The Buffett Shareholders' Meeting is approaching: Here are the three key points to watch

According to the Zhitong Finance APP, the Berkshire Hathaway Inc. (BRK.A.US, BRK.B.US) annual shareholder meeting will be held as scheduled from May 2 to May 3 local time, with approximately 40,000 Berkshire Hathaway shareholders gathering in Omaha, USA. The meeting will be hosted by its CEO Warren Buffett, and investors will have the opportunity to ask the "Oracle of Omaha" about his latest views on the market.

Buffett is 95 years old this year, and each of his shareholder meetings is considered very precious. This meeting coincides with the 60th anniversary of Berkshire Hathaway, and in addition to the complex backdrop of high valuations in the U.S. stock market, escalating geopolitical risks, and the restructuring of global capital flows, Buffett's investment philosophy and strategic direction will serve as a barometer for the global capital market.

Stock Investment

The current capital market is experiencing three structural changes:

1. Restructuring of the technology competition landscape: China's large model DeepSeek has broken the U.S. monopoly in the AI field, with A-share technology stocks rising 27% in the first quarter of 2025, while the Nasdaq index fell 18% during the same period. This "East rises, West falls" trend has triggered a reallocation of capital, with the FTSE China A50 index futures holdings increasing by 42%, indicating accelerated foreign capital inflow into the Chinese market.

2. Impact of trade policies: On April 2, Trump announced "reciprocal tariffs," leading to a global stock market crash on April 7, with the S&P 500 index losing $2.3 trillion in a single day and the Hang Seng Index dropping 13.2%. This policy raised the average tariff rate in the U.S. to 19%, and it is expected that the U.S. GDP growth rate will decline by 1.2 percentage points by 2025, while the inflation rate will rise by 1.1 percentage points.

3. Reversal of the interest rate environment: Market expectations for a Federal Reserve rate cut have warmed, with the 2-year U.S. Treasury yield falling to 2.8%, and the unwinding of yen carry trades has triggered a global liquidity contraction. Amid rising risk aversion, gold prices have surpassed $3,000 per ounce, reaching a historic high.

Against this backdrop, this will be a key focus for investors to ask Buffett questions. Based on past situations, before the Q&A session lasting several hours, Buffett likes to discuss the company's first-quarter financial performance, which will reveal Berkshire Hathaway's most recent major investments. Although investors will have to wait until May 15 to see the full disclosure of Berkshire Hathaway's first-quarter investment portfolio, there are already some significant clues about the investments Buffett and his team have made so far this year.

Historically, Buffett's position adjustments have often been closely related to market cycles. After Berkshire significantly reduced its holdings in the U.S. stock market six times in the past, the S&P 500 index has averaged a 12% pullback within six months. Recently, this operation has also shown foresight.

In 2024, Berkshire Hathaway's investment portfolio shows obvious adjustment characteristics. Annual report data indicates that the company's stake in Apple Inc. (AAPL.US) has decreased from 5.6% to 2.8%, its stake in Bank of America (BAC.US) has dropped by 32%, while cash reserves have increased to $350 billion, accounting for 24% of total assets. In January 2025, the Nasdaq index fell 9.3% in a single month, and in April, due to the impact of the tariff war, the single-day decline reached 5.1%Documents from the U.S. Securities and Exchange Commission show that Berkshire purchased three stocks in January and February: Verisign (VRSN.US), Sirius XM (SIRI.US), and Occidental Petroleum (OXY.US), with total additional purchases amounting to approximately $93.5 million. The documents also indicate that Berkshire sold shares of DaVita (DVA.US) worth about $147.7 million to maintain its ownership stake below 45%. Berkshire's other increase was in the form of additional acquisitions of five Japanese trading companies, totaling approximately $2.7 billion.

Analysis indicates that Buffett is unlikely to make large-scale stock purchases again. The S&P 500 index is close to historical highs this year and has continued to rise for most of the time until mid-February; even after a decline in March, the market overall remains close to the beginning of the year’s levels. More importantly, from a valuation perspective, large-cap stocks remain expensive, which has led Buffett to essentially avoid large purchases over the past two years. He even stopped repurchasing shares of Berkshire Hathaway. However, Berkshire's stock portfolio pays a substantial amount of dividends, and the dividends from its wholly-owned businesses are even greater (in the form of operating profits).

The biggest challenge currently facing Berkshire is that the portfolio of Berkshire Hathaway has become so large that only a few companies are worth the time for a comprehensive analysis. A stock must have a large enough market cap to absorb Berkshire's billions of dollars in investments, but not many stocks can absorb such large amounts of capital. The stocks Buffett has purchased over the past two years have primarily focused on companies with market capitalizations between $1.5 billion and $50 billion. Meanwhile, he has sold shares of some large companies whose valuations have skyrocketed.

Cash Reserves

In his 2024 letter to shareholders, he emphasized "always investing most of the funds in stocks," but places greater importance on the depth of a company's moat and the quality of management. For example, Berkshire Energy became the largest electricity supplier in the U.S. through a $15 billion acquisition, with a stable return on regulatory assets of over 10%. This "moat + cash flow" combination is particularly important in the current environment where the volatility index (VIX) exceeds 30. In response to these changes, Buffett's value investment framework has shown adaptive adjustments. Berkshire's cash reserves have surpassed the total cash reserves of Apple ($166 billion) and Microsoft ($146 billion), seemingly providing ample ammunition to address potential crises.

According to the latest data, Buffett's Berkshire Hathaway has cash reserves of approximately $334 billion, marking a new historical high for Buffett's cash reserves. Meanwhile, behind the $334 billion in cash reserves, Buffett prefers short-term U.S. Treasury bonds, and how to effectively utilize this massive amount of funds is a matter of significant market interest.

Breaking it down, as of the fourth quarter of last year, Berkshire Hathaway held approximately $300.9 billion in U.S. Treasury bills and $33.3 billion in cash. Investors have been waiting for Buffett to deploy this capital into a major investment, but this is unlikely to happen in the first quarter. Fortunately, Buffett's patience has paid off. In the first quarter of this year, the average yield on six-month U.S. Treasury bonds was about 4.3%, bringing approximately $3.2 billion in quarterly income to BerkshireSuccessor Investment Style

At the 2024 shareholders' meeting, 94-year-old Warren Buffett officially confirmed Greg Abel as his successor, marking the beginning of the "post-Buffett era" for Berkshire Hathaway. Abel's resume demonstrates his ability to integrate across sectors: during his management of Berkshire Energy, he led acquisitions of projects such as NV Energy, resulting in a 59% profit growth for the department; he also increased the share of renewable energy investments to 45%, showcasing foresight in line with ESG trends.

Market attention on the successor primarily focuses on the continuity of investment style. Buffett's value investing emphasizes "acquiring great companies at reasonable prices," while Abel is more adept at mergers and acquisitions in the infrastructure and energy sectors. However, Berkshire's recent operations indicate that this transformation has quietly begun: in 2024, the company completed a $3.9 billion acquisition of a utility subsidiary, with non-insurance business profits accounting for 62%. Additionally, the "dual-track" investment system established by Buffett—where Abel is responsible for capital allocation, and Todd Combs and Ted Weschler manage stock portfolios—provides institutional support for a smooth transition.

Against the backdrop of a valuation bubble in the U.S. stock market and escalating geopolitical conflicts, Berkshire's $350 billion cash reserve seems to serve as a "crisis extinguisher"—both preventing systemic risks and reserving space for acquiring quality assets at low prices. For over 60 years, Buffett has demonstrated that the core of value investing is not predicting the market but building a strong investment portfolio. With Abel's succession, Berkshire's "moat" will expand from stock selection to industry consolidation, but its core philosophy of "buying stocks is buying businesses" remains unchanged. For investors, in the uncertain year of 2025, it may be more necessary to revisit Buffett's wisdom: "Only when the tide goes out do you discover who's been swimming naked"—Berkshire's value anchor remains solid