What’s next for Warren Buffett

SPEAKER_1 (0:01)

There is a quality bias that has overtaken a lot of the desires for investors. And so the reason we suspect that's happening is there's a fear that, given this historical rate hiking cycle around the world, there's a lot of uncertainty, obviously.

SPEAKER_2 (0:18)

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Katie Martin (0:36)

Pushkin.

Hundreds of people gathered this weekend to watch the Warren Show. Warren Buffett, he's that guy. He's the patron saint of investing. He's the chief executive of Berkshire Hathaway, and he has this annual opportunity to share his wisdom with the masses. Today on the show, why do people buy shares in this thing? What is Berkshire doing with Apple? And the guy's 93 What happens to Berkshire Hathaway after Warren Buffett?

This is Unhedged, the Markets and Finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist here in London, and I'm joined by Warren Watcher and Closet Berkshire fanboy, Rob Armstrong. Rob, how are you going?

Robert Armstrong (1:20)

I'm doing well. It's too bad we don't do video on this show because then viewers could see my tattoo of Warren Buffett, which is on my bulging bicep.

Katie Martin (1:32)

Thanks, Rob, for that horrifying mental image. Let's crack on.

Robert Armstrong (1:39)

Our colleague Eric Platt wrote this incredible series of four articles about kind of what's next.

Katie Martin (1:44)

Yes.

Robert Armstrong (1:46)

I hate to even utter this sentence about the patron saint of capitalism, Warren Buffett, but he is 94

Katie Martin (1:55)

Is he 94 or 93? I think he's 93

Robert Armstrong (1:57)

In any case, as an insurance guy, he has probably looked at the actuarial table and noticed that the probability that someone else will be running the largest conglomerate in America pretty soon, that date is approaching.

Katie Martin (2:12)

I will just say my grandmother just had a birthday. She's 101 and she is in very good form. She's not, however, a billionaire, unfortunately. But so, Rob, you have met the great man, Warren Buffett.

Robert Armstrong (2:26)

It's true, about five years ago, me, Eric and Oliver Ralph, we were invited slightly out of nowhere to go to Omaha after asking for interviews for a million years. We thought this simply reflected the brilliance of our journalism. Only later did the three of us put together the fact that he just wanted to advertise that he was looking to buy a company in the UK, if he could, and he figured we were the biggest UK newspaper.

So he would talk to us.

Katie Martin (2:56)

But so for the uninitiated, Berkshire Hathaway is a slightly strange beast as a company, right? It's a conglomerate. It's like this weird investing company in and of itself, but it's not like an asset manager as such. Like just, you know, sketch this out for us. What is Berkshire Hathaway?

Robert Armstrong (3:13)

Structurally, it's like a closed end fund, which means it issued a certain number of shares at the outset, you know, close to 60 years ago or whatever. And since then, you can trade the shares, but it doesn't issue new shares. It's just compounded that capital it raised initially over the decades and grown bigger and bigger and bigger.

And there is not a big Berkshire Hathaway corporation. It's basically a smallish office with Warren Buffett and his lieutenants in it sometimes, who just buy and sell stuff.

Katie Martin (3:51)

Like what sort of stuff? Widgets?

Robert Armstrong (3:54)

Well, they buy and sell stuff like huge railroads, hundreds of billions of dollars of Apple stock, many insurance companies, many utilities and energy companies. It's a huge rich portfolio of mostly American equity assets.

But you go to the office and it's like whatever it is, the sixth biggest company in the world or whatever, by market cap or it's somewhere in there. And you go to this office in Omaha and it's like it doesn't even have its name on the building. It's like some random other company's name on the building. And we walked in there, we go up to the desk in this random medium-sized office building in Omaha, and it's like, we're here to see Mr. Buffett. And we were really scared. And the secretary was like, yeah, yeah, have a seat.

And Eric and Oliver and I sit there for like 25 minutes.

And the thought dawns on us that we've been the victim of the most horrible prank in the history of financial journalism. Like someone has pretended to be Warren Buffett's secretary, called us and tricked us into flying to Omaha. About a half an hour later, the elevator goes ding, and who should walk into the lobby? But Warren Buffett says, hello, boys. Sorry, I'm a little late. Let me show you up to the office. And it was kind of like a perfect Berkshire Hathaway moment. Like the impression that he gave us was like of this unassuming old man who comes and greets his guests personally at the elevators. And like, oh, fumbles with the elevator buttons a little bit or whatever. Meanwhile, he's the richest man in the world. He terrifies other titans of business and finance.