Berkshire Hathaway Chairman and Chief Executive Warren Buffett and Vice Chairman Charlie Munger took questions and answers for six hours Saturday — with a lunch break — from shareholders and journalists.

Here are some highlights from World-Herald Business Editor Brad Davis and Staff Writer Barbara Soderlin:

An 8-year-old (almost) steals the show

One of the stars of Warren Buffett and Charlie Munger’s marathon six-hour question-and-answer session: an 8-year-old girl who asked a complicated question about capital allocation.

She asked why some of Berkshire’s recent purchases were in capital-intensive industries, like railroads and utilities, with their heavy machinery, bridges, locomotives and the like.

Why not focus on businesses that don’t require such constant capital, she asked. Businesses like American Express, of which Berkshire owns about 17 percent in recent figures, or See’s Candy, which Berkshire owns in whole.

Good question, Buffett said, especially from an 8-year-old. Said Vice Chairman Charlie Munger: “I’m certainly glad she’s not 9 years old!”

The answer to her question: Quite simply Berkshire these days is so large that it needs to buy large companies to be able to move the needle when it comes to the company’s financial performance. Larger companies – especially ones that are available to be acquired -- can tend to be more capital-intensive.

Those companies still get Berkshire a “decent” return, Buffett said.

“We still love a business that takes very little capital and earns very high returns,” Buffett said.

Still, Munger said the returns on the capital-intensive businesses are “good enough.”

Oh, and Buffett had one more message for the 8-year-old: “You definitely have a job in our capital-allocation department,” he said.

— Brad Davis

On newspapers, Buffett and Munger say the picture isn't good; 'significance to society is enormous'

Berkshire Hathaway Chairman and Chief Executive Warren Buffett and Vice Chairman Charlie Munger said they did not anticipate how quickly print newspaper circulation would decline when they made their most recent buy into the industry in 2012.

Berkshire owns The World-Herald; it bought the Omaha World-Herald Co. for $200 million, when including the debt it assumed. Since that buy in 2012, the company has formed BH Media Company, which bought the daily newspapers in Richmond, Virginia; Tulsa, Oklahoma; and in other cities.

Since those purchases, print circulation has fallen sharply, surprising Buffett, he said, as readers increasingly get news and information online. And revenue from digital operations isn’t making up the difference, he said.

"I've been surprised that the rate of decline has not moderated," Buffett said of sharp dropoffs in daily circulation, Sunday circulation and so-called street sales.

According to Berkshire Hathaway's annual report, The World-Herald in 2012 had daily circulation of 130,001 and Sunday circulation of 162,905. In 2017, the annual report said figures had declined to 93,653 daily and 115,417 on Sunday.

BH Media newspapers including The World-Herald in February laid off nearly 150 people and eliminated more than 100 vacant positions.

The “figures are not good," Munger said of the economics of the industry.

The financial considerations are not of much consequence to Berkshire shareholders, Buffett said, calling them "almost negligible" in the company that had $250 billion in annual revenue in a recent count.

“But the significance to society is enormous,” Buffett said.

Only perhaps the New York Times, the Wall Street Journal and the Washington Post have a digital product with robust enough revenue to be "viable" over the long-term, Buffett said. 

Meanwhile, the majority of the approximately 1,300 print newspapers in the country are suffering and haven't found a way forward.

“It is very difficult to see — with a lack of success in terms of important dollars rising from digital — it’s difficult to see how the print product survives over time.”

Buffett said Berkshire would keep trying to find a way forward. But, for now, he said, "I wish I had a better answer for you, but I don't."

— Brad Davis and Barbara Soderlin     

Why won't Buffett ban Berkshire investment in gun companies?

Why does Berkshire not forbid investments in gun stocks, Warren Buffett was asked at the Q&A to some claps from the audience.

Buffett said in a television interview recently that he wouldn’t forbid gun-company investments.

The Berkshire chairman and chief executive defended that position. “Should it be just my view, or should it be the owners of the company?” he asked, when it comes to what companies Berkshire takes positions in and whether they square with certain moral or social views.

Still, Buffett said, he didn’t put his political views in a “blind trust” when he “took the job” as leader of Berkshire. He was vocal about his support, for instance, of Hillary Clinton in the 2016 presidential election. But when he speaks out on political issues, Buffett said, he’s speaking for himself, not for Berkshire.

“I don’t think I have any business speaking for Berkshire,” he said. Berkshire has never made a political contribution at the parent-company level, he said, and won’t.

What companies are “pure” and which ones “aren’t pure” — it’s very difficult to make that call, Buffett said, to large applause and cheers from the audience. (The mention of Hillary Clinton drew some boos.)

Said Vice Chairman Charlie Munger: Obviously, some investments are beneath Berkshire. “We just do the best we can,” he said.

“Obviously, we’re not going to ban all guns,” Munger said. “We’re surrounded by wild turkeys in Omaha.”

— Brad Davis 

Cost-cutting at Kraft Heinz killed jobs, drove profits, but don't expect that at other Berkshire companies

Ruthless cost-cutting killed jobs and drove profits at Kraft Heinz. Can shareholders expect other companies owned by Berkshire to adopt “zero-based budgeting?”

Not necessarily, says Berkshire Chairman and Chief Executive Warren Buffett. Most Berkshire businesses, like Geico, are pretty efficient to start with, unlike Kraft Heinz when Berkshire and investment partner 3G merged the food manufacturers in 2015.

“We do not expect the managers to get into a position where there would be a lot of change with zero-based budgeting,” Buffett said.

The budget approach forces managers to justify every expense anew each year. Kraft Heinz’ paring of expenses became the food industry standard, with companies like Conagra Brands and brewer AB-InBev doing the same, part of an efficiency push that cut jobs in Omaha with the food producer.

Buffett and Vice Chairman Charlie Munger aren’t parsing each of their business’ budgets each month, but said they model efficiency at their Omaha headquarters, which employs about 30 people.

“I think the decisions get made better if you eliminate the bureaucracy,” Munger said. “Bureaucracy is sort of like a cancer.”

Some businesses can get too lean, though. Kraft Heinz is now running up against the limits of cost-cutting as sales decline. The company again is investing in marketing and new products.

Buffett skimmed the surface in his answer to an investor who wondered what if any products in Kraft Heinz’ portfolio are growing.

Berkshire Hathaway owns more than a quarter of the packaged food company, which reported another quarter of falling sales Thursday as it switches gears from cost-cutting to investing for growth.

“It’s a very good business and there are new products coming out constantly,” Buffett said. Kraft Heinz introduced a microwaveable scrambled egg product recently.

“It’s not one where you are going to get terrific organic growth and it never has been.”

— Barbara Soderlin         

Buffett, Munger say they're standing by Wells Fargo in wake of scandal

After a scandal in which Wells Fargo bankers across the U.S. opened more than 2 million credit card and deposit accounts that might not have been authorized by customers, Berkshire Hathaway Chairman and Chief Executive Warren Buffett said he's sticking by the bank as an investment.

Berkshire owns more than 9 percent of Wells, as of the end of last year — more than 450 million shares worth.

Wells, Buffett said, proves that incentives work. It's just that Wells Fargo gave employees an incentive to do the wrong thing, he said. The even greater error, he said, was that executives didn't admit and fix the problem as soon as they became aware of it.

That's a "cardinal sin" at Berkshire, Buffett said. In a company like Berkshire that employs nearly 400,000 people, of course there are people doing wrong somewhere in the world. "The important thing is that we don't want to incent any of that if we can avoid it," Buffett said, and stop it as soon as executives become aware.

At Wells, that era is over, Buffett said, and the bank will be better for it. Some of the Berkshire's greatest investments, Buffett said, have been of companies that were in trouble at the time Berkshire took stakes, including American Express and Geico. Those companies cleaned up their act and have returned tidy sums for Berkshire, Buffett said.

"There is no reason to think that Wells Fargo going forward is other than a very, very large well-run bank that had an episode," Buffett said. "I like it as an investment."

Said Vice Chairman Charlie Munger: "I think Wells Fargo is going to be better." He compared the chastened bank to what's happened in the wake of the exposure of movie mogul Harvey Weinstein's alleged wrongdoing and the #metoo movement it sparked.

He's "done a lot for improving behavior, too," Munger said, to some shuffling around and chuckles from the audience.

Still, when asked by the questioner if Berkshire should abandon a possibly sinking ship — or at least one that's taking on water — some in the audience clapped, perhaps suggesting that not all is sunny when it comes to some shareholders' opinions on whether Berkshire should continue its large stake in the bank.

Berkshire has made large gains on paper in its Wells stake; the bank stock is down by about 14 percent so far this year.

— Brad Davis 

Even after Warren and Charlie are gone, 'reputation belongs to Berkshire'

What will happen to Berkshire when Warren and Charlie are no longer at the helm? And will companies, especially private ones, still look to Berkshire when they wish to be acquired, even after Berkshire no longer has the imprimatur of Buffett and Munger?

Berkshire’s reputation “belongs to Berkshire now,” Buffett said, and will continue after he’s gone.

For a family business, if the family cares where the business ends up and how it’s operated once the family lets go, “we are absolutely the first call, and we will continue to be the first whether Charlie or I answer the phone or whether somebody else does,” Buffett said.

— Brad Davis 

Lamenting the number of women in executive suites

Growing up in Omaha, Warren Buffett and Charlie Munger benefited from gender discrimination that limited women’s career choices, they said, considering a shareholder’s question about a lack of women in top positions in business.

(They were lamenting this fact.)

“We had this huge talent pool that was being funneled into very few opportunities,” including schoolteachers, they said, referring to women.

“I had wonderful teachers,” said Buffett.

Buffett said he’s had the opportunity to name about six or seven top managers in Berkshire’s businesses, and about half of those have been women. Women Berkshire leaders include the Pampered Chef’s Tracy Britt Cool, Karen Goracke at Borsheims, and General Re’s Kara Raiguel.

“It makes me bullish on the human race,” Buffett said, to see more women rising in the ranks of business.

— Barbara Soderlin    

Hostile takeovers? Nope, says Buffett. I like to be liked by my managers

Kraft Heinz backed off its unsolicited bid for Unilever last year, but not because Berkshire Chairman and Chief Executive Warren Buffett believes hostile takeovers are “evil.”

“We don’t think any management is entitled," he said. "They don’t have a lifetime hold on their business.”

Rather, Buffett said he likes being liked by management he works with.

“We’re counting on them running the company.”

— Barbara Soderlin   

Here's a key to life, from 94-year-old Charlie Munger

Life advice from Charlie Munger, 94: “If you’re going to live a long time, you have to keep learning.

What you formerly knew, is never enough.”

— Barbara Soderlin 

Why doesn't Buffett practice what he preaches when it comes to offering his employees access to index funds, shareholder asks

Berkshire Chairman and Chief Executive Warren Buffett preaches the growth power of low-cost stock index funds, so why don’t all of Berkshire’s operating companies offer these funds as investment options for employees’ own retirement accounts?

A March Washington Post column raised this question, and a shareholder asked Buffett directly.

Buffett deferred to his hands-off management style. Most employees do have access to those funds, he said.

“We overwhelmingly let our managers make those kinds of decisions,” he said.

— Barbara Soderlin

Amid political divide, what does Warren think?

Warren Buffett campaigned for Hillary Clinton for president, and now is running his business with the country divided over President Donald Trump’s approach to the office.

Are Americans “more divided today than 50 years ago?” one shareholder asked Buffett, who is known to wax patriotic about the country’s economic power.

In 87 years, Buffett has lived during the presidencies of 14 men, half Democrats, half Republican. He saw nuclear threat, many recessions, “war in the streets” in the 1960s, but still thinks the U.S. stock market is a good investment.

“After every election, you have people feeling the world is coming to an end, and how could this happen,” he said. But, “in fits and starts, America really moves ahead.”

— Barbara Soderlin            

Why doesn't Buffett buy Microsoft? Here's why

Why has Berkshire Chairman and Chief Executive Warren Buffett never bought Microsoft shares, asked Theresa Finocchiaro Liguzinski, a shareholder and former Omahan.

In Microsoft’s early years, it was Buffett’s “stupidity,” he said.

But since he forged a long friendship with Microsoft founder Bill Gates, who serves on Berkshire Hathaway’s board of directors and was in the audience Saturday, it’s simply for appearances’ sake, Buffett said.

If the shares spiked, some might think Buffett had inside information.

— Barbara Soderlin           

Berkshire owns a big real estate company; are real estate agents charging too much, Buffett is asked

Buffett is on the record saying investment managers take too much in fees from clients, dragging down investors’ lifetime earnings.

But, one investor wonders, what about real estate agents, who might charge a sales commission of 5 percent or 6 percent on the price of a home?

That’s different, Buffett said, defending his Berkshire Hathaway HomeServices Real Estate, with nearly 50,000 agents, including in the Omaha area.

“I would say the people who manage money make a whole lot more money, with perhaps less contribution to the welfare of the person they’re dealing with," he said of Wall Street types. "So I don’t think there are unusual profits involved in being a real estate agent.”

He said the Berkshire business does about 3 percent of the nation’s residential real estate transactions, and looks to grow to 10 percent, with more acquisitions pending.

— Barbara Soderlin          

An update on the Berkshire-Amazon-JP Morgan effort to tackle health care costs

Buffett has called health care costs a “tapeworm” on American business productivity, as companies spend millions to cover health insurance policies for employees.

Berkshire, together with Amazon and JPMorgan Chase — together employing more than 1 million people — are close to hiring a CEO for their new initiative that aims to cut these costs, Buffett said.

“We don’t plan to start health care companies or necessarily insurers,” Buffett said. Instead he wants solutions. Buffett said $3.3 trillion in health care costs annually accounts for 18 percent of the nation’s economy.

The initiative may fail, he said.

“Every dollar has a constituency” in the enormous health care industry, he said.

For Berkshire, “The motivations are not primarily profit-making. We want our employees to get better medical service, at a lower cost.”

— Barbara Soderlin       

How could tariffs affect Berkshire manufacturing?

An Omaha shareholder asks how President Trump’s tariffs on foreign steel are affecting Berkshire’s manufacturing businesses.

Steel costs are up somewhat, but Buffett doesn’t see a real trade war ahead.

He repeated long-held views: Trade benefits Americans, even if they don’t always realize it.

“You don’t know what you would be paying for the clothes you’re wearing today if we had a rule they all had to be manufactured in the United States,” he says.

Meanwhile, the negatives — for example, manufacturing sector layoffs — are painful.

Politicians need to find ways to educate Americans on the benefits, and ameliorate the drawbacks, he said.

“You’ve got to take care of the people that become the roadkill in something that is collectively good for us as a country,” Buffett said.

— Barbara Soderlin        

Buffett says he doesn't get involved in most operating company decisions

Buffett says he remains an arm’s length from business decisions at Berkshire-held companies. He isn’t involved anymore, he said, in the price of See’s Candies or in decisions at the Buffalo News, where he once got involved, as a shareholder asked.

He only gets involved in big, interesting questions — like how to price the risk on, say, a $5 billion insurance policy on a chemical plant.

It’s fun for him and Vice Chairman Ajit Jain to each independently decide what he thinks the risk is — then compare notes.

“It’s the fun part of my job.”

— Barbara Soderlin   

In China, U.S. relations, it can be a win-win, Buffett says

A Chinese investor notes the trade spat between the U.S. and China, as President Donald Trump seeks to shrink the trade deficit and enforce trade rules. The investor wonders whether trade can be a win-win for both countries, or if, “the world is just too small for both to win?”

Says Buffett: “The U.S. and China are going to be the two superpowers of the world, economic and in other ways for a long, long long time.

"We have a lot of common interests and like any two big economic entities, there are times when there will be tensions, but it is a win-win situation.”

Buffett wouldn’t want the U.S.’s trade deficit to get too big, but said both major U.S. political parties believe in the benefits of free trade.

“The benefits are huge and the world is depending on it in a major way for its progress.”

Buffett also noted it might be a good time for him to invest in China.

This August — the eighth month — he’ll turn 88 years old, in a year that ends in an “8” — a lucky number in China.

“If you find anything over there for me, this is the time we should be acquiring something,” he says.

— Barbara Soderlin   

For best success, look to productive assets, like stocks, Buffett says

Buffett may spend hours reading about financials, but you don’t have to pore over the stock page or follow the Federal Reserve’s every move in order to be successful, he tells investors.

“None of that counts at all in a lifetime of investing. What counts is having a philosophy that you stick with it.”

$10,000 invested in a hypothetical stock index fund that tracked the broader market in 1942 would be worth $51 million today, he says. The same invested in gold would be a relatively measly $400,000.

The point, he says: Trust in the productivity of American business, he said.

“If you decided to go with a productive asset, instead of a non-productive asset, you would now have over 100 times the value of what you would have had with a non productive asset.”

— Barbara Soderlin  

It's like 'Mardi Gras,' Buffett says

Warren Buffett and Charlie Munger both walk on stage to loud applause.

The crowds fuel them, Buffett says in a video clip.

The “Mardi Gras” of an annual meeting is “a chance for us to have a lot of fun and meet the people who have entrusted us with their money," Buffett said. "We regard them as our partners. They’re not some faceless group of people. I love seeing them. It gives real meaning to what we’re doing every day.”

— Barbara Soderlin 

Highlights from the annual Berkshire movie

The Berkshire Hathaway annual meeting is kicking off in Omaha's CenturyLink Center with an animated Coca-Cola ad and a vintage taped appearance from (Jimmy) Buffett, strumming and singing about Berkshire Hathaway-a-Ville: "Living' on spongecake, and Omaha beefsteak…"

Seats in the CenturyLink Center appear to be full and shareholders are still trickling in as the traditional pre-meeting ads and movie plays.

In another clip, Bill Gates and Warren Buffett tour the Nebraska Furniture Mart, lounging on a mattress, testing recliners and discussing their success and philanthropy.

"Being successful at almost anything means having a passion for it," Buffett says.

Warren Buffett spends five to six hours a day sitting quietly in his office, the door shut, reading and thinking, he says in a video clip.

That's part of what makes Berkshire Hathaway "a different sort of place," he says. His small corporate staff, with no committees or general counsel, suits him.

"It's exactly the life I like, and it's not work for me, it's just a form of play, basically."

But life at the helm of Berkshire isn’t all quiet pondering.

In another video — another chance to showcase Berkshire’s many brands — Buffett turns to celebrity athletes for help training for crunching numbers.

He strikes out Alex Rodriguez from the pitcher’s mound.

He gets in the ring with Floyd Mayweather.

He scores on LeBron James.

And he cranks out pushups with Arnold Schwarzenegger’s boot on his back: “499 to go! Faster!”

At least he has his Fruit of the Loom: “Hey, this t-shirt really breathes!”

Ever wish you would have invested in Berkshire Hathaway decades ago?

That’s the feeling a parade of frumpy, middle-class couples got meeting with their investment advisor at Hindsight Financial, a investment firm in a Saturday Night Live-style parody.

“Let us show you how many years earlier you could have retired, and meet the spouse you could have traded up to,” the spokesman says. “Our advisors will walk you through every single opportunity you missed.”

Hindsight Financial: Coulda. Shoulda. Woulda.

— Barbara Soderlin

Warren is in the building

As thousands of shareholders lined up at the CenturyLink Center on Saturday morning, Warren Buffett has entered the building.

In a powder blue tie and surrounded by journalists snapping pictures and security people standing sentinel, Buffett will make his way to the CenturyLink's arena for the six-hour question-and-answer session that begins just after 9 a.m. Central time.

There, Berkshire Chairman and Chief Executive Warren Buffett and Vice Chairman Charlie Munger will answer questions from a panel of journalists and from shareholders.

Stay with Omaha.com all day for live updates from The World-Herald team on the floor at the CenturyLink.

— Brad Davis

Saturday's schedule

9:15 a.m.: Q&A session with Warren Buffett and Charlie Munger

Noon: Lunch break

1 p.m.: Q&A resumes

3:30 p.m.: Short break

3:45 p.m.: Formal business meeting

4:30 p.m.: Meeting adjourns (approximate)