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By Jeremy Glaser and Greggory Warren, CFA | 05-02-2015 04:00 PM

4 Pressing Topics From The Berkshire Meeting

Morningstar analyst Gregg Warren gives his take on Berkshire's culture, crisis management, and more from the annual meeting.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. Gregg Warren just finished asking his questions of Warren Buffett and Charlie Munger. We're going to talk about some of the big topics that came up.

Gregg, thanks for joining me.

Gregg Warren: Thanks for having me.

Glaser: Let's talk about Berkshire culture. That came up in a number of different questions today, and there a lot of different facets. Did you learn anything new about how they think about culture during the meeting?

Warren: No, I think they've been pretty clear in the past about how they look at culture, and quite honestly there's an interesting book that came out this past fall by Guy Cunningham at Columbia, specifically on Berkshire's culture and the different cultures at the subsidiaries. We actually had a question queued up that was looking at how they ensure, longer term once Warren and Charlie aren't there, that the culture of the acquired assets gels with the rest of the firm. It's interesting to think about because it is a completely decentralized organization, so you wouldn't think that culture would matter that much. But overall, they do have to have a sort of culture in place that has everybody managing their businesses similarly--this willingness to push capital up to the corporate headquarters to be invested for the long term. So, overall, it was a good set of questions.

Glaser: But you still feel comfortable that the culture will continue after Warren and Charlie are no longer there?

Warren: Yeah, I think they've really established a benchmark. I think that all of the guys who are in the lineup to take over Warren's job once he leaves have been with the firm for a long time. So, they are really imbued with the culture that Berkshire expects.

Glaser: There were a couple of questions in the meetings geared toward what Berkshire will look in a crisis, be it a rail-car accident or a weather event or just another financial crisis. And there were some interesting comments from Warren and Charlie about how things like Dodd-Frank make a financial crisis somewhat more difficult to deal with than it might have been in the past. What's your take on how Berkshire will be able to respond to crises today versus how they did maybe even just a few years ago?

Warren: Well, I think, during the financial crisis, they were sort of the bank of last resort. They really had an opportunity to step in there and offer capital to good companies that were having a difficult time getting access to capital. Warren did make a really valid point: The climate has changed significantly in Washington over the last six years to the point where if we had another crisis you probably wouldn't be able to get a blank check to go out there and do whatever it took to save the economy. It's really a different era. I think that's a lot of the reason why a lot of the regulations have been coming down the pike from the regulators, to ensure that they don't need to jump in in some segments of the market if something does go wrong.

When we think about the insurance stuff, there were some questions about whether or not global warming, over the long run, is going to have an impact. It's sort of highlighted as a risk for a lot of their competitors. The thing is that Berkshire is well overcapitalized on its insurance business, so they can really withstand any big major event in any way. So, it's not as big of a thought. When they look at risk that they are willing to underwrite, they are really looking at whether or not they will be able to cover it if an event does happen. So, overall, there's nothing new there.

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