At Annual Meeting, Investor Sees More Pain After Berkshire's Worst Year
By SCOTT PATTERSON and ALISTAIR BARR
At an event that is typically filled with hoopla, Warren Buffett spent much of his company's shareholder gathering this weekend defending a rough year. And he didn't hold out much hope in the near term for better results in many of Berkshire Hathaway Inc.'s businesses.
"We will continue to do quite well in our insurance and utility operations. We won't do well in other operations," Mr. Buffett said.
But Mr. Buffett was upbeat about opportunities for Berkshire, saying he believes the company is well positioned to capitalize on current market turmoil.
Berkshire last year suffered its worst year ever. Among its hard hit holdings were Wells Fargo & Co., and Moody's Investors Service. Berkshire's shares have fallen more than 30% since the end of September.
Mr. Buffett this weekend fretted that bank stocks could suffer further, thanks to the government's current stress tests of financial firms. His worry: Regulators might paint with too broad a brush and fail to recognize strengths that differentiate companies.
Warren Buffett toured the exhibit floor prior to the annual Berkshire Hathaway shareholders meeting.
"Maybe the whole idea is not such a hot idea," said Berkshire Vice Chairman Charles Munger.
A representative of the Federal Reserve declined comment.
Mr. Buffett said he is especially interested in U.S. deals. "We're always open to things internationally," he said, "probably a little less so now because there are things going on in the United States that are interesting to us."
Still, Berkshire's ability to do many deals may be hampered by a decline in its cash position. The company has roughly $20 billion, down from about $25 billion in cash at the end of 2008. Mr. Buffett has frequently said he would never let his cash go below $10 billion, leaving Berkshire about $10 billion to put to work.
Mr. Buffett predicted more doldrums for retail, manufacturing and services businesses, and offered little hope for newspapers.
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Housing, at least in medium- and lower-end markets, is seeing a pickup in activity, albeit at lower prices, the famed investor said.
He surprised his audience Saturday by sharing some results for the company's first-quarter performance. Operating profits declined to $1.7 billion from $1.9 billion a year earlier, he said. Full results are expected Friday.
Regarding succession, Mr. Buffett has said he plans to split the chief executive and chief investment officer roles. He said Saturday the four money managers who may oversee Berkshire's investment portfolios in the future did no better last year than match the S&P 500's 37% decline. "You would not say that they covered themselves with glory," he said. "I didn't either."
"I have not changed the list" of possible people for the job, Mr. Buffett said, but "we're always looking to add more people to it."
Write to Scott Patterson at scott.patterson@wsj.com and Alistair Barr at alistair.barr@marketwatch.com
