Magazine article New Zealand Management

The World's Best AGM. (Best Practice)

Magazine article New Zealand Management

The World's Best AGM. (Best Practice)

Article excerpt

Jim Scott, former Air New Zealand chief executive and now chairman of his own rapidly growing investment company Aquiline Holdings, was looking for a model and inspiration on which to base the staging of his company's annual general meetings. "They should be a time of celebration," he says. So he took off for the best and reported back to The Director.

It is the world's best annual general meeting and, before this institution disappears, I wanted to be there. I wanted to be in Omaha, Nebraska, on Saturday May 3.

This relatively small--population 750,000--and unlikely United States mid-western city is headquarters to Berkshire Hathaway Inc and home to its legendary 72-year-old chairman and chief executive Warren Buffet. I joined 10,000 other shareholder fans to watch him and his slightly older septuagenarian sidekick, vice-chairman Charlie Munger, in action. I wasn't disappointed.

Buffet is, for my money, the world's most successful value investor. His personal wealth exceeds $50 billion and Berkshire's market capitalisation of $180 billion is 4.5 times greater than the entire New Zealand Stock Exchange.

We came from every corner of America and the globe to hear the best in the business speak. A trip to Berkshire's AGM had become a priority for me since founding Aquiline Holdings, our Hawkes Bay-based management and investment company, which focuses on value investing. And besides, Buffet and Munger, despite their obvious energy, aren't getting any younger.

Aquiline has now invested in 10 small to medium size enterprises (SMEs) with aggregate sales of $100 million this coming year. It was time to make the pilgrimage to see if we could emulate the model created by Buffet and Munger, right through to the way they ran their AGM. An AGM should, after all, be a time to celebrate. And that's what 10,000 of us who squeezed into Omaha's downtown Civic Auditorium came to do. We came to listen, to watch, to ask questions and to burst into applause at the frank and honest answers delivered by these two high-profile leaders.

Buffet and Munger were born in Omaha. As youngsters they both worked at the same grocery store, though never got to meet each other then. Buffet bought his first listed shares as a 12-year-old. Twenty years later he became chairman of Berkshire Hathaway, a poor-performing textile company. Munger teamed up with him soon after and one of the most amazing investment stories of all time began.

Forty years ago a Berkshire share traded at $9. It recently peaked at more than $145,000 a share. Some shareholders at the AGM were predicting that it would "break US$100,000" ($180,000) before the next AGM. Optimistic I thought, but when Buffet told the meeting Berkshire's first quarter 2003 result would hit US$1.7 billion before tax, even I began to think it was possible.

Buffet's reputation as the best in value investors came under attack during the US stock market and dotcom boom. He steadfastly refused to buy high tech stocks and the investment media wrote him off. That's when I took a real interest in his style.

Over the past three years I've read the books and articles on Berkshire, Buffet and Munger. I have watched the spectacular recovery and the re-rating of Berkshire since the dotcom bubble burst. The followers and faithful shareholders at the AGM saluted this success story at every opportunity.

I arrived in Omaha late on Thursday evening, 24 hours after boarding the first leg of my journey at Napier. The next day I went in search of Berkshire's head office and the workplace of the just 13 employees that oversee this enormously successful investment empire.

I found it, finally, in a plain 14-storey brick building 25 blocks from downtown Omaha. The top floor might be occupied by the most successful investment company in the world, but there is nothing to indicate it. No boastful signage. No extravagant statements of success, like those that bedeck nearly every other top 500 company in the US. …

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