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Sage of Omaha Warren Buffett eyeing benefits of Trump tax cut

08 May 2017

Saturday, Warren Buffett and Charlie Munger fielded several hours of questions from Berkshire Hathaway's shareholders at the company's annual meeting.

"I did not think [CEO Jeff Bezos] could succeed on the scale he has", Buffett said, adding that he "really underestimated the brilliance of the execution".

The topic arose at Berkshire Hathaway's shareholder meeting in Omaha, where Buffett talked about his struggles to find ways to deploy the company's enormous hoard of more than $90 billion in cash, at a time when it has been hard to find worthy investments at an attractive price. All companies can struggle with such issues, but the CEO should get wind of the problem and act.

Buffett said his federal income taxes would have gone down 17 percent previous year if the GOP bill was in effect. A year ago the shares rose more than 23%, nearly twice the rise in the S&P 500 (plus reinvested dividends) and the 10.7% rise in the book value of Berkshire Hathaway shares.

Berkshire and 3G control Kraft Heinz Co (KHC.O) and recently tried to merge it with Unilever NV (ULVR.L) UNc.AS for $143 billion, but was rebuffed. Berkshire bought 81 million shares of IBM but just sold off one-third of them - Buffett said the company hasn't performed as well as he'd expected.

"I think it's absolutely essential to America that we become more productive, because that's the only way we increase consumption per capita", he added.

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Former president N Srinivasan attended the SGM via Skype but refrained from speaking about a pull-out after gauging the general mood.

Many Berkshire units are selling their wares at discounted prices at the annual meeting, while others offer memorabilia such as "Berky" boxers and bras, talking Warren Buffett dolls, and rubber ducks that look like Buffett and Munger for $5 a pair.

Buffett also defended Berkshire's foray into airlines, where it is a top investor in the country's big four carriers, American Airlines, Delta Air Lines, Southwest Airlines Co and United Continental Holdings.

Vice chairman Munger reminded the meeting "you've got to remember railroads were a bad business for decades and decades and decades, and then they got good".

Buffett is right that, for most of his stock-picking history, shareholders have likely been better off leaving their money in his care rather than siphoning the cash into their own accounts by way of dividends: Since 1965, Berkshire Hathaway stock has delivered annualized returns of almost 21%, more than double the S&P 500. The two executives spoke about the arcana of insurance, one of Berkshire's biggest businesses. "And Apple, I regard them as being in a quite different business".

Buffett said time will tell about whether his recent wager on Apple is smarter than the 2011 IBM investment. "Walmart and Google were missed opportunities", he said.