3 Important Lessons From Warren Buffett’s 2017 Annual Shareholders’ Meeting
Warren Buffett and his long-time business partner Charlie Munger typically hold their annual company’s annual shareholders’ meeting in early May each year. The meetings tend to draw massive crowds due to the business, investing, and life lessons that Buffett and Munger often dispense. In recent years, the number of attendees have risen to around 40,000.
This year’s meeting was held two weeks on 6 May 2017. Let’s take a look at three important lessons shared during the recent meeting.
1. On speculation–head here
2. On the exorbitant fees charged by hedge funds–head here
3. On dividends
Warren Buffett loves receiving dividends from the stocks he invests in. In fact, in the second quarter of 2017 alone, the stocks in his company’s portfolio will dish out more than US$880 million in dividends to him.
In spite of Buffett’s love of receiving dividends, he has long loathed paying out dividends to his own shareholders. This is because he believes that a dollar retained and re-invested by his firm can create a higher value for his shareholders than what his shareholders can do with the money elsewhere.
However, in a turn of events, Buffett mentioned in the most recent annual shareholders’ meeting that his company may start paying dividends. The Oracle of Omaha said:
“When the time comes—and it could come reasonably soon, even while I’m around—and we really don’t think we can get the money out in a reasonable period of time into things we like, we have to re-examine, then, what we do with those funds. And at that time that we make a decision, it might include both, but it could be repurchases, it could be dividends.”
With a cash pile of US$96.5 billion as of March 2017 (and growing at a rate of around US$6,700 every minute), a lack of cheap acquisition targets and competition in the mergers and acquisitions scene have proven to be a challenge for Buffett and Munger in finding companies to buy.
Buffett added that he doesn’t like the huge cash pile that’s sitting around and that “we shouldn’t use your money that way for a long period of time.”
If Buffett ever decides to dish out dividends to his shareholders, his company would have to commit to maintaining that payout over time. He said that cutting dividends could have disastrous consequences for his firm’s share price.