Berkshire size, Buffett age cloud annual gathering

Tue Apr 30, 2013 12:12pm EDT
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By Jonathan Stempel and Jennifer Ablan

(Reuters) - Warren Buffett may be on safari for major acquisitions, which he likes to call elephants, but shareholders may wonder if his Berkshire Hathaway Inc has become the biggest elephant in the room.

Berkshire has grown to look more and more like corporate America, as Buffett expands outside its core insurance business into such areas as energy, industrial products, newspapers, and in February ketchup, when he teamed up with Brazil's 3G Capital investment firm to buy H.J. Heinz Co for $23.2 billion.

Few of the 35,000 or more people who will this weekend make a pilgrimage to Berkshire's hometown of Omaha, Nebraska for the company's annual shareholder weekend, which Buffett calls "Woodstock for Capitalists," are likely to criticize that strategy.

While Buffett has managed to handily beat the Standard & Poor's 500 so far this year, outperforming the overall market is getting tougher for Berkshire as it grows and diversifies, investors and analysts said.

Buffett, 82, and Vice Chairman Charlie Munger, 89, will at Saturday's annual meeting field five hours of questions about the company, governance, the economy and - with a $15 billion cash cushion even after the Heinz purchase is completed - their next elephant.

"Larger deals are needed to move the needle," said Doug Kass, founder of hedge fund Seabreeze Partners Management Inc, who has shorted Berkshire stock partly because its size, including a $262 billion market value, makes it more difficult to record market-beating returns.

Kass has been tapped by Buffett as a "credentialed bear" to ask questions and "spice up" the meeting.

Buffett himself recognized the performance question when he noted in his March shareholder letter that Berkshire has lagged the broader market since the latter bottomed out four years ago.   Continued...

Berkshire Hathaway CEO Warren Buffett attends the Allen & Co Media Conference in Sun Valley, Idaho July 12, 2012. REUTERS/Jim Urquhart