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Why Omaha beckons Indian investors

April 29, 2016 13:50 IST

Die-hard fans of the sage of Omaha, Berkshire chairman and legendary investor Warren Buffett, can hear him dish out investment maxims from the comfort of their homes.

It’s that time of the year when a number of top Indian investment professionals make a pilgrimage to Omaha to attend the annual shareholders’ meeting of Berkshire Hathaway on Saturday (April 30).

But, with the entire event set for a live webcast for the first time this year, die-hard fans of the sage of Omaha, Berkshire chairman and legendary investor Warren Buffett, can hear him dish out investment maxims from the comfort of their homes.

BSE member Ramesh Damani, who has visited Omaha twice in the past to attend the meet, is one such investment veteran who will not be travelling to the US this year but will stay glued to the webcast on Saturday.

“Omaha is the Mecca of value investing; it’s like going on a pilgrimage. Despite the webcast, it is well worth paying a visit if you haven’t done so already,” he says.

Neil Parikh, chief executive of PPFAS Mutual Fund and son of noted investor Parag Parikh who died last year in a car crash in Omaha, is another investment professional who will be catching all the action from home.

“Until this year, if you wanted a lowdown of the proceedings at the annual meet, you had to either be there in person or wait for the notes to be circulated online,” says Parikh, who has accompanied his father in the past to attend the meet.

Parikh, however, believes that nothing beats the experience of “being there” in person with about 40,000 other shareholders and likens the experience to watching a live cricket match or a rock concert.

“It's always special to see Buffett and investment partner Charlie Munger field questions with their characteristic wit and wisdom,” he says. 

It’s no surprise, then, that a few regulars have booked their seats this year despite the webcast.

This includes Motilal Oswal Financial Services co-founder Raamdeo Agrawal, who has been a regular at the event for more than a decade now.

“It’s an investing pilgrimage and attending the AGM (annual general meeting) with thousands of believers imparts a different level of conviction and energy,” says Agrawal.

“Apart from the investment talk, their approach towards shareholders and corporate governance practices is a source of inspiration to everyone who wants to build a sound investment business.”

Group company Motilal Oswal Mutual Fund has, in fact, arranged a trip for 60 distributors to attend the meet this year.

“Our investing philosophy is influenced by the principles practised at Berkshire and we hope the day-long event will help our business partners appreciate where our thinking is coming from,” says Aashish Somaiyaa, managing director and chief executive of the fund house.

Buffett’s oft-repeated Buffetisms include “Rule No 1: Never lose money. Rule No 2: Never forget rule No 1”, “Never invest in a business you can’t understand” and “Price is what you pay. Value is what you get”.

Most of these Buffetisms revolve around the concept of value investing, a strategy of selecting stocks that trade for less than their intrinsic values.

Value investors seek to invest in stocks of companies which they believe the market has undervalued.

The weekend at Omaha, however, is not about imbibing dull investment principles alone.

Last year, for instance, a shareholder asked Buffett and Munger about their recipe for making friends.

To this, Munger replied, tongue firmly in cheek, that the only way he knew how to achieve this was by getting richer and more generous.

He even doled out tips to save one’s marriage, saying the key was to focus on changing oneself rather than the partner.

Besides the Berkshire meet, Omaha hosts several other informal investment conferences during the weekend, giving a wider platform to interact with other value investors.

“It’s less about learning and more about the experience,” observes Damani.

Adds Parikh: “It’s perhaps the only city in the world where so many like-minded investors can be found in one place.” 

And in many ways, the trip is also a chance to own a slice of history.

Parikh, for instance, has made it a point to visit landmarks in Omaha such as Nebraska Furniture Mart and Gorat's Steak House that find mention in Buffett's letters and biographies.

“It's like walking through history,” he says. 

WARREN BUFFETT AT A GLANCE

Berkshire Hathaway

  • 2015 net income: $24.08 billion, up 21 percent from 2014 -2015 operating income: $17.36 billion, up 5 percent from 2014
  • 2015 revenue: $210.82 billion, up 8 percent from 2014
  • Stock price: $221,430 per Class A share as of April 27, 2016, roughly 3 percent below its December 2014 peak. Berkshire Class B shares are worth about 1/1,500th of Class A shares.
  • Stock price under performance relative to Standard & Poor's 500 in 2015: 11.8 percentage points
  • Stock price outperformance relative to Standard & Poor's 500 in 2016, through April 27
Ashley Coutinho in Mumbai
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