BOOK REVIEW: A Weekend with Warren Buffett and Other Shareholder Meeting Adventures
by Randy Cepuch
In 1999, Randy Cepuch (pronounced C-P-U), then a financial writer with American Funds, attended Berkshire Hathaway’s annual meeting in Omaha, Nebraska. It was a transformational experience. Not only did he learn a lot about Berkshire Hathaway and its stable of businesses, but he also got a chance to rub elbows with Buffett and hear his musings about the company, the stock market and life. Among other things, Cepuch took Buffett’s warnings about technology stocks to heart. After reviewing his portfolio and deciding that he really did not know very much about those obscure technology companies in it, he decided to follow Buffett’s advice and sold most of his tech holdings. Shortly thereafter, as we now know, the bubble imploded. Cepuch, who had reinvested the proceeds in boring, blue chip companies, did quite well. He learned so much at Berkshire Hathaway’s annual soiree that he decided to make attending shareholder meetings a routine part of his investment research efforts. Eventually, he decided to marry his two loves, investing and writing, giving birth to this book. He is now a securities dispute arbitrator for the NASD.
A Weekend With Warren Buffett and Other Shareholder Meeting Adventures is a compendium of Cepuch’s experiences at the annual meetings of Berkshire and 21 other companies. This fairly large sample size gives readers a broad perspective on shareholder democracy in the 21st century. Companies, like people, have different personalities, which often get expressed, for better or worse, at these annual communications.
Through Cepuch’s eyes, we learn of Starbucks’s preoccupation with its good citizenship. Wal-Mart’s annual meeting seems more like a cross between a pep rally and a church revival. Midwest utility Otter Tail’s annual meeting is a big social event for the Fergus Falls (MN) locals. Then there’s Bowl America, a thinly-traded micro-cap operator of bowling centers, whose founder and CEO engages shareholders a la Buffett in a wide-ranging discussion of matters impacting the company and the stock. Google’s shareholders are treated to a fabulous lunch (from a company cafeteria, no less) and Cepuch offers some insight into its unique culture.
The author also provides eyewitness accounts of some notable annual meetings, including the no confidence vote at Disney that led to the departure of Michael Eisner and Sandy Weill’s last shareholder meeting at Citigroup.
To give us a broader perspective, Cepuch travels across both ponds to the shareholder meetings of Ansell and BHP Billiton in Australia and Intercontinental Hotels Group in London. From these vantage points, he offers some observations about international practices and customs for the annual general meeting (or AGM, as it is known outside the U.S.) that will probably raise a few eyebrows.
Throughout the book, Cepuch teaches us a lot about the legal and regulatory mechanics of this unique institution. We learn, for example, about the SEC rules governing shareholder proposals, including how to put one together, and under what circumstances such proposals become binding upon the companies. We hear about dual-class voting structures and how they limit shareholder “democracy.” We learn a little about the impact that Sarbanes-Oxley is having, especially on small companies. We also get a birds-eye view of the antics of some of the better-known shareholder activists and a history of the activist movement.
Besides giving a play-by-play description of events, the author rates each meeting for its educational and entertainment value and also for the desirability of the “freebies” (i.e. take-aways like company products, coffee mugs, and baseball caps) and the quality of the food and drink. For those shareholders looking for a free lunch, A Weekend With Warren Buffett may just be the ultimate guide.
To be sure, shareholder meetings are not the most exciting of gatherings. In one instance, the book tells of shareholders who doze off during the CEO’s formal presentation. Cepuch attended fifty shareholder meetings to find twenty-two worth writing about. Yet, he manages to make this a very interesting and informative read – covering not only the business at hand, but also bringing out the personalities of those running and attending the meetings and mixing in many humorous anecdotes along the way.
Cepuch does omit some important aspects of these meetings. On the one hand, he relates the observations of the investor relations officer at Playboy who suggests that quarterly conference calls have made the annual meeting obsolete. However, he does not underscore that this is the only regular forum where shareholders can meet and ask questions of members of the Board of Directors and the auditors. (It is surprising, therefore, that few institutional investors attend these meetings.) Given the movement underway to soften Sarbanes-Oxley and the recent uproar over excessive executive compensation, Cepuch could have devoted more space to these issues in his book. He also fails to opine on whether the institution is still an effective way to govern public companies.
Despite these shortcomings, A Weekend With Warren Buffett and Other Shareholder Meeting Adventures offers, in a very readable and entertaining format, many important insights and useful observations for individuals and professionals looking to keep tabs on their investments.
Stephen P. Percoco is the editor and publisher of Income Builder, a newsletter for individual investors.
Stephen P. Percoco
Posted: September 18, 2007
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