I am about to embark on my 11th annual trip to Warren Buffett’s Omaha.
Of course, I’m talking about Berkshire Hathaway’s
famous annual meeting this Saturday.
This year I have something unique to share with you: an excerpt from a chapter I contributed to a book, “The Warren Buffett Shareholder.” Let me tell you a little bit how this chapter came about.
In the early 2000s I taught graduate investment classes at the University of Colorado. As a class assignment I had students do presentations on Buffett’s annual letters to his shareholders. We broke up 30-some years of Buffett letters into six time periods and divided the class into six groups. Each group had to present the most important lessons they learned from Buffett’s letters.
The day of presentations was not my finest moment as a teacher. It started out great, but soon all the presentations started to sound the same. Here is why: Buffett’s letters are full of wisdom, and each letter has a new insight or two. But value investing philosophy rules are the same now as they were 50 years ago. Buffett simply adds a new shade of grey onto the same wisdom in each letter. Here is the thing with shades: You see them only as shades next to other shades, not as colors in their own right.
Then I discovered that author Lawrence Cunningham had edited Buffett’s letters into a book, 50 Shades of Warren Buffett. Okay, the actual name of the book was “The Essays of Warren Buffett.” When people ask me for the one book they should read about Warren Buffett, my answer is always The Essays of Warren Buffett — it’s as close to an autobiography of Buffett as you’ll get.
Here is an excerpt from The Warren Buffett Shareholder:
“Next year in Jerusalem” is a phrase sung by all Jewish people at the end of Passover.
“You left Russia 24 years ago and this is your first visit to Israel?” the Israeli border officer at Ben-Gurion Airport snarled at me as she thumbed through my American passport. I had kept singing “Next year in Jerusalem” but had never followed through on it. Now it was 2015 and I hadn’t even set foot in my holy homeland yet, but was already overwhelmed with Jewish guilt!
Just as for Jews Israel is a homeland that we know is always there, for value investors Omaha turns into our homeland for three days in early May. My first pilgrimage was in 2008. I had just finished my first book on value investing when my editor at John Wiley & Sons recommended I participate in a book signing at the Omaha Dairy Queen during the weekend.
I was perplexed. I had labored over this book for two years, just to do book signings at fast food restaurants? Maybe, after DQ, I’d graduate to Burger King.
“You’ll see,” she said.
When I arrived at the DQ, it was packed with authors and book lovers, media, and ice cream. Somehow it felt natural: value investors (who love books) come to the DQ to meet authors, buy books, and scarf a Deluxe Cheeseburger. The event quickly drew so many people that the DQ simply couldn’t handle the traffic. In subsequent years, the event was moved to Creighton University. For investment book authors seeking to meet readers in person, there is no better place.
Several things came out of this DQ visit.
Before that day, I was indifferent to Dairy Queen’s ice cream. Since then, however, I’ve been taking family, friends, colleagues, and clients to DQs nationwide. I’d take a client to a fancy restaurant; we’d skip the dessert and go to DQ. I’d tell him the story about the DQ signing in Omaha, and suddenly a trip to DQ after a fancy dinner seems normal to both of us.
I met Jim Ross, the owner of Hudson Booksellers, who puts together the book-signing event. Hudson Booksellers is a small store in the Omaha airport. It is probably the only airport store in the world that has every value investing book in print. Every year after I step off the airplane, my first stop is to say hello to Jim and thumb through new titles. I may even sign a few books of my own that they diligently carry.
On that day in DQ I was approached by a good-looking man who looked just like me. We started talking and he told me that his name was Ethan Berg, from Lenox, Massachusetts. Due to our similar looks, people often confuse us. He’d be at a value investing conference and people would come to him and ask “Vitaliy, would you sign my book?” At first, he’d say, “I’m Ethan.” However, after the first few times, he started saying “Sure!” and signing the book. The DQ was the beginning of a beautiful friendship between Ethan and me.
As I discovered, the DQ signing was just the tip of a huge iceberg — there were opportunities to learn and to meet interesting folks at dozens of different events all over Omaha.
On my first trip to Omaha in 2008 my goal was clear: to see and hear Buffett and [his longtime partner Charlie] Munger speak. True, I did not relish rising at 5 a.m. or standing in the dark in a long line and later sitting in an uncomfortable seat for six hours in a humongous sports arena. But all that came with a certain sense of adventure the first few times.
After a few years, you hear the same questions and answers over and over again. What is most important about the annual meeting moves beyond the formal session, to all the other people and events around you.
I look forward to the BRK weekend more and more each year. Buffett and Munger are not the main attraction anymore, but they have created an enormous value investing ecosystem by bringing 40,000 investors to a cow town that most people would otherwise be unable to locate on a map.
The BRK weekend is a rare opportunity for me to see friends who come to Omaha from all over the world — the U.K., Australia, Germany, Switzerland. We share meals; we debate stocks. We make new friends.
As I get older I have begun to appreciate that the most important things in life are relationships. A lot of my relationships are rekindled and nurtured in Omaha, and that’s why every year I say “Next year in Omaha” — and mean it.
Vitaliy N. Katsenelson is chief investment officer at Investment Management Associates in Denver, Colo., which has no position in Berkshire Hathaway. He is the author of “Active Value Investing” (Wiley) and “The Little Book of Sideways Markets” (Wiley).
What is value investing? How is it applied in the modern markets by investors like Warren Buffett? Check out “The 6 Commandments of Value Investing,” a chapter from Vitaliy Katsenelson’s upcoming book.