INSUBCONTINENT EXCLUSIVE:
When
WarrenBuffett takes the stage at Berkshire Hathaway Inc's shareholders' meeting on Saturday, the 88-year-old billionaire will be
greeted, as usual, by tens of thousands of adoring followers from around the world.
Yet the Berkshire chairman and chief executive officer's
optimism about the state of capitalism, a likely theme as he and Vice Chairman Charlie Munger field questions for five hours, may appear
out of touch with the rise of populism in his country.
Buffett's endorsements of corporate stock buybacks, the much-criticized longtime
Berkshire holding Wells Fargo, and employer-focused attempts
to reform healthcare put the Oracle of Omaha at odds with the drive among some
Americans
to tackle income inequality using root-and-branch reforms.
Many announced Democratic presidential candidates for 2020 have
endorsed such measures as government-sponsored healthcare and the reining in of big banks, policies that might seem antithetical
PacifiCorp, parts and equipment makers Marmon and Precision Castparts, and food distributor McLane appear more aligned with Republican
President Donald Trump's industrial vision for America.
Trump in 2016 defeated
Buffett-backed Democrat Hillary Clinton for the White
House and championed an American manufacturing and rural economic renaissance, especially in its "heartland" where voters provided some of
his strongest support.
Now, even some of the strong American brands
Buffett bet on being immune
to competition are struggling.
One such
investment, Kraft Heinz Co, has lost more than half its value over two years as consumers moved
to foods perceived
to be more healthy or
natural.
"The businesses aren't necessarily bad, but the brands that were a part of the moat - the reason for the acquisition - are less
prominent," said Meyer Shields, an analyst at Keefe, Bruyette Woods
"That's a concern."
BERKSHIRE LAGS SP 500Investors appear
to have noticed
Berkshire's stock price, which
Buffett called the best measure of how the business is doing, has through Tuesday risen 6 percent this
year, compared with a 18-percent rise in the SP 500 index, including dividends.
Buffett's assistant did not respond
to an emailed request
for comment.
None of this, however, will stop
Buffett's fans from descending on Omaha this weekend.
Events will be held around the city,
and people can buy mementos such as postage stamps featuring
Buffett and Munger or, for $8,950, a pair of 2 carat-weight diamond stud
earrings from Berkshire's Borsheims jewelry unit.
Buffett's career of investing success and down-
to-earth public persona are part of
the draw.
He has used his popularity
to attract long-term shareholders and lend goodwill and credibility
to his business dealings.
This
included lucrative investments at the depths of the 2008 financial crisis, when he provided financing
to such companies as General
Electric, Goldman Sachs and Harley-Davidson.
DOMINANT STAKESSome policies endorsed from political left could weigh on Berkshire, though they
could be dead-on-arrival in the face of a Trump White House and Republican-controlled United States Senate.
For example, some research
shows that when big investors hold large stakes in multiple companies in the same industry, it might reduce the incentive for those
companies
to compete, boosting prices and reducing service for consumers.
Those "common ownership" arguments have drawn the attention of
United States regulators, including the Securities and Exchange Commission and Federal Trade Commission, the latter of which held hearings
on the subject last year.
Berkshire owns multibillion-dollar stakes in six of the largest United States banks plus American Express
It also owns close
to 10 percent of American, Delta and Southwest airlines, and more than 8 percent of another carrier, United
Continental.
"Investors like
WarrenBuffett - no one seems
to have any data about how much does he get involved in corporate governance,"
"The theory says he does not aggressively push firms
to compete more aggressively."
Meanwhile, proposals
to expand Medicare come as
Berkshire plows ahead on its Haven joint venture with Amazon.com and JPMorgan Chase
to cut healthcare costs for employees at those
companies.
Buffett also said in February that Berkshire was likely
to become a "significant" buyer of its own stock, especially if it
extended its three-year drought for major acquisitions.
Some lawmakers have proposed restricting buybacks unless companies commit
to paying
Berkshire employs more than 389,000 people.
All of this comes as
Buffett's advanced age highlights the need for investors
to assess
Berkshire once
Buffett is gone.
Buffett has shed many of his non-Berkshire roles, including sitting on outside boards and hosting college
students in Omaha.
He also ceded day-
to-day oversight of Berkshire's businesses in Jan
2018
to Vice Chairmen Greg Abel and Ajit Jain, each considered a possible successor as CEO.