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Buffett invests big chunk of Berkshire Hathaway’s cash

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By Josh Funk in Omaha

OMAHA, Neb. (AP) — Warren Buffett gave Berkshire Hathaway investors a few details Saturday about how he spent more than $50 billion earlier this year and again reassured them that the company he built will endure long after the 91-year-old billionaire is gone.

Tens of thousands of investors packed an Omaha arena Saturday to listen to Buffett and Berkshire’s vice chairmen answer questions at Berkshire’s annual meeting that was back in person for the first time since the pandemic began, but the turnout was likely smaller than when it used to regularly attract more than 40,000.

Berkshire revealed in its earnings report Saturday morning that its mountain of cash shrank to $106 billion in the first quarter from $147 billion at the beginning of the year as Buffett invested $51 billion in stocks.

Buffett told shareholders Saturday that right after he wrote to them in his annual letter on Feb. 26 that he was having trouble finding anything to buy at attractive prices, Berkshire spent more than $40 billion on stocks over the next three weeks.

Buffett didn’t reveal everything he bought but did mention several highlights, including boosting Berkshire’s stake in oil giant Chevron to $26 billion, up from $4.5 billion at the beginning of the year to make it one of the conglomerate’s four biggest investments. Berkshire also spent billions buying up 14% of Occidental Petroleum’s shares in the first half of March, and added to its already massive investment in Apple stock.

Edward Jones analyst Jim Shanahan said that with the Chevron and Occidental investments combined Berkshire now has more than $40 billion invested in the oil sector.

Even before Saturday, it was clear Buffett was on the hunt because he agreed to buy the Alleghany insurance conglomerate for $11.6 billion and made another multibillion-dollar investment in HP Inc. Buffett said Saturday that he also bought three German stocks but didn’t name them.

Buffett said Berkshire was able to take advantage of the fact that Wall Street is largely run like a “gambling parlor” with many people speculating wildly on stocks.

“Occasionally, Berkshire gets a chance to do something, and it’s not because we’re smart. It’s because we’re sane.” Buffett said.

Buffett revealed Saturday that he has made a big bet on Microsoft’s planned acquisition of Activision Blizzard. He said a couple months after one of Berkshire’s other investment managers bought roughly 15 million Activision shares, he increased that stake to roughly 9.5% of the company — or about 74 million shares — after Microsoft announced the deal in January because Activision stock was selling for less than the $95 per share deal price.

Both Buffett and his investing partner, Charlie Munger, reiterated their past criticisms of cryptocurrencies like bitcoin because they don’t produce anything. Munger said cryptocurrencies are “stupid because they’re likely to go to zero” and “evil because they undermine the Federal Reserve.”

Even though Berkshire is led by Buffett and the 98-year-old Munger, investors didn’t ask much about succession planning perhaps because Buffett said a year ago that Vice Chairman Greg Abel, who oversees all of the company’s non-insurance businesses now, will eventually replace him as CEO. Berkshire also has two other investment managers who will take over the company’s portfolio.

Buffett said he thinks Berkshire’s decentralized culture that relies heavily on trusting people to do the right thing and avoiding huge risks will help the company thrive well into the future and many of the companies it owns like BNSF railroad and its major utilities will remain stalwarts of the economy.

“Berkshire is built to forever. There is no finish point,” Buffett said. “The new management — and the management after them and after them — are just custodians of a culture that’s embedded.”

Investor Harris Kupperman, who leads the Praetorian Capital hedge fund, said he’s not especially worried about the Berkshire’s future because the eclectic conglomerate has a solid foundation.

“He built it as well as he could build it. Nobody is ever going to be him. That’s obvious,” Kupperman said.

He said perhaps Buffett’s eventual successor will be able to reevaluate some long-term Berkshire investments that Buffett has held for decades and decide whether it still makes sense to hang onto things like the company’s huge Coca-Cola stake.

But Buffett’s and Munger’s ages are always in the back of Berkshire investors’ minds because there may not be too many more meetings with both of them. Munger sat in a wheelchair during Saturday’s meeting.

“Actuarily, I don’t know how much longer they’ll be able to do this,” said Josu Elejabarrieta, 43, of Miami, who was attending his first meeting.

In response to concerns about the current high inflation, Buffett told investors that the best thing they could do is invest in themselves so that someone will always want to pay them for their services regardless of how much a dollar is worth. He said all of Berkshire’s companies are paying extraordinarily higher prices for raw materials and products, but inflation should have been expected after all the money the government sent out during the pandemic.

“We’ve had a lot of inflation, and it would be almost impossible not to have it with all the money we mailed out,” he said.

Earlier Saturday, Berkshire said its first quarter earnings fell more than 53% on a large swing in the paper value of its investments. Berkshire said it earned $5.46 billion, or $3.702 per Class A share, during the quarter. That’s down from $11.7 billion, or $7.638 per Class A share, a year ago.

Buffett says that Berkshire’s operating earnings are a better measure of the company’s performance because they exclude investment gains and losses. By that measure, Berkshire’s earnings remained steady at $7.04 billion, or $4,773.84 per Class A share, up from $7.018 billion, or $4,577.10 per Class A share, a year ago.

The four analysts surveyed by FactSet expected Berkshire to report operating earnings of $4,277.66 per Class A share.

In addition to investments, Berkshire Hathaway owns more than 90 business outright, including BNSF railroad, several major utilities, Geico insurance and an assortment of manufacturing and retail companies.

Janet Dalton of Overland Park, Kansas, said she has been attending the meetings for decades. Her family has an even longer association with the company because her dad bought stock in the Berkshire Hathaway textile company even before Buffett took it over in 1965 and began to convert it into the conglomerate it is today. They never sold the shares, which now sell for nearly $500,000 apiece.

Dalton said she misses the more detailed business answers that Buffett used to give at the earlier meetings she attended.

“When I first came to the meetings, it was like getting a mini-MBA. Now it has become more general,” Dalton said. But part of what keeps her coming back year after year is the chance to reconnect with friends and fellow investors she’s met at past meetings.

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Red Deer Brewery to hold Beer Tasting on the Ross Street Patio

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Sawback Beer Tasting on the Ross Street Patio

The Ross Street Patio is celebrating its 10th summer and Sawback Brewing Co. is releasing a new Raspberry Ale named after the Downtown’s most loved feature – The Ross Street Patio!

On Friday, May 27th, the Downtown Business Association and Sawback Brewing will host a free tasting from 5-8PM, complete with live music from Paeton Cameron and James Adams and a light snack from Chubby’s Jerk BBQ & Kitchen! Visitors can then grab a seat on one of the adjacent restaurant patios for a full-sized Ross Street Patio Beer and enjoy the show. This event is free and open to the public.

Amanda Gould, Executive Director of the DBA says, “This is such an exciting time for the Ross Street Patio and Downtown.  We have so much planned over the summer and the next natural step is to license the entire patio through council deeming it an Entertainment District. We will find out in the beginning of June if council approve the bylaw and, straight after that, you can start enjoying full-sized beverages right on the patio while enjoying the summer entertainment!”

The Ross Street Patio is the hub of downtown entertainment, and the DBA is proud to be programming it for the summer season – summer activities include art installations, live music and family fun activities. “Follow us on Facebook to keep updated on what’s going on and when.  If you are a community group or an event organizer wishing to bring some activity to Ross Street Patio, please direct message or call the DBA to find out about the support, including financial support, that we can provide to help your event or activity come to life.”

The Downtown Business Association has been operating in Red Deer for over 30 years, serving approximately five-hundred business owners in the Downtown area. Through partnerships and leadership in advocacy and promotion, the DBA is the catalyst for a vibrant and prosperous downtown that is the place to live, work, play and do business.

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Downtown Red Deer: safe, fun and open for business!

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By Mark Weber

With summer just around the corner, downtown Red Deer is all the more bustling with fun events and even more local businesses to check out. But there are a few misconceptions about the area that persist, and that can even prevent some folks from visiting the city’s increasingly vibrant core. “Downtown Red Deer has an always lot of good things going for it,” explained Amanda Gould, executive director of the Downtown Business Association. “Sometimes, that is outweighed by the perception people have of downtown. “What we need to remember is all that has been happening downtown, what with the murals, the events, the alley upgrades – there are a lot of good things happening. And it’s making it such a great destination to come and visit and to also set up your business,” she added.

“We have seen, over the last year, an increase of 50 new businesses downtown. It’s great news, and the downtown is a great place to go.” As mentioned, however, certain misconceptions about the downtown area persist including that
there is a significant parking problem. “We absolutely do not have a parking issue,” noted Gould. Visitors may not always be able to park directly in front of their destinations, particularly if they are in a facility with lots of other businesses and agencies, but there are typically plenty of places to park nearby if you are prepared for a short jaunt. “If you were to travel just a half a block down the street, or even a block down, you will find there are usually plenty of spaces. We are lucky that our downtown is walkable as well.”

She also mentioned that some residents believe that downtown Red Deer is unsafe. “Again, this is a misperception – it’s not the reality of it,” she said. “We are so lucky as a neighbourhood downtown to have our own RCMP policing unit everyday – they chat with business owners and help them solve any safety issues they may come into contact with,” she said. “There is a team of seven on that unit, and surely that makes downtown one of the safest places to be.”

As to the surge in businesses, Gould noted that reasonable rents attract local entrepreneurs to launch ventures there as well – nicely adding to the growing variety of businesses in the area. It’s yet another plus for Red Deer residents.

In the meantime, one of downtown’s most prominent features – the Ross Street Patio – is really starting to liven up these days with the warmer weather and regularly scheduled musical performances. ‘Music on the Ross Street Patio’ is a free event and is open to all ages. Performances run from 4:30 –7:30 p.m. on show nights. Another annual favourite, the Downtown Market, kicks off on Wednesday, May 25. An accredited farmers’ market, visitors are invited to come down and purchase all their fresh fruits and veggies between 3:30 and 6:30 p.m. each Wednesday. Live music on the Ross Street Patio is also a key feature on Wednesdays.

Gould added that Friday, May 27, is the official kick-off to summer on the Ross Street Patio. To celebrate, they have partnered with Sawback Brewing to introduce a limited-edition Ross Street Patio beer which is super exciting, she explained. “Free samples will be available at 5 p.m. that day (May 27). There will also be music and other activities. The special beer, featured at several downtown restaurants, will be available through the summer.

Looking into June, performances on the Patio will run on Wednesdays, Thursdays and Fridays. “Businesses are now opening up their patios – and we’ve got the music happening on the Patio, so we are really starting to see a lot more people coming down, spending some time outside and enjoying the live music that we are putting on,” she said.

For more about the Downtown Business Association and all that is planned for the Ross Street Patio, find them on Facebook or visit www.downtownreddeer.com.

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