BRK.A Berkshire Hathaway Inc

After more than eight hours of all things Warren Buffett and Berkshire Hathaway Inc., we are ready to close the book on Woodstock for Capitalists.

Our main takeaways this year: succession, Wells Fargo and trade. And realistically, succession was the only subject Mr. Buffett was asked about repeatedly, as Greg Abel and Ajit Jain adjust to larger roles.

1) In terms of succession, will a Berkshire without Mr. Buffett and Charlie Munger have a harder time buying companies?

Berkshire has a reputation as a "buyer of choice" for companies that want a permanent home where the managers will be allowed to stay on and run their businesses with relative autonomy. That reputation has helped Berkshire buy companies at slightly lower prices than other buyers like private-equity firms.

Mr. Buffett is not worried. "The reputation belongs to Berkshire now," he said. "For somebody that cares about a business... we absolutely are the first call and will continue to be the first call."

Berkshire is also famous for doing large deals during market downturns. After the 2008 financial crisis, Berkshire's large balance sheet allowed it to throw lifelines to companies like Goldman Sachs Group Inc. and General Electric Co.

"If things get bad enough, you don't have to worry about them calling us. No matter what," Mr. Buffett says.

2) Another area of contention was continued problems of Wells Fargo & Co., a Berkshire stock holding that has been mired in scandal for more than a year. After being asked at what point Berkshire should exit its investment in the bank, the audience applauded.

Mr. Buffett started off his answer by resurfacing a key talking point on the topic: that Wells Fargo had a flawed incentive system, an issue that was compounded by ignoring it.

He went on to say that Berkshire made some of its best investments when something bad happened and then the problems got corrected. He cited a stake in American Express Co. more than half a century ago.

"All the big banks have had troubles of one sort or another," he said. "And I see no reason why Wells Fargo as a company, from both an investor standpoint and a moral standpoint going forward, is in any way inferior to the other big banks with which it competes."

Mr. Munger chimed in: "Harvey Weinstein has done a lot in improving behavior too."

3) On a broader scale outside of just Berkshire, Mr. Buffett was asked his opinion on trade, and specifically the current trade tensions between the U.S. and China. It was a timely question given talks between the two countries took place this week.

Always the optimist, Mr. Buffett said he believes the two nations have a lot of common interests, and despite inevitable tensions between any two economic powerhouses, the countries have a lot to gain by working together. "The world is dependent on it," he said.

4) He also spoke about the movement of women speaking up against sexual harassment, especially in the workplace, which has spread globally.

One of the journalists asked Mr. Buffett how Berkshire was helping to advance women in corporate boardrooms and in executive leadership.

Mr. Buffett said that there is little turnover among Berkshire managers, but that about half of the new chief executives he has appointed in the past five or six years have been women. More broadly, he said he is now hopeful that more people in the U.S. and around the world are being promoted by merit, which is good for women and for the economy.

5) Finally, turning back to Berkshire, Mr. Buffett was questioned about a possible double-standard.

He has for decades criticized professional money managers for earning high fees that take away from their clients' investment returns.

But Berkshire HomeServices is a surging part of his company and has many real-estate brokers charging fees.

"If you look at our close-to-50,000 agents now, I think they make a good living, or a decent living," Mr. Buffett said, adding. "But I would say that the people who manage money make a whole lot more money, with perhaps less contribution to the welfare of the person that they're dealing with."

-- Geoffrey Rogow

Write to Geoffrey Rogow at geoffrey.rogow@wsj.com

(END) Dow Jones Newswires

May 05, 2018 17:34 ET (21:34 GMT)

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