synchrony and Bread both easily topped expectations for first-quarter profit, and analysts covering the companies have raised estimates for what they will earn this year, despite concerns about a looming U.S. economic slowdown.
Retailer lifeline
While store cards occupy a relatively small corner of the overall credit card universe, Americans who are struggling financially are more likely to rely on them, and they are a crucial profit generator for popular American retailers.
There were more than 160 million open retail card accounts last year, the CFPB said in a report from December that highlighted risks to users of the high-interest cards.
More than half of the 100 biggest U.S. retailers offer store cards, and brands including Nordstrom and Macy’s relied on them to generate roughly 8% of gross profits in recent years, the CFPB said.
Banks may be taking advantage of the fact that some users of retail cards don’t have the credit profiles to qualify for general-purpose cards from JPMorgan Chase or American Express, for example, said senior Bankrate analyst Ted Rossman.
Nearly half of all retail card applications are submitted by people with subprime or no credit scores, and the card companies behind them approve applications at a higher rate than for general-purpose cards, the CFPB said.
“Companies like Bread or Synchrony, they rely a lot more on people who carry balances or who pay late fees,” Rossman said.
Rates on retail cards have fallen by less than 1% on average since hitting their 2024 peak, and they are typically about 10 percentage points higher than the rates for general-purpose cards, Rossman said.
That means it’s unlikely that other large players in the retail card sector, including Citigroup and Barclays, have rolled back their rate increases in the wake of the CFPB rule’s demise. The most recent published APR on the Macy’s card, issued by Citigroup, is 33.49%, for instance.
Citigroup and Barclays representatives declined to comment for this article.
Debt spirals
Synchrony’s CEO gave some clues as to why banks aren’t eager to roll back the hikes: borrowers either didn’t seem to notice the higher rates, or didn’t feel like they had a choice.
Retail cards are typically advertised online or at the checkout of brick-and-mortar retailers, and often lure users with promotional discounts or rewards points.
“We didn’t see a big reduction in accounts or spend related to the actions” they took last year, Doubles told analysts. “We did a lot of test and control around that.”
Synchrony will discuss future possible changes to its card program with its brand partners, according to a spokeswoman for the Stamford, Connecticut-based bank. That could include bumping up promotional offers at specific retailers, Doubles said during the April conference call.
Brian Doubles, Synchrony President
Synchrony Financial
“Our goal remains to provide access to financial solutions that provide flexibility, utility, and meaningful value to the diverse range of customers, partners, providers, and small and midsized businesses we serve,” Synchrony said in a statement.
A Bread spokesperson declined to comment for this article.
Alaina Fingal, a New Orleans-based financial coach, said she often advises people who’ve been trapped in a debt spiral from using retail credit cards. Some have to take on side gigs, like driving for Uber Eats, to work down the balances, she said.
“They do not understand the terms, and there are a lot of promotional offers that may have deferred interest clauses that are in there,” Fingal said. “It’s extremely predatory.”
Check out the companies making headlines in after-hour trading. Arista Networks — Shares of the cloud computing stock slid 7%. First-quarter revenue narrowly beat LSEG consensus estimates, coming in at $2.00 billion, versus the $1.97 billion the Street expected. Adjusted earnings also beat estimates, landing at 65 cents a share, compared to the 59 cents per share analysts sought. Super Micro Computer — Shares slid about 5% after the server maker missed expectations for the third fiscal quarter and gave a weak outlook for the current three-month period. Super Micro reported earnings 31 cents per share, excluding items, and $4.60 billion in revenue. Analysts polled by LSEG called for 50 cents a share and $5.42 billion in revenue. Advanced Micro Devices — The chipmaker surged nearly 4% on the back of a stronger-than-predicted earnings report for the first quarter. AMD reported earnings of 96 per share, excluding items, on revenues of $7.44 billion, while analysts had penciled in 94 cents per share and $7.13 billion, respectively. Wynn Resorts – Shares of the casino operator fell 2%. First-quarter adjusted earnings came in at $1.07 per share on revenue of $1.70 billion. The result fell short of LSEG consensus estimates for $1.19 per share in earnings and $1.74 billion in revenue. Electronic Arts – The video game publisher advanced 5% after fiscal fourth quarter adjusted revenue topped Wall Street’s estimates. The company posted adjusted revenues , also known as bookings, of $1.80 billion, while analysts polled by LSEG sought $1.56 billion. Electronic Arts also issued a strong forecast for bookings guidance for fiscal 2026. Sarepta Therapeutics — The biopharmaceutical stock tumbled 23%. Despite first-quarter revenue coming in ahead of LSEG’s consensus forecast, the company said it faced headwinds in the period and was cutting its full-year revenue guidance. Upstart Holdings — The artificial intelligence lending marketplace’s stock plunged 17%. The company issued revenue guidance for the current quarter and full year that only narrowly surpassed Wall Street estimates. Upstart did beat analysts expectations on both lines for the first quarter, however. — CNBC’s Darla Mercado contributed reporting
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