Berkshire Hathaway annual meeting tomorrow and first-quarter earnings preview; Amazon earnings; The first $2 trillion company; #DonatetheStimulus or #SpendtheStimulus

By Whitney Tilson

Friday, May 1, 2020

1) For the first time in 22 years, I won’t be flying to Omaha for the Berkshire Hathaway (BRK-B) annual meeting, which really bums me out.

My friend and former partner Glenn Tongue, who’s been going almost as long as I have, feels the same way. Here’s his take:

The first weekend in May has, for most of my adult life, meant the annual pilgrimage to Omaha to spend a day listening to my investment heroes, CEO Warren Buffett and Vice Chairman Charlie Munger. They always generously share their wisdom with remarkable clarity and humility.

The weekend also affords a chance to become fully informed about Berkshire’s businesses and investments, both from Buffett and Munger during the meeting, as well as outside of it, from other shareholders and occasionally one of the company’s operating managers, who are unusually approachable.

It is a wonderful weekend – a chance to catch up with old friends, make new ones, and enjoy the camaraderie in the Berkshire Hathaway bubble.

But there will be no Omaha extravaganza this year. The coronavirus has seen to that. So the more than 30,000 of us who would have been there will just have to look forward to next year!

The meeting, however, is taking place – albeit only via livestream – beginning tomorrow at 4:45 p.m. Eastern time. Per Berkshire’s press release:

As previously announced, we will not be able to allow shareholders to physically attend the meeting. However, the meeting will be streamed live on the Internet by Yahoo with a pre-meeting show beginning at 3:00 p.m. central time and can be accessed at

Warren Buffett, Berkshire’s CEO and Greg Abel, Berkshire’s Vice Chairman-Non-Insurance Operations will be physically present at the meeting. However, the other Berkshire directors will not be attending the meeting. In addition to the formal business to be conducted at the meeting, Mr. Buffett and Mr. Abel will respond to shareholder questions that were submitted to three journalists (Becky Quick, Carol Loomis and Andrew Ross Sorkin). Ms. Quick will ask those questions that the journalists decide are the most interesting and important. Mr. Buffett and Mr. Abel will have no prior knowledge of what questions will be asked, but they will not discuss politics or specific investment holdings.

I expect there to be at least two hours of Q&A.

I’m one of four guests that Yahoo has invited to provide commentary, both before and after the meeting – no pressure! 

2) As usual, Berkshire will release its first quarter earnings on its website at 8 a.m. Eastern time tomorrow. Here’s Glenn’s take on what to expect:

After a strong 2019, I’m not expecting great news from Berkshire in the first quarter. For starters, the mark-to-market losses in the equity portfolio will be huge, as Berkshire’s $248 billion in year-end 2019 stock holdings were hit hard amidst the 20% decline in the S&P 500 Index during the quarter. In particular, Berkshire’s airline and bank stocks got clobbered in the wake of the coronavirus crisis and the record-low interest rates that followed.

The utilities and most of the insurance businesses were probably fine, but many of Berkshire’s operating businesses are economically sensitive and thus were likely hit hard as well.

Difficult environments like this can be very beneficial for Berkshire in the long run, as Buffett has a $128 billion cash hoard and doesn’t hesitate to make huge investments when they make financial sense. Unfortunately, however, I don’t expect to see many opportunistic moves in the first quarter.

We may have gotten a preview of Buffett’s thinking from a WSJ article last month by Jason Zweig, in which he interviewed Munger. We learned:

1. The phone has not been ringing off the hook. Companies didn’t seem to be seeking bailout capital from Berkshire. This is not surprising because the government was offering cheap funds, and Berkshire offers more expensive capital.

2. Munger was clear in his belief that this is a time for excessive caution. “We’re like the captain of a ship when the worst typhoon that’s ever happened comes. We just want to get through the typhoon, and we’d rather come out of it with a whole lot of liquidity.”

3. Munger doesn’t believe anyone knows what will happen and noted that the uncertainty is unprecedented.

4. Berkshire will be permanently shutting down some of its smaller businesses.

In light of these comments, I would be surprised to see any major new stock positions initiated and doubt that Buffett bought back Berkshire’s stock in size.

In short, there likely will not be the usual annual meeting optimism. Buffett and Munger don’t sugarcoat things – they call them as they see them.

I expect there will be much talk during the annual Q&A about the depth of declines in business activity and a realistic assessment that it will be a long time before we return to normal.

As always, it will likely be great advice to carefully consider.

3) Internet retailer Amazon (AMZN) reported earnings after the close yesterday.

Along with Alphabet (GOOGL), Facebook (FB), and Berkshire, the company is an anchor stock in multiple Empire Financial Research portfolios.

Amazon’s revenue growth was an incredible 26% – compared to a tepid 1% for Apple (AAPL)… see this WSJ article on the comparison: Apple Survives While Amazon Thrives – and its operating cash flow was $3.1 billion versus $1.8 billion in the same quarter last year. But the coronavirus crisis has led to billions in incremental expenses, so profits were down – and CEO Jeff Bezos said they’ll stay down for a while – so the stock has fallen a bit today.

We’ll have a full update in our upcoming newsletters… but in short, we like Amazon more than ever. Mark my words: though Amazon’s $1.2 trillion market cap trails Microsoft (MSFT) ($1.4 trillion) and Apple ($1.3 trillion), I think it’s highly likely to be the first company to hit $2 trillion.

4) To our surprise, my wife and I received a stimulus check yesterday for $2,900.

Though it didn’t specify, I assume it was for us ($1,200 each) plus our youngest (17-year-old) daughter ($500). I’m not sure if our 21- and 24-year-old daughters will receive their own at some point (see: Next Wave of IRS Stimulus Payments Set to Hit Bank Accounts in Coming Days).

We must have qualified because I had no income in 2018, as I was launching Kase Learning.

To be perfectly honest, however, this check will not affect our spending by a single dollar. So we decided that, rather than just sitting on the money, to donate all of it yesterday afternoon to our favorite charities. They will no doubt spend it quickly, thus helping people in need…

If you’re in the fortunate position we are, then we encourage you to do the same – let’s start a hashtag, #DonatetheStimulus.

And if you’re not, then first pay down any high-cost debt (like credit cards) you might have, and if there’s any left over, then spend it – #SpendtheStimulus.

Remember, your spending is someone else’s income – that’s how any economy works – and I suspect we have roughly 25% unemployment right now, so let’s put every stimulus dollar to work stimulating our economy!

Best regards,


Whitney Tilson

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About Whitney Tilson

Prior to creating Empire Financial Research, Whitney Tilson founded and ran Kase Capital Management, which managed three value-oriented hedge funds and two mutual funds. Starting out of his bedroom with only $1 million, Tilson grew assets under management to nearly $200 million.

Tilson graduated magna cum laude from Harvard College with a bachelor’s degree in government in 1989. After college, he helped Wendy Kopp launch Teach for America and then spent two years as a consultant at the Boston Consulting Group. He earned his MBA from Harvard Business School in 1994, where he graduated in the top 5% of his class and was named a Baker Scholar.

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