A Few Thoughts Before Buffettpalooza Begins Next Week
So far a lot of the attention, well, okay, nearly all the media attention, has focused on the Sokol Debacle (I hate the term, Sokol-gate). There will be some other things going on. Just a few thoughts.
> Historically Buffett makes some favorable announcements right before, or the day of, the meeting. These often include acquisitions but can be as simple as the deal just announced to reinsure part of AIG's asbestos liabilities. This year the incentive to put out some good news is pretty strong, so you should be anticipating that if there is something favorable to announce, even if it has to be dug up from under the mattress, you will hear about it.
> If Buffett holds true to form there also will be a slide showing Q1 results, which are likely to impress. The economy has picked up quite a bit since January, which will help the cyclical businesses. BNSF traffic should be good. If Progressive's results are any indication, GEICO will have a nice first quarter. Other insurance companies, however, had a rough start to the year. Berkshire's National Indemnity and General Re are probably going to report above-average catastrophe losses.
> With equities roaring, book value is likely to post a solid gain unless catastrophe losses are so high they offset other earnings and realized gains from security sales (which is doubtful).
> Payback of Goldman $5B of preferred stock did not take place until April 18, so the nice bump from the 10% premium will be a second quarter item and will offset lower investment income from that quarter. This may be discussed, along with the expiration and runoff of sweetened earnings from other similar financial crisis deals.
> Although it has not gotten much attention, MidAmerican Energy is trying to get a controversial proposal approved to build a nuclear plant in Iowa. I would not be surprised if Buffett has some (favorable) comments on nuclear energy in the context of Japan.
> Buffett the populist and Buffett the capitalist come into conflict when labor issues arise. He hates labor unions and historically has shut down businesses and outsourced work when the economics dictated it. This year, his "all-in bet on America" comment may lead to questions about how this jibes with outsourcing Marmon employees and the recent rash of labor organizing among formerly non-unionized employees at NetJets. I would not be surprised if his answer to the question of persistent high unemployment, outsourcing, and stagnant real personal incomes is along the lines that corporate taxes are businesses' contribution to the social safety net, and we need to put a stop to corporate tax evasion.
> Will Buffett or won't he put the Salomon "lose a shred of reputation" video in the movie? Lot of speculation about this one. This question falls into the class of entertaining minutia that will overshadow this meeting in many respects. Have fun speculating, but pay attention to the big issues as well.
> Lastly this isn't meant to be a comprehensive list, just some thoughts. Add your own below.