"God of Stocks" farewell? Berkshire's most important shareholder meeting in history is coming, what is the market most concerned about Buffett saying?

At 9 PM Beijing time on May 2, the annual investment conference, the Berkshire Hathaway Shareholders Meeting, will enter the Q&A session. "Oracle of Omaha" Warren Buffett has confirmed his full participation, along with his CEO successor—Greg Abel, head of Berkshire's non-insurance business, and Ajit Jain, head of the insurance business, to answer shareholder questions.

In the shareholder letter released by Buffett in February this year, he confirmed that the traditional half-hour movie segment at the beginning of the meeting has been canceled, and the Q&A session will start one hour earlier. The first half of the Q&A will run from 8 AM to 10:30 AM local time in Omaha, USA, on May 2, with a half-hour break, and the second half will run from 11 AM to 1 PM, ending at 2 AM Beijing time on May 3. As with last year, CNBC will provide live coverage of the entire Q&A session (click to view last year's shareholder meeting Q&A live coverage).

This year marks the 60th anniversary of Buffett's acquisition of Berkshire, and it may also signal the beginning of the end of the "Buffett era" at Berkshire. The total duration of this year's Q&A session is about one hour shorter than last year, reduced to four and a half hours, possibly as a compromise due to Buffett's advanced age. Buffett will turn 95 years old this August.

In the shareholder letter released in February, Buffett clearly stated that "it won't be long" before Abel takes over. The letter stated:

"By the time I reach 94, Greg Abel will take over as CEO before long and will write the annual letter."

Therefore, this year's shareholder meeting is regarded as one of the most important in history, possibly Buffett's last full participation in a shareholders' meeting, and investors need to prepare for a Berkshire without Buffett at the helm.

Compared to previous years, investors will cherish what may be the last opportunity for Buffett to share his investment philosophy and experience at Berkshire for an extended period. They may pay more attention to the management's "succession" plan, Abel's future role and strategic direction in the company, and the development blueprint Buffett has outlined for Berkshire.

At the same time, amid the trade war initiated by the Trump administration, investors are more concerned about how Buffett views the impact of tariffs on the numerous businesses under Berkshire and the outlook for the U.S. economy, whether he found opportunities to buy the dip in April, how Berkshire will utilize its massive cash reserves in a highly uncertain environment, such as making new acquisitions or buybacks, whether there will be adjustments to the holdings in major U.S. stocks that Buffett has committed to investing in, especially tariff-sensitive stocks like Apple, and if there are potential reasons for any sales, as well as the layout in overseas markets such as China and Japan

Tariff Impact, Economic Outlook, Investment Strategies and Market Signals in a Highly Uncertain Environment

Warren Buffett typically asks shareholders not to steer the conversation towards politics. However, at this year's shareholder meeting, he may find it difficult to avoid political topics. This is because the trade war initiated by the Trump administration is impacting the stock market and investment sector, while also affecting Berkshire's other businesses. For instance, tariffs are expected to lead to increased repair costs for auto insurance companies like Geico.

Cathy Seifert, an analyst at CFRA Research, believes that Berkshire "is essentially a microcosm of the broader economy—many of its businesses will be affected." Investors will hope for and welcome Buffett's thorough assessment and discussion on tariffs. Notably, Buffett has previously referred to tariffs as "acts of war."

Currently, economists on Wall Street are generally warning that the U.S. may be on the brink of an economic recession. Given that Berkshire has numerous businesses, its stock price will be very sensitive to any downside risks in the economy. Therefore, these businesses are also on the front lines of recession impacts. Investors will want to understand Buffett's judgment on the U.S. economic outlook and closely watch whether he continues to express confidence in the U.S. economy.

Steve Check, founder of Check Capital Management, Berkshire's largest shareholder, stated that he hopes Buffett will publicly oppose tariffs, as everyone is focused on the statements Buffett has to make.

Investors are also interested in whether Buffett will take advantage of the significant drop in U.S. stocks that occurred in April to seek suitable low-priced assets and lay the groundwork for Berkshire's transactions. David Wagner, a portfolio manager at Aptus Capital Advisors, noted that many investors "tend to view Warren as a guiding light."

Berkshire's High Valuation: Will Abel Break the No-Dividend Tradition?

Although Berkshire has performed well this year, investors need to pay attention to the potential risks and changes that may arise after Buffett steps down, including high valuations, challenges to future earnings growth, changes in dividend policy, and adjustments to investment strategies.

Berkshire's Class A shares currently have a price-to-book ratio of 1.7 times, the highest level since 2007, and based on expected earnings for 2025, the price-to-earnings ratio is 25 times, which is about 20 times higher than the S&P 500 index's price-to-earnings ratio. Analysts expect that Berkshire's earnings growth may be limited in the next one to two years. Investors need to be cautious of the risks associated with high valuations and assess whether it can continue to outperform the market in the future.

As the "designated" successor to Buffett, Abel is expected to take on more questioning duties at this shareholder meeting, giving investors the opportunity to evaluate his leadership style and investment philosophy.

Buffett has long opposed paying dividends, believing it is better to retain company earnings and cash. However, as he gradually steps back, this policy may change. Many large profitable companies, including Alphabet and Meta Platforms, have begun to pay dividends. KBW analyst Meyer Shields believes that paying dividends could be a good way for Abel to demonstrate leadership while maintaining the company's culture The change in dividend policy will have a direct impact on investors' investment returns.

Succession Plan and Berkshire's Future Management Adjustments, Future Influence of Buffett's Children

Shareholders may expect Buffett to provide a clear interpretation of Berkshire's future. The role and strategic direction of Abel, Buffett's successor, in Berkshire is of great concern. Investors may want to know more about management changes.

After Buffett leaves Berkshire, there may be management adjustments, with 73-year-old Jain possibly departing, potentially replaced by Joe Brandon, an executive in Berkshire's insurance sector. Investment managers Todd Combs and Ted Weschler may take over a stock investment portfolio of around $300 billion. Investors still need to observe how Abel will impact the stock portfolio.

Buffett currently holds 14% of Berkshire, and since he holds Class A shares with super voting rights, he has 30% of the voting power. Due to ongoing stock donations, Buffett's shareholding slightly decreases each year. Buffett's two children, Susie and Howard, currently serve on Berkshire's board and will control the stock trust held after Buffett's death.

Although the family's influence will gradually weaken with stock donations to charities, his children will still have considerable influence over Berkshire in the initial years following Buffett's death. How the family and professional managers will co-govern will become a focus for long-term observers. Commentators believe that Buffett's children may resist splitting Berkshire, as they view this integrated structure as beneficial for the company.

How to Invest Over $300 Billion in Cash, Potential Acquisitions of Occidental Petroleum, Coca-Cola, or Pepsi, and Buyback Potential

The fourth-quarter financial report released in February this year showed that Berkshire's cash reserves reached a record $334.2 billion, nearly double that of the same period last year, accounting for 53% of the company's net assets. With such a large cash reserve, how Buffett will utilize these funds has become a hot topic among investors.

Investors are concerned whether Berkshire will use over $300 billion in cash for large-scale investments. Will it continue Buffett's value investment philosophy? The last significant acquisition over $10 billion under Buffett's leadership was in 2022 when Berkshire acquired the insurance company Alleghany for $11.6 billion. That year, Buffett also made significant purchases in oil and gas companies, with nearly half of the $41 billion added in the first quarter being oil stocks, particularly Occidental Petroleum and Chevron.

Investors may hope to see large-scale acquisitions and investments from Berkshire like in 2022, but KBW's Shields believes that investors expecting major actions from Berkshire may be disappointed. After all, aside from 2022, Buffett has been cautious about new investments over the past five years, and Berkshire has been in a net selling position for stock investments in four of the past five years There are also comments pointing out that Buffett's $34 billion mega-acquisition of aircraft parts manufacturer Precision Castparts in 2016 was disappointing. The company was severely impacted during the COVID-19 pandemic, and the acquisition has yet to recover to a ten-year level; its current value may be comparable to the original purchase price, while the S&P 500 index has doubled during the same period. From 2017 to 2024, Berkshire Hathaway's acquisition of truck stop operator Pilot in three phases for $13 billion has performed poorly, with the company's pre-tax earnings dropping 42% to $614 million last year.

However, Buffett may still change his mind and seek to acquire the remaining 72% of Occidental Petroleum's shares, or he might attempt to acquire large real estate companies like D.R. Horton or Toll Brothers, which are underperforming. PepsiCo's stock price has fallen to a five-year low, which may pique Buffett's interest. However, considering Buffett's long-standing investment in Coca-Cola, this loyalty may lead him to exclude PepsiCo, a rival of Coca-Cola.

Investment newsletter writer and author of "Buffett and Munger: The Complete Investor," Alex Morris proposed two possible acquisition actions by Buffett: acquiring the remaining shares of Coca-Cola or American Express and privatizing them, which would require approximately $280 billion or $130 billion, respectively.

As for whether Buffett will engage in strategic rescues like he did with Goldman Sachs during the 2008 financial crisis, especially amid tariff shocks to the market, Morris believes that a much larger transaction scale would be needed to make an impact compared to that time.

Berkshire's massive cash buffer has another purpose: if Buffett's exit leads to a stock price plunge, Abel could repurchase a large amount of company stock. Shields stated, "Buffett has accumulated so much cash, possibly in preparation for a management transition."

Buffett's Adjustments to Heavy Investments in U.S. Stocks like Apple and Layout in China and Japan

In just the past year, Berkshire's investment portfolio has undergone dramatic changes. In 2023, Apple stock accounted for about half of Berkshire's portfolio value, while by the end of 2024, Apple would only account for 22% of its holdings. American Express, with a 14% holding, became the second-largest position.

In his February shareholder letter, Buffett stated that the "marketable securities" held by Berkshire declined last year, but shareholders can rest assured that the company's investment strategy will not change: most of the funds will be invested in stocks, primarily U.S. stocks. Investors are eager to understand Berkshire's investment direction in U.S. stocks.

As of the third quarter of last year, Berkshire had sold Apple shares for four consecutive quarters, cutting its holdings nearly in half in the second quarter and reducing them by another 25% in the third quarter, only stopping in the fourth quarter, maintaining about 300 million shares. While Buffett may not further reduce his holdings in Apple, it is undoubtedly one of the tech giants most affected by the escalation of the tariff war. Investors will be curious whether Buffett will restart selling Apple under these circumstances and what his views on Apple holdings are Last year, Buffett stated that the sales were for tax reasons. David Kass, a finance professor at the University of Maryland, believes that if Buffett continues to sell, it may indicate that he thinks Apple's valuation is already high enough, or that, as an investment genius, Buffett foresees potential risks that Apple may face, guarding against the impacts of trade wars and tariffs.

Although Buffett emphasized in his shareholder letter that Berkshire will primarily invest in U.S. stocks, Berkshire's investment layout outside the United States is also receiving significant attention, especially amid trade tensions.

In the shareholder letter, Buffett revealed that Berkshire's investments in five Japanese trading companies—Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo—are continuously increasing, with plans to hold these shares for decades and a commitment to support their boards. Buffett also praised the Japanese trading companies for timely increasing dividends, prudently repurchasing stocks, and their more restrained executive compensation policies compared to their American counterparts.

These five major trading companies operate in a wide range of sectors, including overseas oil and gas production, salmon farming, and television shopping. Since Buffett first announced investments in these five trading companies in 2020, their stock performance has outpaced the Nikkei 225 index.

Since first disclosing the reduction of his stake in BYD in August 2022, Buffett has repeatedly reduced his holdings over the past two years. As of last July, Berkshire's stake in BYD's Hong Kong shares had decreased from nearly 20% to less than 5% (https://wallstreetcn.com/articles/3720417). After July, any further reductions by Berkshire do not need to be publicly disclosed. Investors will be eager to understand how Buffett views Chinese assets and whether he will reinvest in BYD or other Chinese stocks