BERKSHIRE HATHAWAY 2006 TRIP
May 5-7, 2006
|ON THE PLANE
My trip to Berkshire Hathaway started at the Nashville, TN airport, but
things didn't start getting interesting until I got to Memphis, TN. It was
there that I boarded the plane to Omaha, NE. One after one, people got on
the plane. One guy with Graham's "Security Analysis" book, another with
"The Intelligent Investor", another with "The Warren Buffett Way", and on
and on. In hindsight, I think the entire flight was full of Berkshire
Hathaway investors because I saw a bunch of them throughout the weekend at
When the plane was landing, I was talking to a guy and his wife. He's been
a Bershire shareholder since the early 1990's and this was his seventh
visit to Omaha. He said he had to thank Warren because he did a lot of
great things for him.
For me, it was my first visit and the excitement of the trip only allowed
me four hours of sleep the night before.
I picked up my rental car at the Hertz place - a Pontiac Vibe. It was a
nice car that got me around the city with ease.
At 11:15 AM, my first stop was the French Cafe in the historic district.
The restaurant opened in the 1960s and had those fourteen foot ceilings.
At the entrance, there was a magazine about the annual meeting, so I
picked that up and ate lunch at the bar. I ordered a beef tenderloin
sandwhich and a quadruple Dewar's. Then I started asking the bartender and
manager about the city and about Warren Buffett.
They said he showed up the night before around 6-6:30 PM for pictures with
friends. He ordered a Cherry Coke and stayed for about 30 minutes. They
also said he was going to show up Saturday night to eat there. The
bartender said it's intimidating to serve his table because he's so
admired and everyone runs around frantically.
The food was OK. It's a good place to go when you feel like overpaying for
something, and it wouldn't be worth revisiting unless I knew Warren was
going to show up.
After lunch, I headed over to the Seville Plaza Hotel to see if I could
get into my room early. Luckily, they had my room ready. The hotel was
undergoing some renovations, so it had that "new" smell everyone desires.
I picked up some beer and enjoyed a couple while I unpacked. I turned on
CNBC and noticed the market had a great day.
From there, I went to Berkshire Hathaway's main headquarters. I didn't get
the chance to go inside, but I did get some pictures of the building from
Then I swung by Buffett's house for a few pictures. It's amazing he's been
in the same house since 1958. People could drive into his driveway if they
wanted to, but I'm not sure what happens after you do. I wasn't about to
At 4:30 PM, I showed up for the Yellow BRKer party. It was another
opportunity to talk to other Berkshire shareholders.
|Vooch, Shai Dardasti, and unknown
I first went up to Shai Dardashti to say, "Hello!"
and thank him for inviting me to the party. I also asked if I could get a
picture of him there, and he insisted that someone take a picture of the
both of us, so that was very nice of him. I'm the fat guy in the
yellow shirt. Shai is in the middle and I don't know the name of the
Whitney Tilson was also there, but I didn't get a chance to talk to him. I
think he left right after the speeches because he was throwing a party
later that evening at the Marriot. I was going to show up to that one, but
ran out of time.
About 150 people showed up to the party. They had a cash bar, so I got a
couple beers there.
I also met some interesting people there and learned a few things.
One guy asked me what stocks I was holding, so I ran
down the list: ACAS, APA, APT, ARLP, AZO, BBBY, BRKB, COF, CVX, DELL, DG,
DVN, ET, FRX, HD, HDI, JNJ, KOF, LPNT, LXK, MVK, PSUN, SKM, SPF, WMT.
He was concerned about DELL. He thinks Lenova is the lowest cost provider
and will give DELL high competition in the international space - the place
where all the growth opportunity is. He suggested I research Lenova some
He thought the ET has already run it's course. I agreed, but I've already
sold off major portions of my holdings after I doubled my money. The
remainder is still up +150%.
I told him I was concerned about FRX because they might be too
concentrated in too few products.
He liked the JNJ, but said LXK probably won't be going anywhere.
For SPF, like most of the people I talked to there, they said homebuilding
has run it's course and it's time to get out.
They were interested in BUD and think it's a great buy. I told them I
reviewed BUD, but felt their debt level was too high. I didn't think BUD
could get out of debt within five years.
I also asked them if Buffett still owned the billion ounces of silver that
he bought at $4/ounce. They said they thought he sold it, and I later
found out at the annual meeting that Buffett did sell it a while back for
a small profit. Today, silver is trading at $13/ounce. Buffett wishes he
held, but he admits it's impossible to get out at the peak all the time.
SPEECH - "The Genius of Warren Buffett"
At 6:30 PM, I show up at Roskens Hall. I run into another shareholder
outside and he points me in the direction of where I should be going for
the speech because I couldn't find the auditorium. So we head over to the
bathroom and chit chat for a bit.
portfolio at an early age
Later, I find out, this guy was the teacher from the University of
Tennessee that introduced Buffett to Clayton Homes. Before Mr. Miles gives
his presentation, this man gets up and starts talking about his Buffett
He said he wrote to Buffett and told him he had an article about Ben
Graham that he wanted to publish. Buffett said he couldn't help him. They
asked Buffett to come to Tennessee and Warren said he'd visit if he ever
had business in the area. They kept talking back and forth (I'm guessing
over months or years), and since Buffett didn't have any business in
Tennessee, the Tennessee crew said they'd go to Buffett to meet him if it
So when they gave Buffett the book about the Clayton Homes owner as a
gift, Buffett bought the company and gave all the students a B share, and
the teacher an A share.
It was really interesting to listen to the teacher because he was full of
enthusiasm. In fact, numerous people, throughout the entire weekend, were
very proud to be Berkshire shareholders.
The Miles speech was equally interesting. Miles said that when the big
opportunities come about, you should load up, just like when Buffett
bought GEICO or the Washington Post. Miles said Buffett bought the
Washington Post with a 20% Margin of Safety.
Miles said that Buffett is a genius in four things: Calculating numbers,
and 3 other things which I forgot.
He said Buffett has the calcuation ability of Albert
Einstein, the thriftiness of Benjamin Frankin, and the folksy penmanship
of Mark Twain.
He said that Buffett runs on a treadmill for an hour per day to keep his
body in shape and plays Bridge for 12 hours per week to keep his mind in
|Buffett's office desk
He said Buffett can read five books per day if he
wanted to, and that he is extremely intelligent.
He said Coke paid Buffett $125,000/year just to be on the Board of
Directors. Recently, we heard that Buffett resigned from his position
citing lack of time.
Buffett keeps his car for 10 years. When he got rid of his last car, it
only had 35,000 miles on it.
He receives 250-300 letters per day from people around the world.
|Inside the tent
At around 8:30 PM, I showed up at Borsheim's. They
had a huge tent. Inside was a band, and bartenders serving drinks, and
some finger food. They also had a bar made out of ice with liquor bottles
suspended inside the ice. It was neat.
All the liquor was free. I imagine, they get everybody loaded and then
they go inside and drop a ton of money on jewelry. When I went inside the
store - it was huge and full of people. When I walked through the store, I
entered into the mall area where it was full of people talking and having
a great time. There were bartenders everywhere serving anything you
I walked around, got a couple beers, and took some pictures.
Borsheim's was jam-packed
party continued out into the mall
There were bartenders all over the place serving free liquor
ice bar with liquor bottles suspended in ice.
(114th & Dodge)
At 10:00 PM, I showed up to another jam-packed place where everybody was
eating ice cream and talking. I ordered a Blizzard and looked at the books
Wiley was offering. Robert Miles was also there autographing books. Mr.
Miles has written several books and I purchased "Warren Buffett Wealth"
while I was in town.
I also saw a book there written by Janet Lowe called, "The Rediscovered
Benjamin Graham" which appeared to be interesting.
Before the Miles speech began, I heard there was a 20% discount at the
exhibit hall tomorrow, so I decided to wait and see what kind of books
were offered there, since this Wiley Books team didn't seem to be offering
At 11:30 PM, I jumped in bed, watched TV and fell asleep around midnight.
When the wake-up call rang at 4:00 AM, I couldn't get up, so I slept for
another hour or so.
|You've got to get
up early to get to the Qwest Center if you want a good seat
At 5:45 AM, I arrived at Qwest Center. The doors didn't open for another
75 minutes, but there were already 200 people in line and I showed up at
the perfect time - any later and the line got really, really long. The
building is impressive and the people in line were very nice. We chatted
about stocks and the real estate market for about an hour. Once again,
people were negative on the real estate market.
A camera crew came up to me an interviewed me for five minutes. It was
kinda funny. One question they asked me was, "If you could ask Warren
Buffett one question, what would you ask him?" I thought about it for a
second, then said, "I'd ask him what's the next stock he's going to buy".
It was cold standing outside, even in a thick long-sleeve shirt. People
from Justin's Boots were out passing cups of coffee. When a couple
thousand people were in line, a couple anti-abortion protesters came out
in full force showing huge pictures of aborted fetuses - it was kinda
gross at 6:30 in the morning.
When 7:00 AM came around, the doors opened up, and people started running
inside. They ran, and ran, and ran, down a hallway and up a flight of
stairs to get into the meeting area. Once inside, they started reserving
their seats. It was a madhouse. Luckily, I got a front row seat on the
side: Sec 121, Row A, Seat 5.
I was talking to the guy next to me. He's been there several times. He
said they issued 61,000 passes in 2005 and 77,000 passes in 2006 for the
event. The place only seats about 20,000 people.
A couple minutes before the movie begins, a bunch of bodyguards come
walking out Warren Buffett and he takes a seat to watch the movie. He was
only 20 feet away from me. It was amazing and I was smiling from ear to
ear. One guy asked a bodyguard if he could talk to Buffett and the
bodyguard said, "No".
The meeting starts out with what felt like an hour-long movie. It was
produced by Susie Buffett - Warren's daughter. It was a comedy which had
numerous clips: a cartoon about Warren, Charlie, and the See's Candy CEO,
as judges in an American Idol spoof called "Omaha Idol". The cartoon
featured the likeness of Steve Jobs, Snoop Dogg, Oprah Windfrey, Bill
Gates, Arnold Schwarzenegger, and other people.
Then, they show a clip of Warren Buffett who's calling Charlie Munger to
tell him to "Buy Internet Stocks!"....ahhahaa... In real-life, Warren
wouldn't do that because it's outside his circle of competance. Charlie's
on the other end of the phone, saying "No! No! No!". Then Warren calls
Jamie Lee Curtis, who's sitting in bed, talking to Warren on the phone.
Warren convinces her to call Charlie up and convince him to buy Internet
stocks. Jamie calls Charlie up, and Charlie says something like, "I think
Warren must have misunderstood me. I agree, we should buy Internet
Stocks". It was funny to hear them talk about that.
Then Ellen DeGeneres gave a tour of the See's Candy manufacturing facility
and had a little too much fun with the candy.
Interwined with the comedy clips were advertisements of several of the
businesses that Berkshire owns: Dairy Queen, Coke, Geico, and many others.
The funniest part of the movie is when they had the four girls from
Desparate Housewives sitting around a card table talking about the man
they want to marry. They were trying to decide whether they'd marry for
love or for money. Three of the girls would rather marry for love, but
Nicollette Sheridan said, "Why marry a Millionaire, when you can have a
Billionaire?" She pulls out Charlie Munger and he's sitting around the
table with them. It was hilarious because Charlie's like 80 years old and
he's got really thick glasses.
Later, Buffett was joking about how she pulled an Anna Nicole Smith move
and that, "When choosing between old rich guys, pick the older one."
The movie also featured a clip from Buffett's congressional testimony
about Solomon Brothers and how if one of the 8,000 employees loses money
for the company, that's OK, but to lose a shred of reputation it's
After the movie, Buffett and Munger introduced the Board of Directors.
Bill Gates was sitting front and center. Buffett then proceded to answer
questions from the audience.
I'm just going to highlight some of the things Buffett said:
Buffett is pumped up and excited about his recent purchase of Iscar
Metalworking for about $5 Billion. He kept saying that shareholders should
be rewarded in five to ten years down the road.
Buffett is going to Israel in September to look at similar businesses to
Buffett also talked about how not all businesses are attractive to him.
That the owners of some businesses have big heads and want big dollars. He
said he's in the middle of one such deal, and he think it's a mismatch and
he will walk away, but he wants to talk to this guy so he can learn all he
can from him. It was an interesting comment because it's almost as if he's
an alien who walks around and sucks out the brains of everyone he speaks
Buffett talked about the Forest River CEO's annual letters. I think the
guy wrote a book and it's recommended reading.
Warren says he's not interested in Internet stocks because he doesn't have
good visibility of what an Internet company would look like in 5-10 years.
He says he likes companies that will look a good bit the same 5-10 years
down the road as they do now.
Buffett says there's no question that ethanol usage will grow. Munger says
he doesn't like ethanol because it takes more energy to make ethanol than
what you get out of it.
They both talked about how copper has gone from 70 cents to $3.50 and how
oil has gone from $10 to $70.
Buffett said, "It begins with fundamentals and then it turns into
speculation. What the wise man does in the beginning, the fool does in the
Buffett said once people get envious about something that is hot (like
commodities and housing), nobody can determine the peak because it's
outrageous the prices can go.
Buffett said $45/sq ft is a good price to pay for a home. I ran the math
on my own home and came out with $62.50, so I guess I overpaid. hehe
Buffett said Berkshire has 400,000 sharesholders. I thought that was kinda
high and it might be an error.
One person asked if it's a good time to buy Berkshire Hathaway stock.
Buffett said, "No". They don't just go out and buy stocks of companies
they love. They Will only buy stock when the price is right.
Around that time, I was getting tired. I had 4 hours sleep the past two
days, so I went to the shopping area where all the companies feature their
products - some are selling stuff and others are not.
I go downstairs to the exhibit area and got some lunch. To my amazement,
the place is jam-packed with people. There's an overflow set up in 3
locations with large-screen TVs and chairs all over the place. Thousands
of people had to watch it from this area.
I go to the bookstore and found several DVDs worth buying.
I also met Janet Lowe there. I've already got three of her books, "Value
Investing Made Easy", "Warren Buffett Speaks", and "Damn Right" which is a
story about Charles Munger. I asked her why they didn't have "The
Rediscovered Benjamin Graham" book there, and she said I could find an
autographed copy of it at the Marriott near Borsheim's.
Meanwhile, Buffett was still on stage talking... I kept passing TVs with a
bunch of people sitting around them, taking notes, and watching. I must
have missed another 45 minutes of it, but I already know so much about
him, that a lot of the things he was saying was a duplication of effort.
I picked up a couple more things, then headed over to the Marriott to buy
After I picked up Lowe's book, I headed back to the hotel to take a nap. I
was exhausted. I was watching the pre-show for the Kentucky Derby and got
so tired I fell asleep and missed the race. Later I heard Barbaro won.
At 6:30 PM, I woke up and headed over to NFM. The place was jam-packed -
probably a thousand people were there. The lines were long. Inside, I got
to eat some of Warren's favorite things: a Hamburger, Cherry Coke, and a
Dairy Queen Dilly Bar. I watched some people play Warren's favorite game:
Bridge, saw his favorite color: Red, and heard his favorite music:
Dixieland. His favorite place to live is Omaha. There were three other of
Warren's favorite things there, but I didn't see them.
I also walked around the Nebraska Furniture Mart. They had an 82-inch flat
panel screen that was selling for over $100,000. It was huge.
This was probably the worst part of the trip, but it
could have been because I was so tired. I packed in a lot of things to do
while I was there. In less than 45 hours, I toured a beautiful city and
had a great time.
I just might go again next year.
largest furniture store in America
Inside the tent
82-inch flat panel worth over $100,000