Little Rock-based Delta Trust and Bank makes its annual pilgrimage to Omaha, Nebraska to hear from Berkshire Hathaway officials, including legendary investor Warren Buffett. Buffett and Berkshire Hathaway are among the most respected leaders in the investment community and their reports and prognostications offer major insight on the current and future expectations for the economy.
It is the fifth year that Delta Trust has taken a group of interns from the University of Arkansas at Little Rock (UALR) on the trip – described by some as the "Woodstock for Capitalism" – and 3 of them have agreed to share some of their experiences with Talk Business as the weekend unfolds.
MEET THE INTERNS
Nathalia Garay Castillo is a general finance major at UALR. She is originally from Bogotá, Colombia where she lives with her parents and older brother. She speaks Spanish, English and is learning a third language. After she graduates from UALR, she will continue her education to earn a Master of Science degree in finance.
Brooke Dodd is a finance major at UALR and resides in Hot Springs with her husband, Nick Dodd, and their two children, Hayden and Hannah. She is Co-Chair of the Friends of C.A.S.A., a fundraising organization benefiting the Garland County C.A.S.A. As an employee of Edward Jones Investments she has held the position of Branch Office Administrator for the past three years and is part of a succession plan to ultimately lead the office.
Kate Hendrix is majoring in economics and pursuing a minor in finance at UALR. She is a life-long resident of Benton, Arkansas and has worked as an accounting clerk at Summerwood Partners, LLC. In the fall semester of 2010, Kate was accepted to the UALR William H. Bowen School of Law and plans to attend beginning in the fall of 2011. After law school, she plans to remain in central Arkansas and pursue a career using her law and business degrees.
[Photo (left to right): Nathalia, Kate, Delta Trust CEO French Hill and Brooke in Omaha]
After a day of travel, Delta Trust officials and the interns went to Piccolo Pete’s, a famous Omaha steakhouse. Of course, Omaha, Nebraska is world-renowned for its steaks owing to its historical ties to the American cattle industry.
Nathalia reports that there was more food than anyone could finish. Afterwards, the group drifted to a nearby Dairy Queen (DQ), a big Berkshire Hathaway investment. Buffett has even been known to serve ice cream to guests at the DQ during the conference, but not this year.
Up before sunrise to get a place in line for the shareholder meeting, Brooke described the atmosphere outside the Qwest Center as "unreal."
"After waiting in line for an hour and a half, we made a dash for our seats. It took only minutes for the arena to fill," she said.
Kate said the group was very close to Buffett as he made his way through the crowd (see photo) and that they met a New York Times reporter who got to quiz the Berkshire Hathaway CEO. Buffett made public comments today on the recent scandal touching the investment firm involving one of its top executives, David Sokol.
Sokol resigned in March after alleged insider trading.
Calling his actions "inexplicable and inexcusable," Buffett said he made "a big mistake" and should have expressed more outrage at Sokol’s actions when it was disclosed.
"He wasn’t defending Sokol; however, he explained that he has done a lot for Berkshire Hathaway so that’s why he didn’t make the scandal public right away," Nathalia noted.
Kate added that after grilling from a Fortune reporter, Buffett said Sokol wasn’t fired – despite Berkshire Hathaway policy – because he did not want to make a decision "in anger."
In the afternoon Q&A session at the annual shareholders meeting, Buffett fields more questions and cements his reputation as the "Oracle of Omaha" by making plenty of pronouncements about potential investments. The event draws some of the world’s top CEOs and most influential business leaders.
Warren Buffett good friend and fellow philanthropist Bill Gates of Microsoft sat in the front row, according to Brooke.
"I had heard that Bill Gates sat front row and stayed the duration during each year’s meeting," she observed. "I can attest that this is true. I have watched him all day and he has not moved at all."
Buffett told the crowd that gold investments were a "great investment to fondle" but didn’t offer a promising long-run return.
He also discussed bailouts, says Kate. "He said he felt that the [Obama] administration did the right thing. They were trying to save a frail economy," she reports.
Nathalia ran into Coca-Cola CEO Muhtar Kent. There was the proverbial picture pose. Coca-Cola is another long-running piece of Berkshire Hathaway’s investment portfolio.
She also says she’s looking forward to asking one of her finance professors about a comment made by Buffett that conglomerate’s have significant benefits, a position she’s certain that her professor will disagree with based on previous statements.
Our intern/reporters ended the day at the Young Presidents Organization (YPO) reception at the Holland Performing Arts Center. Several analysts from Morningstar, Markel Corp., Gardner Russo & Gardner (GRG) and Sanibel Captiva Trust spoke on a panel.
They offered observations on the conference and current economic conditions.
Delta Trust’s French Hill was recognized for a question. He asked about the Sokol situation and Buffett’s response to the ordeal. Sokol was considered a potential successor to Buffett when he retires.
"It’s a personal tragedy," said Markel’s Tom Gayner.
Thomas Russo, principal with GRG said, "It will run its course and will not be spoken of in a year or two. The main issue is succession and that will be the topic of choice in future years.
In short, there was no clear answer given on the Buffett succession today.
Other intern notes from the YPO panel:
Brooke: The outlook was very upbeat. There was also considerable discussions on the QE3 (Quantitative Easing, Round 3). Both Buffett and the panel felt that its impact is already reflected in today’s market.
Kate: On Buffett successor, shareholders were not given an answer for this today. It was stated that "no oak tree grows under the shadow of another oak tree."
Nathalia: The panel discussed that "price power" must be present in a company that they will be interested in investing in. That competitive advantage protects investors from uncertainty and inflation.
The UALR interns are off to a dinner party at Gorat’s, another Omaha iconic steakhouse. Tomorrow, they will have a final brunch before heading home. Great work and thanks ladies for sharing your experiences! – Roby Brock, executive editor