(May 2, 2015) The 2015 #Berkshire Hathaway Annual Meeting marks the 50th anniversary of Warren #Buffet running #Berkshire Hathaway. The mood at the 2015 #Berkshire Hathaway Annual Meeting was even more celebratory than usual. Warren #Buffett and Charlie Munger were as sharp as ever and put on another excellent meeting at Berkshire Hathaway. For five hours, Warren #Buffett and Charlie Munger answered questions before 40,000 people that ran the gamut from business specifics to philosophical life questions.

At the 2015 #Berkshire Hathaway Annual Meeting, one shareholder asked Warren #Buffett and Charlie Munger on 3G Capital (the private equity firm #Berkshire Hathaway partnered with to buy Heinz and Kraft) and its practice of significantly reducing headcount after an acquisition. Warren #Buffett stated that there is no policy to have more people than we need and provide an example on the headcounts in the railroad industry. Warren #Buffett pointed out that railroads went from 1.6 million workers to 200,000 while delivering more freight and better safety records. Warren #Buffett does not believe in hiring extra people, and most of the #Berkshire Hathaway’s managers don’t operate that way. Where Warren #Buffett sees it, Warren #Buffett may tolerate it, but Warren #Buffett does not like it. Charlie Munger is also not a fan of employing too many people and compared it to working in Russia: “They pretend to pay us, and we pretend to work.”

Warren #Buffett and Charlie Munger were asked to comment on the IBM stocks. Charlie Munger said that that IBM is not similar to textile mills in the 1960s. #Berkshire Hathaway owns many companies that were mightier in the past than they are now. But IBM has managed through many tech changes. Warren #Buffett added that the share buyback program at IBM should help in the longer term.

With regard to the culture and growth rate of #Berkshire Hathaway, Warren #Buffett states that the culture of #Berkshire Hathaway runs as deep as any large company’s could. For example, Mrs. Louis in Germany, owner of a motorcycle apparel and accessories retailers, wanted to sell to #Berkshire Hathaway because the culture of Berkshire Hathaway is institutionalized and will last for decades.

#Berkshire Hathaway owns significant amount of Coca Cola stock. On the trend of eating less sugar, Warren #Buffett said that while consumer food companies will adjust over time, Coca Cola remains popular with 1.9 billion Coca-Cola products consumed per day. That was true decades ago, and Warren #Buffett is confident that it will be true far in the future. Charlie Munger commented that sugar is enormously helpful because it prevents premature softening of the arteries.

At the 2015 Annual Meeting, Warren #Buffett and Charlie Munger were asked to evaluate the Auto dealership business. Warren #Buffett believed that auto dealers have no scale advantage – it is a local business. The finance part is not attractive either because banks are a cheaper source of money. As a result, the margins of auto dealership won’t widen as they grow their businesses.

#Berkshire Hathaway shareholders also challenged Warren #Buffett and Charlie Munger on the environmental issue. Warren #Buffett stated that twenty percent of #Berkshire Hathaway Energy in Iowa comes from renewable energy (wind). That will be 58 percent by the end of 2015. Warren #Buffett continued that #Berkshire Hathaway Energy has $18 billion committed to renewable energy (wind and solar). It is dependent on tax credits, and Berkshire Hathaway is able to invest far more money because of the consolidated tax return – more than any other utility. Most utilities don’t pay that much income tax.

Warren #Buffett recalled his worst failure as #Berkshire Hathaway invested $400 million in Dexter Shoe, and Dexter Shoe went to zero. And #Berkshire Hathaway compounded the mistake because #Berkshire Hathaway paid for it in stock. Charlie Munger said that in most of the time, #Berkshire Hathaway makes mistake when #Berkshire Hathaway issues shares.

On the corporate activism, Warren #Buffett believed that the best defense against activism is performance. In 2015, money was flowing into activism. Activists were reaching in terms of the kinds of companies they are targeting. Warren #Buffett did not believe activism is a constructive activity. For example, activists are urging companies to repurchase shares, even though shares seem to trade above intrinsic value.

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