Buffett's Empire, In 194,300 Square Feet -- WSJ

Date : 05/04/2019 @ 8:02AM
Source : Dow Jones News
Stock : Berkshire Hathaway Inc (BRK.A)
Quote : 267954.0  -3521.0 (-1.30%) @ 9:05PM

Buffett's Empire, In 194,300 Square Feet -- WSJ

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A massive exhibit hall shows off Berkshire's reach

By Nicole Friedman, Erik Holm and Hanna Sender 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 4, 2019).

Warren Buffett has always known how to make a buck.

As the annual meeting for his Berkshire Hathaway Inc. has grown in popularity over the years, Mr. Buffett and his staff have gone to greater and greater lengths to make sure attendees have plenty to spend their money on.

For more than a decade, the meeting has been held at a massive arena in downtown Omaha, Neb., big enough to accommodate the tens of thousands who now make the pilgrimage to the event, often called "Woodstock for Capitalists."

The arena is adjoined by a 194,300-square-foot exhibit hall, and on Berkshire weekend, it is filled with products from dozens of Berkshire-owned companies, offering everything from candy and soda to mobile homes and chartered plane flights. Not all of Berkshire's 60-odd subsidiaries participate, but a look at the floor of the exhibit hall offers a glimpse at just how vast Mr. Buffett's empire has grown.

The hall in the CHI Health Center Omaha (formerly called the CenturyLink Center, and before that, the Qwest Center) is open from noon to 5 p.m. on Friday, and 7 a.m. to 4:30 p.m. on Saturday. The Friday hours were added in 2015 to help drive more sales.

"A friendly warning," Mr. Buffett once joked in a shareholder letter. "If I find sales are lagging, I get testy and lock the exits."

Brooks Running Acquired by Berkshire in 2006 Brooks Running hosts a 5-kilometer "fun run" in Omaha the day after the annual meeting. Each year, it sells a new special edition Berkshire running shoe.

Fechheimer Acquired in 1986 Ohio-based Fechheimer has been making uniforms since the Civil War (it supplied both North and South). It now sells to the military, police, firefighters and transit workers, among others.

Fruit of the Loom Acquired in 2002 Fruit of the Loom, one of the many familiar brands that Berkshire owns, sells Berkshire-themed merchandise at the annual meeting, including "Berky Boxers."

Benjamin Moore Acquired in 2000 Paint maker Benjamin Moore's 2019 color of the year is Metropolitan AF-690, a shade of gray.

Nebraska Furniture Mart Acquired in 1983 Nebraska Furniture Mart was founded in 1937 by Rose Blumkin, known as Mrs. B, who emigrated from Russia to the U.S. Mr. Buffett bought the company from her in 1983 with a two-page agreement and a handshake.

Oriental Trading Company Acquired in 2012 This party-supply company sells Berkshire-themed toys at the annual meeting, including rubber ducks representing Mr. Buffett and his business partner, Charlie Munger.

Pampered Chef Acquired in 2002 Pampered Chef is run by Tracy Britt Cool, formerly Mr. Buffett's financial assistant. The cookware company is currently attempting to popularize something called the " bubble waffle."

Shaw Acquired in 2001 Carpet and flooring company Shaw Industries does $6 billion in annual sales and employs more than 22,000. It was once Berkshire's largest non-insurance business. Now it gets a half-page mention in Berkshire's 100-plus-page annual report.

Kraft Heinz Berkshire owns 27% of Kraft Heinz Co., and large write-offs at Kraft Heinz weighed down Berkshire's 2018 results. Mr. Buffett said in February that he overpaid for Berkshire's stake in Kraft Heinz.

Coca-Cola Berkshire is Coca-Cola Co.'s largest shareholder with a 9% stake. Mr. Buffett took a big stake in the soda company more than 30 years ago. Mr. Buffett, a major fan of Coke's products, has called the investment "a rather extreme example of putting our money where my mouth was."

Dairy Queen Acquired in 1998 Mr. Buffett isn't just the owner of International Dairy Queen, he's also a client. He regularly brings his great-grandkids to his local Dairy Queen in Omaha, and says it was there that he did some of the research that led him to take a big stake in Apple Inc. He told CNBC that he quizzed his great-grandkids and their friends about their loyalty to their iPhones on one of their DQ expeditions.

See's Candies Acquired in 1972 When Mr. Buffett bought See's, it marked a shift in his investment approach from looking for cheap companies to acquiring good businesses at reasonable prices. Mr. Buffett and his business partner, Charlie Munger, eat See's treats -- usually peanut brittle -- throughout the day while answering shareholder questions at the annual meeting. The two used to be closely involved in overseeing the candy company, but it's a small part of Berkshire now.

Geico Acquired in 1996 Geico Corp. is the No. 2 car insurer in the U.S. by market share. Its longtime CEO Tony Nicely retired last year. (He remains chairman.) Mr. Buffett said Mr. Nicely has grown Berkshire's intrinsic value by more than $50 billion.

Three Launched in 2019 Berkshire Hathaway's insurance group recently launched a new small-business insurance policy, dubbed Three. The hook: the policy is just three pages long.

Acme Brick Acquired in 2000 Acme holds the Guinness World Record for largest brick. Dubbed "Baby Clay," it was more than 9 feet long and more than 3 feet high.

BH Energy Acquired in 2000 Berkshire Hathaway Energy's four regulated utility companies serves about 4.9 million customers in the U.S., and its U.K. subsidiary reaches about 3.9 million. It also owns gas pipelines and a residential real estate brokerage chain. Greg Abel, one of Mr. Buffett's top two lieutenants, was CEO of Berkshire Hathaway Energy until last year, when he was promoted to oversee all of Berkshire's noninsurance businesses.

Duracell Acquired in 2016 Berkshire traded a longtime stake in Procter & Gamble Co. for battery maker Duracell. Both Duracell and its chief competitor, Energizer Holdings Inc., use pink bunnies to sell their batteries. A 1992 agreement between the brands allowed use of the Energizer Bunny in the U.S. and the Duracell Bunny in other parts of the world.

Marmon Acquired in 2008 Marmon was a conglomerate in its own right before Mr. Buffett acquired it from Chicago's Pritzker family in 2008. It consists of more than 100 manufacturing and servicing businesses, including units that lease railcars, operate cranes, sell pipes and more. It had revenue of about $8 billion last year.

Precision Steel Acquired in 1979* Precision supplied the stainless steel for a part of the Mars Curiosity Rover. It is unrelated to Precision Castparts, a company Berkshire bought in 2016 for $32 billion.

BNSF Acquired in 2010 When Berkshire announced the $26 billion deal to acquire Burlington Northern Santa Fe, one of the largest railroads in the U.S., Mr. Buffett called it "an all-in wager on the economic future of the United States." It's paid off well for Berkshire: BNSF earned $5.2 billion last year alone.

Forest River Acquired in 2005 Recreational-vehicle maker Forest River typically brings an RV or boat to the annual meeting for shareholders to tour.

NetJets Acquired in 1998 Fractional-jet company NetJets typically brings a jet cabin to the annual meeting in hopes of convincing attendees to sign up for a jet-sharing plan.

The Bookworm The Bookworm, an Omaha institution that's not owned by Berkshire, runs a booth for shareholders to buy reading material about the company, and other books that Mr. Buffett recommends. His top recommendation this year is "The Moment of Lift: How Empowering Women Changes the World" by Melinda Gates.

Yahoo Yahoo Finance, which is not owned by Berkshire, streams the annual meeting online.

Charlie's Campaign Headquarters The booth appears to be the headquarters for a campaign by Mr. Munger to become chairman of Berkshire -- Warren Buffett's job. In truth, Mr. Buffett organized it as a surprise for his friend and business partner.

Some of Berkshire's largest companies don't have much of a presence at the meeting. The notable absences include insurer General Re, Berkshire Hathaway Automotive and Precision Castparts.

*Precision Steel was acquired by Wesco in 1979. Berkshire owned a majority stake in Wesco at the time; Wesco was folded in to Berkshire in 2011.

Write to Nicole Friedman at nicole.friedman@wsj.com and Erik Holm at erik.holm@wsj.com

Read more of The Wall Street Journal's coverage of Berkshire Hathaway and its annual meeting.

Dinner with Charlie: The World According to Mr. Munger

Charlie Munger is a living reminder that to be a great investor, you must be a great learner. Warren Buffett's long-time business partner says one key to his success is that he's "good at destroying my own best-loved ideas."

When Warren Buffett Takes the Stage, Try Your Hand at Berkshire Bingo

Optimism about America. Criticism of hedge funds. Disparagement of vegetables. Play along as the Berkshire Hathaway chairman hits on his favorite topics at his company's annual meeting.

Charlie Munger Has a Side Gig: Designing College Dorms

The 95-year-old billionaire has many unusual ideas about architecture, and schools have to listen when he funds new buildings.

The Berkshire Empire Is Quietly Collaborating More Than Ever

An increase in communication among senior Berkshire leaders offers a glimpse at the future of the conglomerate when Warren Buffett no longer runs it.

Howard Buffett Looks Beyond an Oracle for Advice

The philanthropist/farmer/politician/author discusses his "personal board of directors," the group he turns to for guidance. They include a former senator, a former Coke executive, a nonprofit executive, and his dad, famed investor Warren Buffett.

 

(END) Dow Jones Newswires

May 04, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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