伯克希尔·哈撒韦BRK-B

Good morning, and welcome to Omaha. I wanna welcome all our owners, our long-term owners, those that have recently become a shareholder. Again, thank you for joining us in Omaha for the meeting. Obviously very excited by this. I wanna also touch on we have many people here just experiencing it, so just great to be together. The first thing I just wanna touch on, we had the video, incredible 60 years. The one thing I did note that we've traditionally had was we've often had a movie which included the credits that came with it. The video. We'll have a few other videos that I'll touch on later. We did have an exceptional producer, an executive producer, and I wanna thank her 'cause it wasn't acknowledged. Susan Buffett, thank you.

The director who's always done the movies, again, did this video and will do our company videos that I'll touch on shortly, Brad Underwood. Thank you, Brad. We have a great day planned, and it's really all around our owners. It's our culture, but most importantly, this is our owners' day, our owners' weekend. We have an exceptional group of owners, and we're just passionate to be here. We'll communicate a variety of things around Berkshire and our, and our insurance, our operating subsidiaries and Berkshire as a whole. What we really treasure is the engagement with our, again, our owners, our shareholders and the, and the questions that come. Thank you. Really appreciate it. To touch on this morning, we have 3 sessions that we'll cover over the morning, early afternoon.

The first session, there'll be some pleasantries here, and then we'll move into a business update. That'll be the first session. As we move into the second session, I'll have Ajit Jain join us here on stage. We'll obviously take any questions, so it'll be a question and answer period. We'll do the traditional rotating between our shareholders and Becky. Becky, thank you for being here. We'll do the traditional Q&A. Then that session will wrap, and then we'll move to a third session that will have Katie Farmer. Katie has been the CEO of BNSF, our railway, for the past five years. Then we'll also be joined by Adam Johnson, who is a 10-year CEO of NetJets, but also took on an incremental role recently, we announced that in December.

Adam took on the Consumer Products Group, Services and Retailing group. We'll have them join us for the third session. Again, the traditional question and answer period. The only thing that I would say this is also a little bit incremental or different from past meetings. Throughout this morning, we'll have three different videos associated with operating companies. The first one will be from GEICO. Nancy Pierce, who's the CEO of GEICO, long-term veteran and wealth of experience with GEICO. She's over in the managers section. She'll narrate a video on GEICO. We'll also have a video on NetJets narrated by Adam and a video narrated by Katy on BNSF, the railway. That'll be incremental.

The fundamental purpose of both having some incremental managers join us on the stage and the videos, we have an exceptional team at Berkshire. The depth of management's very deep. Obviously, we have a number of subsidiaries, but the depth of our team is great. This is an opportunity through the videos or having incremental leaders on stage, it's an opportunity for you as our owners to both learn more about those businesses, but also about the leaders that lead them. That will be a format that as we go forward, we'll build on, i.e., we can introduce you to other leaders either on stage or through the videos. Let's move to the formalities now. I'm going to introduce our directors. I'm going to do it alphabetically.

If they could just acknowledge with a wave or however they would like to acknowledge our shareholders, our owners. Start with Howard Buffett. Susan Buffett. Our Chairman, Warren Buffett. Warren, we have a little surprise there for you. If you look up to the right, you'll see a jersey and a number. We are retiring Warren appropriately, it's number 60 for 60 years as our CEO of Berkshire. Equally, it's placed beside Charlie's jersey, number 45. Charlie was with Berkshire for 45 years. Obviously, our Vice Chairman and a treasured partner of Warren, and it's just reflective of a great partnership. Thank you, Warren. I'm happy to report both those jerseys will remain in the rafters for the years to come. Great. Now, we'll continue with our directors. Steve Burke. Kenneth Chenault. Christopher Davis.

Our lead director, and I'll just add a point here 'cause, it's Sue's 20th year as a director of Berkshire. Thank you for being our lead director and all you do, Susan Decker. Charlotte Guyman. Ajit Jain. I would just add for relative to Ajit, obviously been our vice chairman of insurance for 9 years. I had many years to be his co-chairman. One thing I just wanna touch on, Ajit joined Berkshire in 1986, so not only is he a director, just been really the architect of our insurance business. Again, thank you, Ajit. Thomas Murphy Jr. Wallace Weitz. Meryl Witmer.

Now I think my eyes have adjusted a bit to the lights and everyone out there, and I have to tell a little bit of a story here because when Warren announced the transition last year, and I was sitting here and couldn't have been more proud, but I don't mind sharing the first thing that flashed through my mind was, "Geez, we've already booked this arena." I know the directors would be here, and I knew I would have some family here. It's wonderful that I'll have you here, so thank you. Thank you. Back to a great tradition. I'm gonna throw the mic over to Warren. Warren?

Thank you. This is not my show today, but there are two anniversaries that we're kind of celebrating today. One is the fact that the board has had what I will generously call a refreshment, which they voted and you couldn't have made a better decision. They did it unanimously. It was a surprise to all the board when I announced it last year, except for Susie and Ajit. That's been a 100% successful. Greg is doing everything I did and then some, and he's doing it better in all cases, and he's the right person, so that decision we score 100% on.

Thank you, Warren. Thank you.

There's another anniversary today that I'd like to spend just a minute telling you about because about 10 years ago, we made a commitment to essentially move 10% of the resources of Berkshire Hathaway. We turned it over to another person who was not that well known at the time, and we did that by spending roughly $35 billion buying stock in Apple Inc.. We were going to have that under the management. We're turning that money over to the management, essentially, of Apple to make Berkshire look good without any work by us, which is our preferred way of operating. I would like to report that 10 years later, several things are happening. One is the $35 billion, counting dividends, realized appreciation, unrealized appreciation.

That has turned into $185 billion pre-tax. I didn't have to do a damn thing.

I mean.

It's, you know, we're very big around here on having other people do the work and collect the money. That has been a success. We do look at marketable securities as being businesses. That doesn't mean we hold all of them forever. Our largest holding is Apple. Apple has a very interesting history that some of you may be familiar with. 1 item is they're observing an anniversary themselves. I think just within the last week or so, they celebrated their 50th anniversary. You know, 50 years seems like a long time, but Apple seemed like a very new company. When Tim Cook went into the top position at Apple, he succeeded a legend.

You know, that everybody in America knew his name, and not many people knew Tim's name. Apple had had this roller coaster experience where the two Steves had started in a garage or something 50 years earlier. I'm not sure how many of you know, but Steve was thrown out for a while. He came back in. He did these marvelous things in terms of developing products, and then he had an untimely death. Everybody said, "Who's gonna manage Apple when Steve Jobs isn't around?" Probably just a very few percentage points of American investors had even heard of Tim Cook. We, in effect, Tim took over about 14 years ago when Steve died.

When we made our investment, and turned over 10% of the resources of Berkshire, we were turning it over to Tim Cook. As I say, he has turned that into $185 billion or something pre-tax, which we won't bother to compare to our record with. Tim Cook has announced that he's retiring as well. That's an announcement that's just been made in the last couple of years. I think it's appropriate if Tim Cook would take a bow and our shareholders would say thanks to him. Tim Cook is right by me. How would you like to step into the shoes of Steve Jobs and come through with his record? I mean, it's one of the miracles of American business management.

Thank you, Tim, and I'm going to turn things back to Greg, and we'll go on with the meeting.

Thank you, Warren. Tim, on behalf of our shareholders and owners here, we echo everything Warren said. I would add one thing. You've truly been a global ambassador around the world for American business. Thank you. Warren, thank you for taking the mic there. I am reminded I have a Cherry Coke here in your honor, peanut brittle in Charlie Munger's honor, and that seat remains open. Thank you, Warren. Now we'll move to a few more formalities and get into the business update. Really started with the letter to our owners and shareholders at the end of February, and I touched on it in the letter. I highlighted that the first thing as we transitioned, I wrote a letter to our 400,000 employees touching on culture and values.

The purpose of that letter was to highlight that was not going to change. It had never changed in Berkshire under Warren 60 years. Aspects have evolved, but our culture and values did not change. That as we did the transition, that was not going to change either. It's the bedrock of Berkshire, that culture and values. Now, one of the values we've often touched on here is integrity. There's no better example of Warren's remarkable demonstration of that when he testified before Congress in 1991 as the Chairman and CEO of Salomon Brothers. I like to call it Berkshire's Anthem, but I wanted to make sure we had that opportunity to see the video today. Berkshire's Anthem.

I thank you for the opportunity to appear before this subcommittee. I would like to start by apologizing for the acts that have brought us here. The nation has a right to expect its rules and laws to be obeyed, and at Salomon, certain of these were broken. Almost all of Salomon's 8,000 employees regret this as deeply as I do, and I apologize on their behalf as well as mine. My job is to deal with both the past and the future. The past actions of Salomon are presently causing our 8,000 employees and their families to bear a stain. Virtually all of these employees are hardworking, able, and honest. I want to find out exactly what happened in the past so that this stain is borne by the guilty few and removed from the innocent.

To help do this, I promise to you, Mr. Chairman, and to the American people, Salomon's wholehearted cooperation with all authorities. These authorities have the power of subpoena, the ability to immunize witnesses, and the power to prosecute for perjury. Our internal investigation has not had these tools. We welcome their use. As to the future, the submission of this subcommittee details actions that I believe will make Salomon the leader within the financial services industry and controls and compliance procedures. In the end, the spirit about compliance is as important or more so than words about compliance. I want the right words, and I want the full range of internal controls. I also have asked every Salomon employee to be his or her own compliance officer.

After they first obey all rules, I then want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper to be read by their spouses, children, and friends with the reporting done by an informed and critical reporter. If they follow this test, they need not fear my other message to them. Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless. I welcome your questions.

Berkshire's Anthem, that's embedded in Berkshire. It's a great reminder to our CEOs and employees, our 400,000 employees, and we do remind them of that, including I ask our CEOs each year, just sent a letter in again in the first quarter, asking them as they run their business, as they make those daily decisions they make, apply that simple test that Warren highlighted, the news-newspaper test. Moving to the more formal update on our numbers. We in fine tradition, we always start with our exhibit hall sales from the exhibit hall yesterday. The interesting thing is, last year was a record, as you may guess. Fortunately, this year's sales were very consistent with 2024. We're basically at 1.5 million sales.

The point is we'd always love to get to 2 million, and we're not there yet. We've got something to work on. Importantly, what the exhibit hall represents is our businesses showing their products and services, and you get to see this great commitment of our leadership team and their passion for Berkshire and their passion for the owners. I was fortunate to spend some time going through the exhibit hall yesterday. That's a wonderful experience because we're getting the opportunity to engage with all of you as owners. We treasure the exhibit hall. What a great experience. I'll just add, it's open till 4 o'clock today, and feel free to spend a little money.

Now, truly moving to the more formal aspects of the business update. We issued our 10-Q this morning and had the related press release. You can see the results I'll touch on those. I'll start with Berkshire just as a whole. Obviously, we have our insurance as I've referenced as our heart of Berkshire was our foundation. As we move to the non-insurance businesses, we're really fortunate to have a number of businesses in there, but in their aggregate, they're fundamental and really central to American businesses and American industry and to the American consumer. When I combine those, it's really the unique opportunity we have to excel across those businesses. That will continue. It's been our focus, it'll very much continue to be our focus.

If I start by looking at these results, I'll start with the insurance, total insurance. I'm starting there because there's a couple really important points to make. You can see in 2026, the first quarter, we're actually up quarter-on-quarter. Yet in the letter that I sent out just in February, highlighted the fact that we're unlikely to see stronger results in 2026. There are some important points here. In 2025, we have an $860 million after-tax charge associated with California wildfires that we insured. The adjustment's not so important. It's just to highlight that the 2026 results and what we're feeling in the insurance industry right now, there's two things. One, our 2026 results do not reflect any catastrophic events. It was a pretty benign period.

There were some storms in the Northeast part of the U.S., but relative to 2025 and past years, very benign. That highlights again that the insurance or insurance businesses, but the industry as a whole, the pricing we've talked about, that hardening, i.e., can you get the proper premium for risk? It's becoming a more challenging market. What's driving that? When you see a benign environment, and I'll touch on further results, another layer, but you start to see competition coming into the industry. They bring a variety of products and forms, but it's really they're bringing capital into the industry. Just wanted to really highlight, we still see that as a softening market, and I'll expand on that. When we discuss insurance, we have two core objectives at Berkshire.

We want to underwrite at a profit, create a profit for our ultimately for our shareholders. Truly underwrite at a combined ratio, and I'll come back to it because there's a lot of insurance jargon here, and there's a lot of numbers, so I'll come back to it. The second core objective is to increase our float. The insurance jargon and the numbers on here, go to the combined ratio on the left and go way over to the right, the 10-year average, 93%. I'll give you a little bit of color here. If we have a $100 premium that comes in associated with a policy, the 93% represents the costs incurred associated with that premium. It can be the cost of writing the premium, the commissions, or the loss reserve we set up.

The 7%, i.e., $7 on $100, is our profit, our operating profit on that premium. If I go back to the $93, just roughly $23 of that would be the expenses, the administration of running the business. That's just an average. It varies across our businesses. It varies across the industry. The other $70, and this is very important, that's actually what goes down into float. When you see our float growing, we take that $70, it goes into our float, and we'll incur premiums against it over the years to come. When the premium shows up, we pay out against that $70.

If you take a simple small commercial business or personal insurance, that $70 effectively gets paid out likely over a 3 to 4-year period. That premium sits there as float. We earn on it, and Warren's referenced it many times. It's a valued part of Berkshire, and it's really the opportunity to continue to create value for you as our owners and shareholders. You can see on the float, going back to 2015, it's effectively doubled through 2025. There's a small increase in the current quarter, but I wanted you to all see it, but it's not the fact it increased, it could have decreased because it's just subject to the payment cycle we're in.

The really core and important objective is that we grow it over the long run, and we'll continue to provide those type of updates to you as our owners. If I go back up to the underwriting results, and you see the combined ratio again, but we'll focus on 2026. Primary and reinsurance, they're both 87%, 89.6%. The amazing thing there is that there's an eight in that number. Our 10-year average is in the 93%, so we're actually realizing more operating insurance income profit there. What's driving that? A very benign environment when you think of the catastrophic environment we insure into. The last time there was a hurricane that hit landfall in the U.S. was 19 months ago. Our quarterly results, our results last year do not reflect those type of outcomes.

That means we have more capital coming into that industry. We like those results. The reality is as our insurance business softens and we cannot realize the value we should for the related risk, Ajit and our insurance team across the businesses, we start writing less premium. We still want to write it at an underwriting profit because we'll there's still opportunities there, and there's a number of risks we'll insure, but we'll be much more cautious and specifically across the primary and reinsurance businesses. Let's move to GEICO. As I highlighted, we have a new CEO. We're fortunate to have Nancy leading that team. They even have a better combined ratio, 87.3%. That means associated with that business, 12%-plus operating income coming off of each dollar of premium we write there.

Exceptional result. What's driven that is that four or five years ago, the GEICO team stepped back and said that they felt they weren't, relative to the risk, getting the proper premium, the proper price for risk. Over the last four years, we have worked hard, the GEICO team worked hard to get the proper balance across that. That meant our premiums went up for our customers across certain classes of drivers. They worked hard to segment that customer. That happened across the auto industry. Generally speaking, you saw an increase in the overall premium as they managed that underlying risk. What's that mean to the industry? What's that mean to GEICO? Well, one, there's a lot of folks out there pursuing those customers.

Anytime you increase a customer's insurance premium and especially over a period of time, and this is I'm talking about both GEICO and our competitors, listen, people start evaluating and shopping. We've seen unprecedented shopping activity across the auto space, and you see the advertising that's out there. They're pursuing customers, and they're pursuing the GEICO customers. Yes, we there's an important balance I want to highlight to all of you is that, and this is what our GEICO team's working on. Yes, we have to get the price to risk right, but there's two other important things we really need to balance. The second piece is we really do want to retain our customers. There's no more valued customer than our GEICO customers. Many of you as shareholders and owners of Berkshire are GEICO customers.

We want to retain all of you. We want to retain every GEICO customer. As we found that right priced risk, the next challenge is making sure we retain our customers, and Nancy and her team have that as a clear objective, and they're working hard on that. The third piece of that balance is to grow GEICO. How do we measure growth in that industry? It's policies in force. If I touch on what we've experienced as growth in GEICO, if we go back to last quarter 2025 versus this quarter, ending March of this year, our policies in force grew by 2%. Now compare that to the number one competitor in our industry, Progressive. They just announced their first quarter results. They grew by 11%.

Our team at GEICO fully acknowledge, as I said, that balance that they have to find across those, the 3 metrics, including growth. It's not going to be easy to just restart the growth engine. We acknowledge that. They understand the objective, as we go through 26 and into 2027, 2 important objectives, as I said they have, is that, okay, let's retain our customers and let's start growing GEICO again. The last thing I'll just touch on the insurance business, and it's Tokio Marine. I'm not going to expand a lot, but other than we announced the transaction in the 4th quarter of, I mean, in the 4th week of March.

A great transaction by Ajit and his team, it's a strategic transaction in that. I'm highlighting that because, yes, there's a financial aspect of it, and we're thrilled with that. It is a long-term strategic partnership. When Ajit's on stage, I'll have him expand on that. Well done, Ajit, thank you to you and your team. A great transaction for Berkshire. Now we'll move to our non-insurance businesses. I'll start with BNSF. As I've highlighted, a number of our non-insurance businesses provide critical product services. BNSF is a great example of that. 32,500 miles of track in the West, moving core products for a number of customers that touch every industry in the U.S. You'll see the results, some improvement there.

What we really wanna highlight today, and Katie will be joining me on stage and she'll touch on this, is that we have a lot of work we know to do at BNSF. We have a great group of employees who have been working very hard, I would say, on the ground, boots on the ground. You've heard me talk in the past that we have to work hard in our yards and work on how we can move our cars quicker and meet our customers' expectations. We're doing a very good job on the customer service side, but we've recognized we've got to get better operationally. Our team's also been very focused on what resources do we have? Do we have too many locomotives?

'Cause actually too many locomotives, it sounds counterintuitive, but can be a problem. You're just not as efficient, but the congestion and everything comes with it. Our teams have been very focused on that. How do we best use our employees? Well, that's something our team's working hard on, but and we're working hard to become more efficient, more effective. We also have to very much recognize where we are versus our industry peers. This is the six Class I railroads that operate in the U.S., and we're one of them. You can see that last year, we were fifth out of six, and that's a reality of where we are, but we're also getting better, and we are going to get better.

We recognize that this performance is, as I've said, our teams have worked hard, but there's a lot of room for improvement. The good news is, if I look at it in 2025, and what we have here is our operating margin. The 34.5% you see for Berkshire, that's the operating profit that came back to BNSF associated with its underlying operations. That operating margin improved by 2.5%, 250 basis points. That's a very positive outcome, obviously. By the way, in fairness to our team, that's the work they've been putting in. That on a nominal basis, that was the largest improvement across the 5 peers. We're pleased with that, but we know there's a lot of work to be done.

If you look at our first quarter results, happy to report that, okay, we went from fifth to fourth, but our team would be the first to say there's a lot more to be done. If you look at our overall operating margin there, very consistent with the result last year, and the efficiency we've delivered is being maintained and improved versus the quarter over the quarter of 2025. Again, we see a lot of opportunity here to continue to get better. To achieve where, say, Union Pacific is as a leader at, with an operating margin of 39.5%, we know that's gonna require a step change, both as how we're operating, but even how we approach our operations.

An important step that we've or something we've identified, we like to identify the gaps and where we can get better, is technology. We're doing a lot at BNSF, and I'll touch on our other businesses here when I go through technology. That's where we see a step change or potentially where a few of our peers have gapped out versus how we're using technology. I'm gonna back up to GEICO, and then I'll come back to BNSF. 'Cause it was approximately 4 years ago, I was in a GEICO meeting with our management team there, and they were discussing this price to risk and segmenting customers. We had our operational team from GEICO. They had the commercial team, but they had the tech team there.

They're often there and you're looking for some help. What I heard in that discussion was a clear technology transformation that was happening at GEICO. It was obvious that the technology was going to be a big part of the solution as GEICO tackled their certain challenges. As that meeting wrapped up, I very much wanted to spend more time with the technology team to understand what was driving this. They were calling it a technology transformation, 'cause I could see that it was so applicable to what we were gonna do, what we needed to do and what we would pursue across our non-insurance businesses. What is this technology transformation that they described at GEICO? I'll summarize it in a few different ways.

First and foremost, we recognized we were going to become a builder of technology rather than just a buyer of technology. That meant that instead of we had a number of systems and we often bought the related applications or software that came with it. Yes, it's a valued application, but it was disconnected from all our systems obviously. We didn't have that ability to then use the information, get to the data. What they started to talk about is simplifying the infrastructure, making sure we would build what we needed ourselves and deliver solutions back to our customers, and we would have clear access to the data. All things that make a lot of sense, but a massive challenge, and it doesn't happen overnight, and we're still on that journey at GEICO in year five, there's no question.

Quickly recognized that this could be used across our other businesses. Very fortunate that at GEICO they had put their leadership team in place to drive forward this transformation. The most senior leader, then, came from GEICO, joined our non-insurance operations, took on a senior leadership role, the leadership role helping us with the technology transformation at Berkshire Hathaway Energy, and then also as a senior technology officer at BNSF. We started down that journey, and one of the first things you have to do is say, "Okay, we need a different resource base." Now we're hiring engineers, we hire developers in our technology group that help us start to build the solutions we need for these businesses, and it's going beyond GEICO now.

We still have our valued employees there and they may be retraining or transitioning to other roles, but the reality is we need less people managing the applications and the software and more people building outcomes that our businesses need. When I asked our team, "Well, how does AI fit into this artificial intelligence?" Well, it's actually a big piece of this 'cause it's effectively what goes on top of a lot of our systems, and that's what they're building. They're using AI to build applications, and that's all great, but we also know there's certain risks around humanity, there's risks and there's the broader risk for globally and for the country. There's also risks within our businesses.

As they just start heading down this path, I said, "Well, okay, how should we think about this? How are we How should we all be comfortable we're approaching this correctly?" They said, "Well, we don't really like to call it artificial intelligence." They call it narrow artificial intelligence. They have three really important principles associated with it. The first one was that, yes, we're using it, and we'll use it with these engineers we have and these highly skilled individuals we've brought in, but how are we gonna manage it? Well, the first thing was that we still have our employees, our senior management team involved in implementing the recommendations that we then receive associated with the architecture, the framework they put in place.

There may be things that still occur and should occur just like they did within our systems or within that, as it moves up and the important decisions are being made, there's human involvement. Our managers, our employees are involved, and that's part of the governance that's effectively in place. The second piece is what they call the safeguard, and the safeguard is very intriguing because right away, of course, we all want good governance. We want that in place. What's that mean? Our team said, "Okay, here's how I would describe it. If we ask for an outcome, we want a recommendation or an action, and we ask it now and then half hour later we ask, do we get the exact same outcome?

If we can receive that same outcome, we're effectively the safeguard. We know we're utilizing that application properly, and importantly, it means we've got a defined data set that we're comfortable with. I like to call it the constraint. We know we're constraining our data. We know what data we're using, and we know what data's coming in. When you talk about all the operations that we're focused on, yes, the next day of operations come in and it updates that data set and we may get a if we ask the question the day later, we'll get a marginally different answer. It's got new information. If we ask it, "Well, if you ignore today's information and just focused on yesterday, do we get the same answer?" Yes. We call that our safeguard.

The third thing on technology and associated with this narrow AI is it has to be additive to our businesses. We're not gonna do AI for the sake of AI. You can spend a lot of money in this area, and we need to know what we're trying to achieve and do we see a valued proposition for the businesses. That's what we call narrow AI. If you see how it's starting to be applied at BNSF, it's incredible. If I think of BNSF, we have the expansive network I touched on.

We have a variety of trains leaving from a variety of points every day I've touched on, it can be the intermodal trains of 150 to 200 on our tracks a day, which are moving very quickly and often leaving L.A. to deliver product in Chicago 48 hours later. It can be in the last quarter, we had more than 750 trains a day moving across that system. There's weather or there's equipment failures. We share our tracks. We allow Amtrak to use them. They can be running on time, or they can be running behind schedule. We have to adjust all to that. The reality is, Katie and her team have a system that's been running for 177 years, we were not there in how we could use technology to operate that better.

That's what we're using, or we've just started down the path of, that's how we know we'll see that step change in our operating performance. Now, to summarize it, all that, but I wanna let you know it's all around operational excellence. We are gonna get better at rail, but we're gonna use that framework across all of our businesses. They very much will create the framework, and then our teams can embrace it if they so choose, and we'll help them see the value of it. There is an opportunity there. I'll break it down with one last comment around technology. When you think of artificial intelligence, everybody talks about the large language models and, okay, they're learning models, and there's a lot more to it than I just highlighted.

I summarize it as one thing, and this is why there's an opportunity across all our businesses. Those large language models, I really communicate them, and I communicate them to our teams, or at least it helps me understand it. They're large logic models. At this point in time, we're using it to solve logical challenges in our business. What we're trying to do it is in a more efficient fashion, you do it more quickly and get to a better answer. That was a lot in technology, but it touches the whole franchise of Berkshire. If I move to energy now, and provide an update there, I'm just gonna touch on the opportunity first and then come to the challenges. 'Cause as I've just discussed technology, that's the opportunity in energy.

One of the core inputs to all those data centers, hyperscalers associated with artificial intelligence is energy. Our businesses have that opportunity in front of them at Berkshire Hathaway Energy. Yes, we're pursuing them, and we'll do it. I'll touch on it in a way we view as the right approach for both our states and our customers. I would highlight it's not new to us. If you just go across the river a little bit east to Iowa, we serve just under 50% of that state. If you look at the number of data centers and hyperscalers in that state, it's very significant. We have 4 very large hyperscalers, data centers there or builders of them and ultimately their customers using it.

If I look at our peak load, i.e., the amount of energy being used from those data centers, it's at 8% of their peak load. The only reason I highlight that 8% is when I hear people in the industry and all the utilities around us, a lot of states, they're talking about this great opportunity. Jeez, hopefully, in the next 5 years, they'll be from a relatively starting point. They want to get to the 5%-10%, and we're already at 8, and we see opportunities to grow that by 50% over the next 5 years or potentially more. We'll do it in a way, and you're starting to hear more and more of this across the U.S. We'll do it in a way where we're not going to impact the costs of our other customers.

These users of the, i.e., those, the hyperscalers, the data centers, and the users of the energy, they have to bear their full cost. We can't transfer that burden across all our other customers. That's a principle we've applied across all our utilities and from the very early goings when we're building these data centers. I would highlight, I think our team's doing an exceptional job of that. If I, again, go back to MidAmerican, if you look at their with all the data centers and hyperscalers and the infrastructure they put in place, their rates are still 45% below the national average. That's just unheard of. It's an exceptional outcome, and it just highlights they're doing the right things when they build this infrastructure, or it's a part of it.

We would highlight we have similar positive outcomes across the rest of our utilities. I would note one other thing. Our gas network or our infrastructure there, our large pipeline company we have there, as they build out all this infrastructure, not just in our utilities, but across the U.S., our pipeline footprint will grow. A lot of it's being built by natural gas and we'll meet that challenge. Here's an interesting point. 15% of the gas consumed in the natural gas consumed in the United States is touched by our pipeline network or one of our core assets there. Again, that's the opportunity on the energy side. It's not without its challenges, and we've talked about this the past few years. When I think of the Berkshire Hathaway Energy, what's the challenge?

It's what I call the regulatory compact. We leave your capital, our owner's capital, Berkshire's capital in these businesses. Often a portion of the earnings that they generate, we may reinvest back into those businesses. For that, we get a very specific set of return. It's a fair, it's over the long run, it's been a very balanced and fair return. How do you measure that? It's versus the risks we take on in that business. That's the compact. Okay, you're going to pay us X% return and what risks are you asking us to take? That model has worked very good for a number of years and for centuries. The problem is it's becoming more stressed. If you think of inflation, if you think of the data center challenges, but I strongly believe we're managing that separately.

Then you move to assets that are 60-100 years old that are starting to retire. We bring those into the network. The challenge is every day to get more efficient, more effective from the operational side. As a regulator, as a governor, you're very focused on, I don't want my rates to go up. I don't want to take on more risk. They want to transfer that back to us. That's the regulatory compact. Unless that exists, we do not, if we don't see that balance, we don't deploy our capital back into those businesses or into those utilities. We work hard to maintain it. There's been a very important challenge we've had within that. We've touched on in the past too. That's wildfires. Wildfires in the West, very prevalent the last 15+ years in California.

We experienced a very significant wildfire in Oregon in 2020 or a number of wildfires across Oregon, but we being the state, but also the company. There were a number of wildfires across the state. We had certain equipment, certain high winds. We had certain failures with our equipment that contributed to those fires. Associated with that, we fully acknowledged where there was causation and where we were responsible for it. There was also associated with some of the fires and specifically 1 fire, a class action lawsuit that had very large claims against our utility there, PacifiCorp. We had to approach it such that we'd resolve all the other matters, but that was a class action. There was specifically 1 fire that we strongly felt we weren't responsible for. There was 0 causation.

There was an Oregon Department of Forestry report that said that PacifiCorp did not contribute nor cause the fire. We took a very strong position there that one, we were not going to put more capital in to fund the entity and these type of risks and these type of obligations. Secondly, we would challenge that liability verdict. We challenged it. It's been a long process. As owners and shareholders, and this was a very significant event that occurred in this past quarter or occurred in April. We're very fortunate that it was up to the appellate court. They reversed and remanded that liability verdict and said back to ground zero, start over again. What they're really saying was that that class of customers and who did we actually affect and where was the causation that will be revisited and then the related damages.

Some positive things associated with it. We recover $1 billion of security we've already posted. The people, the law firms that pursued it are responsible for our costs associated that period of time. Not our litigation costs, but the costs we incurred in posting the bonds or posting that security. That's $10 million or approaching likely $10 million. The most important thing is we've reset the stage there. That's very important because we're working hard to get that regulatory compact balanced and getting the right outcome. We do want to see these utilities move forward. We want to be a very good operator and steward of those assets for our customers. The last thing I'll just touch on wildfires. When you think of PacifiCorp, yes, we've addressed that challenge. To get the right compact, we've worked with Wyoming, Idaho.

I've touched on Utah on this stage to say it requires a judicial system that supports the legislature, the laws in place. More importantly, we all or as importantly, we need good legislation that then sets that that balance. We've had it across those states and we'll continue to work hard across our other states. An exceptional outcome and and wanted to make sure, you know, there's still a lot to be done there because we're back to the very first back to 1st base on the on the legal proceedings. Now, moving to our manufacturing and servicing businesses. There's a the this highlights our blues, the manufacturing group that represents approximately 70% of that group and the service and retailing groups in the in the gray or beige.

I like to think of when you think of our manufacturing group, we've got three groups there. We have our industrial group. We have our building products group and we have our Consumer Products. The Consumer Products servicing and retailing, as I've touched on, is now under Adam Johnson. We're fortunate to have Adam as our leader there. He's managing 32 of those companies and we'll have him on stage and we'll expand on that more. I go back to those, a few of those core manufacturing groups, I'll start with the industrial group. Even when I think of the industrial group, I like to break it down into a couple other groups. It's, it's a good way to think of our businesses, and that's why I want to share it. Within the industrial group, we have a metals group that is very strong. There's three businesses.

We have Precision Castparts. It's a business we acquired 10 years ago in 2016. It's run by Mark Donegan, who was the CEO when we acquired the business. He continues to run it today. As owners and shareholders, we're very fortunate to have Mark in that position. He understands Precision Castparts inside and out. He understands the industry. Very much works towards delivering solutions for our customers. The second important part of our metals group is a business called IMC. They're our International Metalworking Companies. You can hear the management team over there. It's really interesting to see that company. One, they make the tools that remove steel. They'll take a cylinder of steel, they create the tools. That gets utilized in a variety of other industries.

It can be the aerospace, like a Precision Castparts, and I'll touch on that, or it can be another industry like the auto. If you think of what's happening in the aerospace industry, and this is why Precision Castparts and IMC has such a significant backlog, or I'm highlighting a backlog. If we look at what Boeing just announced last quarter or this quarter, but just recently, their number of planes that they delivered went up by 11% quarter-on-quarter. That's phenomenal, and they're talking about even doing more. Very similar results at Airbus, and that's who Precision Castparts serves, and also, often IMC serves that industry. That's remarkable. If you hear the backlog in this space, it's 10 years. I did ask our team the simple question.

I go, "Well, is that many more people really flying?" Like, I get it, we're post-COVID, and it's building up, and I sort of obviously knew part of the answer, but it's really remarkable why there that demand. A lot of us know this, but the reality is to see what's driving it is the efficiency of those planes and engines is so great now that it's better to buy the new plane and retire the old plane. What you have is this 10-year backlog that we're seeing a very similar backlog across our metal businesses when you touch on a Precision Castparts or IMC. The third piece of the metal groups, and by the way, I should just touch on this. We acquired IMC basically 10 years before Precision Castparts.

You go back to a 2006 timeline, we acquired 80% of it. Again, we're very fortunate to have the senior leader there, Jacob Harpaz, who was at the business, the senior leader running it back then and still runs it today. If I look at how Precision Castparts and IMC works together, Precision Castparts is now, if not, but very likely IMC's number 1 customer. We have them working on joint solutions. I'll move to that 3rd group. In 2022, we acquired Alleghany, and we're fortunate to have that in the family now and a very good addition. Along came, also with it came 3 non-insurance businesses. There were a variety of other ones that are tucked into the appropriate place in other businesses.

One of them that stood alone was WW Steel. It was a family-founded company. It had transitioned to Rick Cooper. He's here over in the manager section. He's the CEO. It's a remarkable business. Basically, they contribute steel into a variety of core infrastructures. It can be bridges, it can be stadiums, it can be arenas. Their most famous one is the Las Vegas Sphere. Here we bought an insurance company, and Warren has touched on this. We sort of had these nice add-ons that I'm not sure we spent a lot of time valuing that side of it. Incredible additions to the Berkshire family, and that really comprises the metals group. Now, if we move to the second group is the chemical group we have within the industrial sector.

We have three of those. We have Lubrizol going back to 2011. We've touched on that business many times. We acquired OxyChem last year. Associated with OxyChem, we announced the acquisition. We closed it on January 2. Very nice addition. I would say they produce two core commodities, so it's more a commodity chemical business, and they're valued commodities in the, again, industrial sector, their plants can't be replicated. That would not be easy. We've got valuable assets. The third piece of the chemical group is a company called LSPI, and I'm just highlighting it because it's a real gem for our owner shareholders. What it does is it creates a drag reduction agent that allows oil to move through a pipeline.

You can imagine in the environment we're in right now with the, with the fundamental supply and demand imbalance on oil, the more oil that can be moved through those pipelines, and you can't quite double it, but you can get darn close. They have an amazing product and obviously in very high demand. The last thing I'll just touch on with the industrial group is we have Marmon, excellent business. The reason I'm touching on it at the end, it's really amazing because it's the catch-all. It touches our rail industry or the industry. It touches the energy industry. It touches the metal industry. It touches the chemical industry. It touches on all the core industries in the U.S. Again, a remarkable asset that we have and will continue to create strong value for our owners and shareholders.

The second piece of the manufacturing group is our building products group. I'm not gonna go through all the businesses in there because we have one that is the bellwether, and it tells you how the rest of them are doing. That's Clayton Homes. The other businesses their results follow very much, very closely that because with Clayton Homes, we're building manufactured homes or site-built homes. There's a lot that goes into it, and our other companies provide both products to them and across that space. It could be the insulation, paint, carpet, a variety of other things. You look at Clayton's results, if you go to the manufactured side of the business, our results are down on true homes manufactured and sold, down approximately 10%. A little better than the industry average, that gives you a feel for it.

If you go to the site build, i.e. homes home builder, they're down around 5%. The numbers I've been seeing for the last quarter are probably more like 7% across the industry. That's obviously driven by where interest rates are and certain other challenges for the consumer. Where's the opportunity? I'll touch on the challenge. Where's the opportunity in these businesses, and how is Clayton tackling it? It's very much around pursuing the American dream, and can we help deliver that? What I have gonna have our team bring up a slide that highlights this is actually a what we call a CrossMod home. We have it in the exhibit hall. It got moved in.

Had to cut the back off a little bit, so it's not quite the full size if you're, if you're comparing it to that. The reality is, this is where the opportunity is within Clayton. We wanna deliver on an affordable home to the American consumer. This home you're looking at, we thank you. Thank you to our Clayton team. Including the lot price, assuming it's in the 40,000 range, and there's a lot of place in America where it's well below that. We recognize some others, it may be greater. We can deliver this home on-site built, 2 bedroom, family home, living space, very, very beautiful living space for $249,000 delivered, including the lot. That's absolutely incredible. That's delivering affordability to the consumer.

The CrossMod, how can we get it to that price? 70% of that home is built in our manufacturing side of our facilities. Those manufacturing homes we produce, we now use it. The last 30% is built by our site builders. They bring the street appeal and all the features that as a homeowner they may want. It's a exceptional product. We don't stop there. We still have a very strong culture around the manufactured homes, and how can we, you know, what's the extreme on that? Well, if we deliver a single, and this is 1,000 square feet, if we take it to the manufacturing home and think of a traditional manufactured home, and our team probably won't like it, but it's more the box, square box. What it does create is a home.

It can be a 2 bedroom with a, again, very nice living space, very well done, now has a 30-year plus life on these assets, just like this one. They can get a 30-year mortgage on the CrossMod or on a manufactured home now. That's the quality we're building it to. We can now do a single manufactured home for just under $35,000. We can deliver it. They still have to get their lot or rent one. The reality is we're creating homes that people can afford, and that's really where the opportunity is within Clayton. Very proud of what our team's doing there. Lastly, I'm gonna move to the service and retailing business. I'm not gonna dive into it in our Consumer Products business. Again, we'll have Adam here.

When I think of those businesses, Adam's been in that role, as I said, since December, very much learning the businesses, getting to know the management team, like myself and how we've always done it, we'll be very focused on capital allocation and the risk, but also very focused on helping the team achieve operational excellence across those businesses. If you think of those businesses across those 32 businesses, we have a wide spectrum of where they are in their life cycle. We have some that are still growing and growing very quickly. We have some that are growing at a much smaller pace, but still growing.

Then we have some that I would call in the more mature cycle, but still creating a valued product to the co-consumer customer and deploy and creating capital producing cash flows that often within those businesses will redeploy across our other businesses. We'll have that chance to discuss that with Adam. The last thing I just want to touch on before we move to the second session and I wrap up here, I'm going to move to our balance sheet and activity associated with that. In our first quarter of 2026, we purchased $235 million of Berkshire stock. You can see that reflected on the slide. We've talked about this often, but when do we purchase stock? It's when our intrinsic value, again, conservatively determined, exceeds the current price of our shares.

We do that literally, Warren and I will be discussing this on a daily basis and how do we feel around the overall value. It's not a daily, but we think about it daily. The reality is there's a lot of different ways to calculate intrinsic value. It can be a simple premium over book value. You can take book value because we have everything at a historical cost basis and try to adjust our various companies that a BNSF is recorded on the books at the original price we bought it at versus what's it valued at today. You can go through that exercise.

Or if I think of it more as how we would think of businesses when we buy a stock or a full company, we think of it as we have our balance sheet, we know what our cash is, we know what our U.S. Treasuries are, we know what our equity investments are, they're mark to market, and then we have our operating companies in place. That's where we have to think about what are the long-term economic prospects of those businesses five years, ten years from now. The other important part of that equation is how do we redeploy that capital that comes off of it? That's really the approach we take to the intrinsic value. Let's move to our balance sheet. The very specific numbers. There's a lot of numbers here.

Again, I'll touch on a few captions. If you look at our cash and U.S. Treasury bills, there's a risk that people use the $397.4 billion as the headline number, because that is our cash and U.S. Treasury sitting there at the end of March. We don't like these type of adjustments, but it is important to communicate it. There is $17.2 billion of payables associated with the Treasuries that are in that total. How does that happen? We bought the Treasuries right before the end of March, the payable, i.e. the fact we use our cash to purchase those Treasuries, that occurred right after the end of March. We've got the Treasuries up in the $397, and we're still holding the cash.

Accordingly, our cash in U.S. Treasury bills net is $380 billion. Yes, it grew by that $7 billion you can see on the slide. The other important thing to focus on is our cash and investments at the bottom. The $705.8 billion versus the $708.7 billion at the end of the year. We're down just under $3 billion. Now, what drives that or what's the underlying numbers behind that? We produced a little more than, close to $10 and a half billion of income and related cash flows in the first quarter. We also would have incurred certain capital expenditures against our businesses.

We incur those to either reduce risk in the businesses, to manage those businesses on a sustainable basis, or to pursue growth. That was, like I said, just under $5 billion. Again, we are involved in our management teams as they decide to deploy that capital and very comfortable with that. The other piece of the equation in the first quarter was we closed on the Oxy transaction. $9.5 billion flowed out associated with that. Very pleased with that. We did have two transactions last year that we announced. Oxychem, we announced it and closed on it in this year. Last year, we announced Bell Labs, a smaller transaction. We're fortunate to have it join our company, Steve Levy and his team. Great group there.

Warren likes to say we finally delivered on Charlie's objective around, we have a rat poison company that we value highly, but it's an exceptional business. The reality is that's not in that number. We had the Oxy transaction resulted in a little more than a $3 billion decrease in our results. With that, a very fulsome business update. I appreciate the opportunity to share where our businesses are and where they're going. Thank you. I'm going very shortly have Ajit join us on stage. We'll move to the Q&A. As we transition to that session, we'll have the GEICO video narrated by Nancy. Thank you.

GEICO started out 90 years ago by trying to make things simple and giving a great price and service to customers. When you think about it, today is exactly the same thing. We're just continuing to try and perfect that and make it a little better every day, a little faster, a little easier. I'm Nancy Pierce, I became CEO of GEICO in December of 2025. Prior to that, I was the Chief Operating Officer, I just had my 40th anniversary with GEICO. I started as a claims associate in 1986, right out of college. I've just had the pleasure over many, many years of working in, I think, just about every department or every sector that GEICO has. While I started in claims, I've been in pricing, I've been in product management, I've been in underwriting.

I've had an opportunity to run operations in different parts of the country. What really has kept me all these years and what has inspired me and I think inspires all 30,000 people at GEICO is every day, we're delivering for customers and we're doing something for them. We're saving them money on a product that, you know, everybody has to have, but maybe you don't necessarily wanna use it. But when you do need to use it, that's really the moment of truth. For us to be able to do that and to do it in a way that saves people money and gives that outstanding customer service, that's what excites me every day. The reason that we have customers and will continue to grow is just keeping that as our North Star.

If we do that, I think GEICO will be very successful over the next 20 years. GEICO was founded in 1936 by Leo and Lillian Goodwin, and their idea was to come direct to consumers and to cut out the middleman and to have much better cost and much better service for those customers. In 1951, Benjamin Graham took an investment in GEICO, and of course, one of his students was Warren Buffett. That's when Warren really started to think about GEICO and to deeply try and figure out what we were doing and met with the leadership of GEICO, and that was one of his first very big investments, his personal investments. Then later, he started investing Berkshire Hathaway shares. By 1996, he owned all of GEICO.

From that beginning, we now insure millions of cars, trucks, RVs, campers, et cetera. We're in all 50 states, we try and be there wherever the customer needs us. That's always been sort of number one. I think from the first time I met, Warren or Greg or Ajit, they always start by talking about integrity and reputation and making sure that you're doing the right thing for customers. It's something we live and breathe every day at GEICO, it's absolutely a big part of our culture.

Obviously, Berkshire Hathaway was founded in some ways on insurance, and being wholly owned has just been terrific for GEICO and terrific for our customers over the years because it really allows us to invest in our business and to make long-term decisions, not quarterly or annual decisions on what's best for growing our business. You know, obviously, Berkshire has many other insurance companies besides GEICO, and we do work together with them. GEICO sells many of their products, you know, today, and we continue to look and bring more of them onto the GEICO platform. There are always cycles in insurance. Sometimes there's bad weather.

It's just making sure that the company's prepared for all of those things and to deliver on that promise that we make to customers when they buy that policy to be there in their hour of need. We take that very, very seriously. If you're involved in a, in an auto accident, the last thing you want is to go weeks and weeks and weeks before you get paid and before the whole thing is resolved. We really strive to do that now in minutes where possible, as opposed in days or hours. Nobody really wants to spend a lot of time with their insurance company, but when they do, we wanna make sure that they're getting the very best service as fast as they possibly can.

When I think about innovation, it's really about things that are gonna allow us to handle claims faster than anybody else in the industry. What I'm really focused on is our customer loyalty and retention, so we wanna improve those. It's a very competitive market right now. You know, everybody has come out of sort of a, an unusual period out of COVID in regards to frequency and severity. I think everybody now, all of our competitors are in the mode to try and grow. The best way for us to grow is to retain, you know, every one of our customers.

I think that what I'd like to communicate is just that every day, 30,000 people at GEICO go to work in support of millions and millions of customers. I want you to know that that's what the GEICO team is delivering for Berkshire day in and day out, is a reputation of doing the right thing, saving customers money, and just giving outstanding service.

Thank you, Nancy, and to the GEICO team, thank you. We've got an exceptional leader in Nancy, and again, appreciate you taking on that senior role. Welcome, Ajit. yes. Great to be up here together. Ajit, if you don't mind, I'll start with I touched on Tokio Marine, an exceptional transaction, an exceptional relationship I know you've built over many years with the Tokio Marine management team. If you could just expand on that strategic transaction and relationship, we'll love to start with that.

Sure. Thank you. Tokio Marine and Fire is the largest non-life insurance company in Japan. They've been doing business for more than 100 odd years and are clearly regarded as a blue chip company in the international arena altogether. They're clearly number 1 in Japan. Every insurance company would like to be associated with them. They have a very high reputation in Japan and globally as well. We, being in the insurance business for the last, God knows how many years, we've tried year after year to try and get a relationship going with Tokio Marine and Fire. It has not been easy because one of the things we bring to the business is a capital partner. Tokio Marine were cash rich, and they really never needed capital in a big way. They have been expanding in Japan.

Now, given the limited growth in Japan, they've looked overseas, and over these last eight, 10 years, they've really got most of the low-hanging fruit overseas that they would like to get. Nevertheless, they are keen, and they are hungry for business elsewhere outside Japan. Last year, we got a chance to spend some time with them and talk to them in very general terms about what the two of us could be doing and should be doing with each other. After that initial conversation, which probably took place nearly a year ago, things moved fairly quickly. To sort of get to the bottom line, in March, we finally announced a transaction with them. That transaction has three legs to it.

I'll describe to you each one of them, and that'll give you an idea of what the relationship is right now, and we've got a long way to go, of course. Firstly, we bought some stock in the company. Just a simple transaction. We wrote a check for $1.8 billion, and we got 2.5% of the stock of Tokio Marine and Fire. That was one part of the transaction. Secondly, they have a good and profitable book of business in terms of what they write in Japan and elsewhere. We took a piece of the business, just that property casualty business that they write, and, you know, we compensated them for their efforts in getting the business, originating the business, and running the business.

We get a slice of their business for several years down the road. The third piece was a sort of strategic agreement between the two of us. It is not spelt out in a lot of detail, and normally I would be very, very concerned about having open-ended strategic transactions. Tokio Marine, they are a quality company. In fact, they remind me of a phrase that J.P. Morgan used I don't know how many years ago, "Doing first-class business in a first-class way." That is Tokio Marine in the insurance industry. We have a general statement that we'll work with each other, we'll coordinate when it comes to finding opportunities elsewhere, running businesses operationally, and that is something that will evolve over time in terms of who's gonna bring what to the party.

I certainly hope this serves as a springboard for both of us to move on to the next plateau.

Thank you, Ajit. It's an exceptional transaction and a real long-term relationship. Thank you so much. You know, it's 1 thing when I think of also it reminds me of our 5 other Japanese companies that we've made investments in. Yes, we like the financial investment, but we also see long-term strategic relationships that can develop across 1 or all 5 of them. Fully support and excited by everything you just described, Ajit. Thank you. We'll move to the more formal, or not the formal, but our traditional Q&A, question and answer. We'll go again to the stations and to Becky. Today we'll start with station 1. Station 1.

Hi, my name is Warren. Warren from Omaha. I've recently undergone a, let's call it a significant change in role. I have, well, let's just say a not insignificant portion of my net worth tied up in Berkshire stock. Now, Greg, I've been watching this company for a while. Long time, a very long time. I've been telling people that I have no intention of selling a single share. Not one. My question is a simple one. I'm 95 years old. I've got nothing but time and Cherry Coke. I want to know, just so I have something to tell my fellow shareholders, why should they hold their Berkshire shares for the long term? Anyway, Greg, I'll let you take it from here.

Well, Warren from Omaha, very astute question. If I think of what we've already discussed this morning, which is our culture and values and highlighted that's the bedrock of Berkshire, then what did it create? It created the foundation that we have today. That's this incredible set of assets that exist within Berkshire. We have our insurance business led by Ajit and his team. We've talked about it being the heart with talent and opportunities because we have capital available and it'll be available at different times. We've got significant opportunities there. If I think of our non-insurance businesses, I spent a lot of time on those, but we've got unique opportunities on the operational excellence side and we'll pursue them and there'll be incremental investment opportunities in there. We have our equity investments, as we know, and we also have a very important asset.

We have our cash in U.S. Treasuries. It serves a couple purposes. One, you've heard Warren and Charlie say this before, I've said it, we do not intend to be beholden to anyone. We start with that position. Thank you. It's how we manage Berkshire and we'll continue to manage Berkshire. That asset, the cash in Treasuries, also creates a unique opportunity. It creates the opportunity to deploy it across these different groups. It can be and it will be dependent upon the opportunity, i.e. is it a strong value proposition, if it presents itself, we'll be prepared to act decisively and with significant capital. That's what it's there for. We have, we will and do have opportunities within the equity investments that we currently have and beyond that.

We have our operating businesses, as I said, and there it can be deploying capital back into those businesses, as I touched on the capital expenditure side, or it can be the incremental opportunity to acquire 100% of a business. Then there's the opportunities that Ajit's already alluded to on the insurance side. What's the other unique thing is, yes, Berkshire's a conglomerate and we recognize that, but we are a unique conglomerate in that we can move our capital very efficiently, and that's the value of the conglomerate, is we can move our capital very efficiently across each of those groups. We can move it from insurance to non-insurance into equities, or if we so choose to hold it in cash or back across those in a very efficient way, in a very tax efficient way.

I would also add to the fact that how are we unique as a conglomerate? We live by the fact that we hate bureaucracy. We do not embrace in our Thank you. Yes. Ajit's the biggest fan. He reminds me constantly and I love it. I treasure it. We've heard many times the ABCs, the arrogance, bureaucracy, complacency that can creep into a company will kill a company. We intend to never allow that to happen. We have this unique opportunity to both take the businesses we have today, take that foundation and build upon it. We also have that capital to be deployed back into them. How will personally myself and the team define success? We'll define success is can we ensure that Berkshire endures in its current form?

That means we do business as we do today, consistent with the cultures, values, business principles we have with both the long-term objective and with great purpose and intent, create long-term value for our shareholders. That will define success.

Greg, I'll let you take it from here. I've got a few things on my plate. Actually, excuse me, I need to take this. Someone may want to sell me their business. I hope it's an elephant.

As you've all picked up, that was a deepfake. Here's the interesting thing. That was done with zero input from Warren Voice photo. We were able to obtain that with information that's out there and replicate those actions and that voice. The reality is that's what we're dealing with when we think of Berkshire and how we have to protect it every day. It can go to deepfakes and they're using a way to try to penetrate our business. It can be the cyber attacks. It's a great reminder for our team because that is a significant risk across Berkshire that we're managing every day, cyber risk, and it's one that we take extremely serious. I touched on the technology side. We're constantly using technology to protect our businesses, and then we're also trying to use technology to identify it.

A lot of us have heard about Mithos and what's going on there. We're very focused on those risks. Ajit, before we move truly to our first question, and you've touched on this many times. When we think of cyber risk and we insure it, what's our current approach across our insurance businesses and your thoughts there?

Cyber is something we worry about in the insurance operation at two levels. Firstly, there is a huge demand by people in business all over the world who are interested in buying protection against some kind of a cyber incident. We have been slow in terms of consciously, we have been slow in terms of entering that class of business as an underwriter. The reason for that is, firstly, on cyber, I find it very difficult to have some meaningful method to assess and model the aggregation. People will tell you, "We've got it under control," and they'll show you all kinds of models, but nothing that I can really hang my hat on in terms of we really have a good feeling for what the aggregate exposure is.

Any risk we take on, the first question we ask ourselves, how bad can bad be? I'm not sure we can answer that question as well as we should. The second reason is cyber has been a very popular, fashionable product in these last several years. We have not played in it. As it turns out, there haven't been very many cyber losses. People who've taken on cyber risk have actually made profits, and as a result of which, the premiums that cyber insurance commands has been coming down over time. We'd hate entering a line of business where prices are coming down. We're sort of sitting on the sidelines, and I'm not sure when, but I'm pretty certain that the day will come when we will have a fairly significant role to play in cyber.

Secondly, you know, we being a large company are exposed to cyber perils ourselves. We try and do the best we can. We, I think, are as good as anyone else. Cyber insurance is very highly regulated by the regulators, and we've been consistently above what the regulations call for. I think we're doing the best we can, but I cannot be categorical about it.

Thank you, Ajit. Let's go to the now truly the Q&A session. Becky, we'll start with you, and thank you for being so patient. Thank you.

Okay. Becky, just repeat the last part of the question.

Yeah. AI also is very fashionable right now. People are jumping into it from the insurance space and from the non-insurance space. Clearly, if AI becomes reality as it's being projected, then there's no question about it'll be a huge game changer. Right now, what we are seeing is AI being used as a productivity tool, as a mechanism for reducing labor costs and doing routine repetitive things. I do not think AI will reach a point where you can make a trade-off on things like pricing, settling a claim. That is still years away and, you know, I tend to be skeptical. I'll be surprised if AI can solve that problem for you. If you're counting on AI telling you which stock to buy and which one to sell, I don't think that's going to happen.

Ajit, I found it interesting. Ajit and I were together, a few weeks ago, and Ajit got his team on the phone 'cause we were discussing this exact question, Becky. Ajit, your team immediately went to, yes, the cyber risk, which we've already touched on. They then went quickly to the fact that really across the insurance businesses, and it's that building concept, that we're very focused on how do we become more efficient in creating code and managing it. They immediately went to that aspect of it. Then as you touched on becoming more productive, more efficient. They went as far to say. I thought the example was really good.

I mean, if we were looking at a risk and we had our traditional underwriters doing it, we might have looked at the 5 largest risks. Your team highlighted that now we can pretty much in a fairly quick way, yes, we focus on those, but we'll get a very quick view on another using technology. We'll probably look at those other 15 risks and have a strong view on it. Is that fair?

Yep, that's it. Exactly.

Yeah. Using it within the businesses, but well aware it's evolving, I think is a fair way.

Mm-hmm.

Yeah. Thank you. Thanks, Ajit.

Thank you.

Now, formally, Station 1, unless Warren, you're up there again.

Sure. I think one of our greatest strengths at Berkshire is patience and being disciplined when it comes to allocating our capital. There will be opportunities that come over time and for yourself. It doesn't mean there's not opportunities now, but it doesn't mean you need to deploy all your capital or spend all your money right now. That's really our approach. We take every day, we recognize we've got a significant asset in our cash, and U.S. Treasury is using it as ourselves as an example. That's an asset. It's a great opportunity. You'll feel the moment or feel there's a strong value proposition with an opportunity. When do we see those?

We've outlined our investment philosophies, which is, 1, we very much have to understand what we're investing in. We want to have a strong. It can be you touched on technology and the things you're seeing there and the evolution and how fast it's all changing. I always start with, and I know we always have at Berkshire, do we understand this business? Do we understand the opportunity? More importantly, do we understand the risks? We want to have a very understandable view of what the economic prospects look like for the next 5, 10 years. Not, yes, the next year matters, we're not in that investment for a year. It has to be a long-term view of where that opportunity will go. We take it 1 step further.

We're going to be in these investments forever. We think that way. We need to, we like to have a strong view on the management team, that they're capable and operate with high integrity. If we can get to that position, but the most important being then at the end, the value has to work for us to deploy our capital. We're not anxious to just deploy capital into subpar opportunities. We wanna know it meets our principles. We'll, as I said earlier, we'll act decisively, both quickly and with significant capital. Ajit, anything you'd like to?

No.

Thank you. Becky?

Thank you, Becky. Obviously, yes, the many years of operating Berkshire Hathaway Energy and then in the role of the Vice Chairman of non-insurance operations. Fortunately, that was, Ajit and I were in those co-roles for the past 8 years, 9 years now. That created a very significant opportunity for myself personally to understand those businesses. As I've already touched on, we have exceptional businesses, exceptional leadership there's still opportunities there. I'll spend a certain amount of time associated with those businesses and make sure we're allocating our capital properly, and we're still thinking about risk across those businesses and encouraging operational excellence.

Listen, having been inside a business, it's easy to look at your internal metrics and convince yourself you're doing okay. You have to look outside and say, "Well, what is the customer seeing, feeling? What are our competitors doing?" I think that's what we can bring on the operational side. I've touched on bringing Adam on or him taking on the incremental role across 32 businesses, he'll bring that great operating knowledge, and we have Ajit on the insurance side. When it comes to the equity portfolio and again allocating time, still we have significant opportunities there, as we look at deploying our capital that's on the balance sheet. I shared where our cash and U.S. Treasuries were.

I would highlight if you think of our equity portfolio as it exists today, I articulated this in the letter. We have a concentrated portfolio, and we highlighted that by calling it across the core. The best name is really a concentrated portfolio of investments. We had our core four concentrated investments I highlighted in the letter. We have our Japanese investments. It's interesting, if you then go into the next number of companies where we have positions that are very significant, and I would add that associated with those, we may still be acquiring shares or rationalizing what's the right position across that portfolio.

The first group when I highlighted it was just under $200 billion and remains at that. Closer to $185 billion right now. Add in associated with be it the other investments, you have a BofA, a Chevron, a Google, companies like that. There's another $70 billion of investments. What that highlights is a very significant portion of our total investments are highly concentrated and sit across a limited portfolio. The active management of that is really limited is really what I'm highlighting. We know those businesses well. We know the management teams. Those are the things that Warren and I would still be absolutely collaborating on and discussing.

We don't have to discuss them every day, if there's something going on across those businesses, we'd be discussing it that week or that month. Maybe it's where they're going or what we've learned. The Japanese companies just announced their results in the last 48 hours, that was an active conversation that Warren and I had just around their results and the businesses and what we're seeing there yesterday morning. That, those are core, it doesn't mean we just set them aside or they're concentrated investments. We're constantly aware of them and evaluating them. Ted manages another $20 billion or just under $20 billion of our capital and his responsibilities go far beyond that.

He obviously helps us across a variety of our other opportunities or helping us assess risk or capital deployment in our, in our businesses. We're fortunate to have that. It's a, it's a portfolio that's very manageable when you think of the management around it and what's required of it. As, as we've touched on already, is the opportunity to deploy that cash in U.S. Treasuries at the right time is a very significant opportunity, including equities, including what we may see within the operating businesses and including the insurance side.

When it comes to allocating the time, yes, there's a certain amount of time spent on operations and we'll prioritize that 'cause we see a huge opportunity to continue to improve and close those gaps and operational excellence. We see opportunities within our existing portfolio, that is either adding to them or right-sizing it, and then constantly evaluating what other opportunities are out there, either in whole totality, acquiring a company that's private or public. Equally looking at what are the incremental opportunities if we're gonna own a piece of a company and those are evaluated in the same fashion. i.e. we look at, as I said, the economics and really tied to the last answer. Ajit, any thoughts there?

Yeah. I really think capital allocation and operating businesses are two sides of the same coin. A comment that Warren had made several years ago, I think goes a long way when he made the comment saying that a good capital allocator will make a good operating manager and vice versa.

Well said, Ajit.

I didn't say it, did Warren? Worse.

Well said, Warren. No. obviously we recognize it. The last thing I'd just say around that, I mean, when you think of our operating companies, and I touched on this, we have a very deep bench. We have exceptional operators that understand their business. They understand their industry, their customers. Yes, do we still have opportunities to get better? Yeah, it's continuous improvement, we'll close those gaps. We have exceptional teams there. Be it myself, Adam, Ajit, we spend our time making sure we're comfortable how the capital is allocated. Do we understand the risks? Are we aware of those gaps? Thank you, Becky. Let's move to station 2.

Thank you. Thank you for attending your ninth shareholder meeting. Again, when it comes to our capital allocation approach in the, in the long term approach we've taken, it's very much aligned with our owners and our shareholders that are here. They've taken a very long-term approach around their investment. We're fortunate to have this unique ownership base within our shareholdings. Again, over the long term, there will be significant opportunities for Berkshire. This is where it's back to the patience and the discipline around capital allocation. Do we have any idea what will occur tomorrow, or will that event be three years from now, two years from now? There will be dislocations in markets that again, will allow us to act.

That's where the both disciplined approach, knowing how we're going to, our investment philosophy around those activities. I would add, it's not that we don't see exceptional companies out there today that we'd love to own, I'll be careful because I wouldn't want to say Long term, we'd be happy to own those companies because there's excellent companies that have excellent management teams that we evaluate. I would say when you think of the world, it doesn't mean there's multiple handfuls of those type of companies, but they're there. The price relative to the opportunity, the economic prospects of that company and the related risks, we're not interested in acquiring those companies at that price. That can be a piece of them or all of them.

That doesn't mean that opportunity won't be there in the future. It's what we spend our time preparing for, i.e. 1, being disciplined, but 2, being aware of some core opportunities we would treasure or value at the right price. That really ties back to the discipline. You asked me personally, my plan for patience for over maybe, quote, "action." Again, it aligns to, I took this role and so fortunate being able to work with Ajit Jain and others, but we do it because we love and believe in Berkshire Hathaway. Warren Buffett brought this great commitment to Berkshire Hathaway, a great understanding of Berkshire Hathaway, and passion. With that, he wanted to create something that was very long term, including the opportunities it would create.

Personally, and I know all of us, we bring that same passion, and we fully intend to do it consistent with how we've done it in the past. Thank you. Good. Yeah. Yeah. Ajit, please. Thank you.

Yeah.

You know, insurance, much like investing, is a game that requires patience. It is very difficult to get people to sit back and do nothing. When I recruit people, my modus operandi, I tell them right up front, I tell them, "Your job is to say no." "You will get bombarded with deals day in and day out, but your base case is just say no." I said, "Every now and then you will come across a deal that will hit you with a two-by-four, and it'll be screaming money. That's when you come to me, and we'll make a decision whether to do it or not." You know, all kidding aside, it is very difficult to sit there and do nothing while everyone else is being wined and dined by brokers and taken to London.

I think the real test of being successful, certainly in insurance and therefore in investing as well, is the ability to say no.

Yes. Well said, Ajit. I think it applies to insurance, and I think your earlier comment. I mean, it's so applicable across all our businesses. That's what it did remind me of one story, and I'll just share it quickly. We'd acquired a company, and we were still in, having a challenging matter with how we were going to resolve some matters. I remember the deposition, and I don't want to say it's one of my most proudest moments, but it was close to it. They said, "Well, how would you describe Greg as a CEO and a manager?" They said, "Well, all he says is no." I think that's part of management. You have to be ready, and including investment, you have to be disciplined and ready to say no.

Trust me, we understand that a lot of people have this urgency to act. Ajit, you described it incredibly well.

Thank you.

Thank you. Let's go back to Becky. Becky?

I mean, the short answer is depends on the price.

Ajit, I like your Charlie answer. Obviously some thought has gone into that because there's a lot of dynamics there.

Yeah. There is a lot of chatter. There's a lot of need. Fortunately, there's enough capacity in the insurance world today that would like to write that risk for no other reason, but people are sitting on excess capital, and they'd like to find a way to deploy that excess capital. We ourselves have taken a small participation in a program that's being put in place so as to write insurance for the ships in the Strait of Hormuz. We haven't written any deals as yet. It's still being fine-tuned. If we can get our terms in terms of the underwriting decisions and the fact that the U.S. Navy will escort these ships, we have put a price on which we will be comfortable underwriting that risk. Nothing's happened as yet.

Thank you. Thanks, Ajit. Thanks, Becky. Station 3.

Thank you. Yeah. As far as managing the existing portfolio and what's in that portfolio, as you touched on, was put together by Warren. It is a group of companies that Warren understands thoroughly, and I would be very comfortable that I understand the businesses, the economic prospects of those businesses. That's why when I outlined it in the letter, I was really trying to send the message that, yes, we're very comfortable with those. We understand it, and yes, it's a concentrated portfolio, but, you know, their businesses will evolve, and there's risks that may surface, so we'll constantly evaluate it. It's a portfolio very comfortable with. You know, Warren touched on Tim Cook's amazing success with Apple.

You know, Warren Buffett and Tim Cook were recently discussing this, and they were talking about, well, Warren Buffett didn't invest in it because he saw it as a technology stock. He saw what the product was and how much the individual consumer valued it. It's a remarkable perspective, but it would be very much a similar perspective that I think many of us would apply. You know, maybe electricity, I know a lot. I know how to make sure something gets generated and how we're gonna transfer and all that. Am I really that interested in how they make the Apple phone? I'll be intrigued by where they make it and some of the risks and challenges around that.

I do fully, our team, you know, when we talk about it on a more broad basis, listen, we're looking and saying, "Do we understand the value and why that product has value?" It's really that value to the consumer. I think the unique opportunity we have and so fortunate is that Warren comes into the office each day. It's fortunate that we get to discuss potential other opportunities that may be out there, bringing a different set of skill sets. In the end, we're gonna narrow pretty quickly down to what's the opportunity? Why is it valued? Why does the consumer, whoever is using it, whatever industry it is, why will that company and that product endure? Associated with that, where are the risks associated with that?

That pretty much is how Warren approached it, how I approach it. The, when it comes to our existing portfolio, yes, we'll always be well aware of what we've invested in. As far as understanding those, the opportunities and risks within them, very comfortable that, have a strong view in that, and we're comfortable where we're at. Thank you. Did you read anything there?

No.

Okay. Becky?

I don't know how I'm supposed to take that. No, both obviously, succession's an important topic, and I'll come back to our board both relative to Ajit and I. I touched on this earlier. I mean, Ajit joined Berkshire in 1986 and is the architect of our insurance business, along with obviously Warren and input from Charlie. We've created a franchise that's second to none, and we couldn't be more proud of it. As it was touched on, the culture and the discipline within it is exceptional.

I found it really interesting, you know, when Warren announced the transition last year, and Ajit will recall this, the very first thing that happened was we left that meeting, there's a lot going on, and Warren said to Ajit, but then also myself, "Let's get the insurance managers together," our top 5 along with Ajit and with Marc Hamburg, "and let's sit down and talk about the business. Let's talk or let's discuss the culture." It was a remarkable opportunity for me to, 1, expand my knowledge base on the insurance side. I obviously been working with Ajit for a number of years and had other board opportunities where I had a wide understanding of it.

To spend time with Ajit and our team and have Warren's perspectives, it was great. That was literally the first action Warren took. What I could see within that group was a very deep group that of management experience, insurance experience, and they absolutely had the same values and culture that Ajit has highlighted. I think when it comes to culture, Ajit touched on it already, which is it is challenging to keep a culture where you maintain that discipline. Because as he said, inaction and telling people, you know, take a few months off when they're used to being active is not easy if they're that type of underwriter or selling product. That's the delicate balance. When it comes to Ajit, we're fortunate.

He's got an exceptional group that works with him and then also operates a number of our critical subsidiaries. They're deep in both knowledge and talent. I would then also highlight our board takes the succession issues very seriously, both with Ajit and myself. They have a plan in place, and they discuss it. If Ajit were unable to perform in his role today, or I was unable to perform, our board knows what action they would take. Ajit?

Yeah. In terms of the culture and the underwriting orientation, which is so critical, there are a few simple rules that I've followed over the years. It's come at a cost, but I think net-net it's still a positive. Let me just lay it out in terms of how I think about this issue. Firstly, we have a very small number of people who actually get involved in the decision-making. My top 3 lieutenants in my reinsurance operation, forgetting about companies that we acquired, we have been together for 35 plus years now, and we've become friends.

The other thing, to minimize any kind of competition among these people and stepping on each other's toes, we have a compensation plan that gives fixed salaries, fixed compensation to the individuals, as opposed to having some complex formula that results in they get the upside and Berkshire gets the downside. I try and stay away from that as much as possible.

Thank you, Ajit.

It's really a problem with all the compensation plans I've seen. The other thing that is important is people need to have experienced going through a tough time and the fact that it doesn't penalize them. We insulate them from the ups and downs of the marketplace so that they feel secure, and they do the right thing. Those are the elements that I think allow us to have a long-term orientation and not get sucked into the latest fashion of the year.

Right

The day and just do stuff for the sake of doing.

Your compensation question is such a critical point, Ajit.

Yeah. The compensation thing, having seen all these programs over the years, I remember having mentioned to Warren at some point in time, I said, "Warren, you give me a compensation plan, I'll game it. You'll not be able to figure it out for years down the road." That's the problem. Together with the fact that if the employees lose, they want to go back and renegotiate the plan, and if they win, they're happy to walk away with everything. That's the big challenge.

Thank you. Thank you, Ajit. Thank you, Becky. We'll go to station 4.

Thank you. I had a very long and extensive answer last year to the question. It is an important one, but I think it's one we have to recognize. I'll touch on rail or rail, too. We have certain companies where we very much operate now. This would be our utilities. It would be our, including our pipelines. We operate as a steward of those assets. We operate as a steward of those assets effectively for our states and for our customers. Whenever we approach resources, for example, that we may own or what we're going to build, it's very much first and foremost, we absolutely need to comply with the current laws that are in place, including the federal laws.

We know what those parameters are, and as we see federal law and state law across our many states. The federal law, there are things they do, and there are things implemented to reduce the impact on the environment. We're very sensitive to that, and our teams are absolutely committed to both complying and absolutely doing it right. I would add that if we're discussing our facilities, for example, across the river in Iowa, we have plans on resources and when we'll retire our coal units potentially and our gas units. That's very much driven by state policy. It's the state will decide, i.e., through their policy legislature and through our regulatory processes, how we'll operate, how long we operate these assets.

In the end, it's those customers that both bear the cost and bear the risk. Very much we are very respectful of that, and as I said, we're stewards of that. Do we provide input into that process? Absolutely. For example, I know I touched on this last year, but if I look at our Iowa utility, this changes every year because of the load growth we've discussed. If we look at on a 12-month, 365-day period, it'll be very close on this. Approximately 93% of our energy came from renewable energy. That's remarkable. They absolutely lead the nation, and we've done that in a way where we could do it in an affordable way. Yes, we still have our carbon resources there.

We still operate our coal plants. We need them to deliver as I would call protection to the system, i.e., it stabilizes it, and there's peak times we need it. Do we use them less? Absolutely. That's a policy our state made many years ago, and we provided a lot input, as I said, and we've deployed the capital to ensure that could be delivered. The reality is, state by state, they'll decide what resources we'll deploy to serve the customers, and they'll also very much provide us input on when we'll retire our units.

The real challenge going forward, and it's well beyond Iowa, because I think Iowa, and our other utilities, we approach it in a very prudent way, and we've got one, i.e., prudently, we're doing it consistent with our state policy, but want to do it in a, call it a frugal way. We're not building for just sake of building. We're trying to do things that we feel are best for our states.

The challenge is when you talk about the hyperscalers and the data centers, that's putting a lot of pressure on the system and there'll be if you look at the amount of gas units purchased, there'll be an incremental amount of carbon units used as we go forward if that's going to be a valued, if artificial intelligence and the consumers want that, and that's a valued product, it's gonna put a lot of pressure on the systems and on the type of assets we use and the industry uses. Ajit, anything on the insurance side? Because I know you've gone on the insurance side as far as how, what do we insure? How do we approach it?

Yeah. Right now in the insurance sphere, the supply is greater than the demand. That makes it very difficult to be able to carve out a deal that rationally is good for the buyer and the seller. When supply is greater than demand, it's the seller that loses. Because of that, we haven't been active in getting involved in writing insurance for these new facilities, the data centers.

The hyperscalers.

Yeah.

Yeah.

Clearly there is a surge in demand, and as long as supply doesn't go crazy, we will get a few days in the sun sometime in these next few years.

Yeah. Thank you, Ajit. Very valid question, but again, very, very proud, I would say literally proud because I think the one thing we've always emphasized across our utilities, across our regulated entities, I would include BNSF. They have to move certain product that has certain risks and dangers around it. We are a carrier of that. We have to. That's an obligation that came with that railroad. Just like our utilities. There are certain things we do that are absolutely required, and the key is that we do it consistent with what's required both federally and at the state level, and that we're exceptional stewards of the underlying assets. With that, we're gonna move, Ajit, thank you. We're gonna move to our next session, but let me explain how it's gonna play out a little bit.

We're approaching 11:00. As we transition, we'll move to a NetJets video. Again, just give you some more knowledge on NetJets and Adam Johnson. We'll take a break, but this is the exciting part, and we're very fortunate Warren agreed to this. At 11:45, Becky and Warren will do an interview backstage. Basically in 45 minutes, if you take a break and then reconvene, we'll have Warren on the large screen. Becky will interview him. As we take the break, there'll be a couple other activities. One, you'll get a 3-minute warning before the 11:45, so if you'd like to rejoin us. You'll be able to see it throughout the arena, but it'll be a, again, a, an interview from Warren.

Also during the break, we often did commercials during the movies. We could have incorporated into the video. We'll have those at the 15-minute mark, basically at 11:30. The commercials will play. That'll be a 12-minute reel of our various commercials from our different companies. Be a 3-minute warning. Then we have the interview with Warren. Then we'll recommence the third session. As we recommence that session, we'll have a video from Katie on BNSF that'll allow our team to get settled in here. Please enjoy your break as we go to it. Becky and Warren, we look forward to your interview. Thank you.

Ten years ago.

We made a commitment to essentially move 10% of the resources of Berkshire Hathaway. We turned it over to another, a person who was not that well known at the time, and we did that by spending roughly $35 billion buying stock in Apple Inc.. We were going to have that under the management. We're turning that money over to the management essentially of Apple to make Berkshire look good without any work by us, which is our preferred way of operating. I would like to report that 10 years later, several things are happening. One is the $35 billion counting dividends, realized appreciation, unrealized appreciation, but that has turned into $185 billion pre-tax. I didn't have to do a damn thing.

Tim has announced that he's retiring as well. That's an announcement that's just been made in the last couple of years. I think it's appropriate if Tim would take a bow and our shareholders would say thanks to him that. Tim is right by me.

First and foremost, we recognized we were going to become a builder of technology rather than just a buyer of technology, that meant that instead of we had a number of systems and we often bought the related applications or software that came with it. Yes, it's a valued application, but it was disconnected from all our systems obviously. We didn't have that ability to then use the information, get to the data. What they started to talk about is simplifying the infrastructure, making sure we would build what we needed ourselves and deliver solutions back to our customers, and we would have clear access to the data. All things that make a lot of sense, but a massive challenge, and it doesn't happen overnight.

We started down that journey, and one of the first things you have to do is say, "Okay, we need a different resource base." Now we're hiring engineers. We hire developers in our technology group that help us start to build the solutions we need for these businesses.

Thank you. It's great to be here.

Well, the reality is that with an incredible leadership team and amazing employees and a strong board, we have over the past 10 years accomplished everything that we set out to do in 2016 when I took the role. What we've done is transformed our portfolio. We've taken it from a company that was 50% production in the Middle East with a lot of risk to now geopolitically much better, where 83% of our production is in the U.S. We've taken it from production of 650,000 barrels a day to 1.4 million barrels a day. We've doubled our resource, more than doubled. We've gone from 8 billion BOE of resource of oil and gas to 16.5 billion, and we've also been able to ensure that we had sustainability, a long runway.

The portfolio's not just double, more than double, it's higher quality assets, so higher margin assets. Now we've got 30 years of runway in our portfolio, assuming activity at the current level. Now we're not gonna keep the current level. We will take advantage of accelerating this runway, this 16 and a half billion. We can accelerate that when the macro allows. What that's going to do, it's gonna be a massive value creator for Oxy. Now that we've done all that we needed to do to get the portfolio straightened out to get to where we are with the assets and the sustainability, now it's just a matter of developing it.

Now we don't. We control our own destiny from that standpoint. We don't have to depend on M&A or any future contracts from anybody in the Middle East or in, anywhere internationally. We can decide when we want to develop it, at what pace. When we can, we're gonna develop it, and we're gonna develop it as quickly as we can, as long as it won't happen until we get that last debt payment down so that we're down to $10 billion in debt, principal debt. After that, we're free to take what the macro will give us, while also spending some of our capital, returning it back to the shareholders through share repurchases and dividend growth. We have the ability to grow organically, to then grow the dividend and to provide shares repurchases.

I'm so excited about it too. The reason I'm stepping down is we have for a long time had a great succession planning process in place. While I've had the support of it, as I said, an amazing leadership team, so we were able to accomplish all of this, while building the culture and increasing our technical capabilities. We did all that. We've checked all those boxes, but now we looked at our top successor and what we need to do now in the next 10 years, we felt like he's better, he's gonna be better at doing that than I would've done.

Next 10 years is this organic growth.

That's gonna drive our stock price up, I think, tremendously over the next 3-5 years.

I'll point out one other thing. While we're gonna take what the macro gives us with the growth, what we're doing now is creating incremental free cash flow.

... by just reducing our cost and increasing our efficiencies. I think that we have the lowest capital intensity of anybody in our industry, and part of that's what Richard Jackson has been driving and to get us to that level. Now with respect to what the macro's gonna give us, I think that this disruption in the world with respect to oil, I think that's gonna have a hangover effect. That's gonna carry on. That's gonna, I think, cause shortages. Probably starting by mid next year, we're gonna be in a scenario where there's gonna be a lot of places that need to start developing oil faster.

Because of our lower breakeven cost than anybody else, we should be one of the ones that are first to the gate to start that process, because we have a breakeven of lower than $40.

I think oil prices are a bit suppressed now because of what's coming out of all the strategic petroleum reserves around the world.

I believe that by midsummer this year.

we're gonna start seeing that prices, without some growth starting to happen, will start to go up. I think that, you know, by the time that we're ready to start our growth, and again, that would be when we get to the $10 billion, that would be later this year, 1st of next year. We'll be a part of that process to help build back the supply of oil for the world.

Yes. We do with Greg what we do with our other large shareholders or our team does with any shareholders. We want our shareholders to understand what we're doing, how we're doing it. Greg has been involved in a part of the process of understanding what the business is gonna look like. I think Greg is amazing. He's the OxyChem deal now. He's a tough negotiator.

He's honest and he's fair, and so we've built a great relationship.

only OxyChem deal that was going on.

Let me clarify.

On the OxyChem deal, he is into the details, and he doesn't forget. That's why he could sit there and talk about all those businesses.

He knows those businesses like the back of his hand, now he knows OxyChem in the same way. We had great discussions around it. That turned out to be an incredibly good win-win for us and for them because that debt reduction we were able to accomplish with that frees us up so that just right now we're at $13.8 billion in debt principal. I believe that by the end of this year, first of next year, we'll be down to the $10 billion. That resets everything that we can do. That finalizes the transformation for us, then we're off and running.

Thank you.

Thank you. Appreciate it.

I certainly have to acknowledge that the consumer attitude is a little bit different. I watch the University of Michigan numbers very closely.

I know exactly where it is, and what I know is our numbers are up for the year, and I'm very thankful for that because I also know the confection industry fairly well, and I don't know that others can say quite that.

It's definitely a headwind for Benjamin Moore. Number one driver is housing churn at Benjamin Moore, and with affordability issues, mortgage rate issues, and confidence, it's been a strain. There's no doubt about it.

Yeah, we've probably seen, you know, a little bit of a change in our trends over the last month or so.

You know, there's a lot of factors influencing the consumer, so sometimes it's a little bit hard to tell, you know, what factors those are.

When we think about the consumer, it really, you end up in 2 tiers right now. If you are affluent and you are looking at your retirement accounts, the market's doing really well.

Those consumers are looking for new experiences. However, if you're in the lower income demographic, right now when you think about persistent inflation, interest rates that are still relatively high, not by historical averages, but for recent years, these consumers are pressed. They're trying to manage strained family budgets.

I think that what we're trying to do at the end of the day is just be mindful of that we do have a consumer base that is ultimately forced to spend more money on certain other things that they may have been had more money in their wallet before. Gas prices are obviously rising.

Thanks for having me.

Yeah, well-

Q1 was fantastic for us. Grew 23% globally. A very broad growth story for us. All regions growing double-digit. Our core market's really strong. We're seeing the consumer be very durable and strong right now. We're excited about the future for our growth, and obviously for the category we're competing in.

Yeah

Yeah

Yeah. Well, the first thing we always track is participation, and participation in health and wellness, specifically in run and walk, is at an all-time high. We think there's 52 million runners in the U.S. that run twice a week. Globally, we think that's up to 600 million. That's the foundation of our business. On top of that is performance matters in people's lives. The last couple weeks in the marathon.

we've seen epic athletic achievement and per-

... under 2 hours.

So-

... what a great spotlight for our sport, and that's driving interest as well. The general theme of health and wellness around the world, though, is a one-way street, we think, and more people than ever are running, walking, and staying healthy.

Yeah.

Yeah. Well, first off, epic athletic achievement, good for our sport. Running is at the center of everybody talking about it. We sit right in the middle of that with innovation, Becky, and we were talking off-air about this.

The shoe matters for the athletes. We have always been a company on innovation and R&D for our athletes and everybody that moves. That's why we have the number one market share here in the U.S. in run. We just became the number one brand in Germany, too. Highly technical markets, our products and brand is right in the center of that. We love it when there's epic athletic achievement like that.

Yeah

Yeah. Well, new, obviously, for us, and what I've been talking about this week is just the consistency of leadership at Berkshire. We've seen it with Greg over the years, but now we're seeing it with Adam, and I couldn't be more excited to have more interaction with Adam and start to learn from him. Consistency, this deserved trust, empowerment that has the bedrock of Berkshire culture is still the same things that I'm feeling from Adam and from Greg.

Yeah

Yeah. I think this weekend is a moment for us to network as peers, and the lunch is one way, but what I try and do is spend time one-on-one with some of my peers to suck all the information I can and experience from them. This is a moment where we get to network, and those networks, you know, last throughout the year. It's more one-on-one networking than in groups, and we've been fortunate to do that this weekend.

Yeah. There's not one way. This is the best part about Berkshire's empowerment and decentralization. I think all of us independently operate, but there's access to be able to share ideas and solve different problems. We are solving very different businesses here, but there's some common themes in the macroeconomic environment, in geopolitical ways. We do find times to connect and share what we're all dealing with.

Yeah. Sounds like you're on it, Mike. I mean, this is the game. Innovation in our space is just ramping, both in terms of how fast innovation is coming for runners. Midsole compounds and weight in running right now is really the arms race.

We've got great midsole compounds that are reducing weight, still giving the runner cushioning and resiliency and rebound. All of us in this category are in this arms race to create performance products that improve people's lives, which Brooks has done for 25 years. 25 years now, we're on a 14% compounded annual growth rate.

growth over that time based in product.

That's right.

Thanks for having me.

Yeah. They're selling like hotcakes. Warren obviously is still a feature for us, but Greg has reached icon status this year. He's on the Mount Rushmore with Charlie and Warren here. We're selling a lot of them.

More than 30 years.

It was fantastic. I have to say, Greg handled himself fantastically well. I think Ajit adds a great dimension to the stage. Warren's presence, especially his AI presence, added special value, and I think the business is in terrific shape. If you were to think about this company and its current market value, if you were to revalue the equity portfolio to, let's say, the historic mean of the S&P's, say, 17 times.

That's maybe about $70 or $80 billion of risk. The operating businesses trade way below 17 times, probably closer to 10 times. There's a lot of upside in Berkshire.

9%.

I think it was one of the first slides. They're buying stock.

I think we saw it today. You know, there was a substantial amount of stock purchased, and we're sitting on $400 billion of cash.

I see nothing but opportunity. I, you know, I like to buy when they like to buy.

rather not say, but I think, You know, I like to buy when they're buying.

I think that was a vote of confidence.

No, I don't think so.

I think he's very, he's very engaged with Warren on those discussions. I think he's thinking a lot about the investment portfolio. I think if you look at Apple and Coke in particular, they're both going through CEO transitions.

They're being managed with excellence, and I think inspired a lot by the Berkshire transition. In fact, I talked to Tim Cook last night, and that was the first thing he said is he wants to be recognized as the person who's managed succession better than anyone. I said, "Well, you've got a tough, a tough comparison.

You know, I think in every one of these cases, it's something different. I think in Apple's case, Tim's done this for a long time. I think he has realized that there's an opportunity for product innovation, and somebody like John, you know, is head of hardware engineering. You probably couldn't pick a better person for the next decade of Apple. The need for innovation. I think at Coke, Enrique is a fabulous successor. I would've loved to have seen James stay longer, I think that, you know, the demands of these jobs are great, especially a company like Coca-Cola where you're operating in 204 countries around the world, and you're traveling to those countries. I think Enrique will be an excellent successor. I think in Doug's case, he acknowledged that the AI transition is gonna be one that probably needs different leadership.

I think in a lot of these cases that you're citing, you have CEOs who realize their limitations and the opportunities for somebody new that's gonna continue to create shareholder value for the businesses that they run, and they're so convicted to the future success of the company, like you see at Berkshire, that they're making the right choices.

Well, the beauty of the AI is it will model the risks for you.

And-

it will give you an opportunity to then assess, you know, how right or wrong has the AI actually given you the ability to assess it. Those AI tools are gonna be incredibly useful. You look at, like, these operating businesses, they're run incredibly efficiently from an SG&A perspective, there's no question that there's optimization opportunities. Like, just think about, like, risk calculation in the insurance business. AI will be an enormous contributor to reassessment of risk, reassessment of pricing. I just think all these operating businesses over time are gonna have a great benefit in efficiencies and opportunities from AI.

Well, you know, I think they're not gonna talk a lot about the macro environment, but I would like to hear their perspectives about the macro environment.

I just don't think that that's something that historically they've spent a lot of time talking. I think when you look at where the S&P is trading, and you think about a 26x multiple and 100-year mean at 17x, we will regress to the mean.

I almost think it's implicit in the cash balances what they think about the opportunities going forward.

I think they answered that with Tokio Marine.

I have to say, I love the fact that they're actually doing more of a deep dive into the businesses.

I think that that's a great pivot. You know, you're never gonna replace the Warren-Charlie dynamic. That can never be replaced. For a company that's so big and so complex, has so many operating subsidiaries, going and actually doing a deep dive and showing the depth of the management teams across all of these businesses, I think that's a great pivot, and not what I expected, but something that I'm actually really enjoying.

Thank you for having me.

That'd be great. Thank you.

Ajit, I like your Charlie answer.

Obviously some thought has gone into that because there's a lot of dynamics there.

Yeah, there is a lot of chatter. There's a lot of need. Fortunately, there's enough capacity in the insurance world today that would like to write that risk, for no other reason but people are sitting on excess capital, and they'd like to find a way to deploy that excess capital. We ourselves have taken a small participation in a program that's being put in place so as to write insurance for the ships in the Strait of Hormuz. We haven't written any deals as yet. It's still being fine-tuned.

If we can get our terms in terms of the underwriting decisions and the fact that the US Navy will escort these ships, we have put a price on which we will be comfortable underwriting that risk. Nothing's happened as yet.

How are we unique as a conglomerate? We live by the fact that we hate bureaucracy. We do not embrace in our. Thank you. Yes. Ajit's the biggest fan. He reminds me constantly, and I love it, and I treasure it. No, we've heard many times, the ABCs, the arrogance, bureaucracy, complacency that can creep into a company will kill a company, and we intend to never allow that to happen. We have this unique opportunity to both take the businesses we have today, take that foundation, and build upon it.

If I look at our peak load, i.e., the amount of energy being used from those data centers, it's at 8% of their peak load. The only reason I highlight that 8% is when I hear people in the industry and all the utilities around us, a lot of states, they're talking about this great opportunity, and geez, hopefully in the next 5 years, they'll be from a relatively starting point. They want to get to the 5%-10%, and we're already at 8, and we see opportunities to grow that by 50% over the next 5 years or potentially more. We'll do it in a way, and you're starting to hear more and more of this across the U.S., we'll do it in a way where we're not going to impact the costs of our other customers.

those, the hyperscalers, the data centers, and the users of the energy, they have to bear their full cost.

Well, I think it's all working.

It's all working. It isn't our ideal surrounding area, or environment I should say, in terms of deploying cash for Berkshire. In terms of how we got the right management, we got the right arrangement, you know, we can pick our spots.

Nobody can tell us what to do exactly. Sometimes we're doing nothing. Other times we get quite active. I mean.

Absolutely

Yeah. The world is full of people that are offering you things to do, and then the question is to find one that, you know, makes sense. There may be 20 out there that make sense that you don't understand and you just leave them alone.

Well yeah.

No. Well, we don't do anything.

I mean, Of the 60 years I've been in the business, you know, there's probably 5 of them are really juicy, you know? I think it was Thomas J. Watson Sr. of IBM that, said, they asked him the reason why IBM had been so successful or something like that, and he said, "I'm smart at spots, and I stay around those spots." That's the whole thing. IBM was in 3 different businesses, including time clocks and a couple And 2 of the 3 turned out to be no good, but they, so they just focused on the 1.

Yeah

Yeah

Well, and I would say I understand fewer of the businesses as a percentage of the whole than I did 10 years ago. I have not learned new industries for some years, you know? I don't kid myself on that. I'm not going to learn. I'm not gonna have an edge on, you know, a whole bunch of younger people that have actually grown up with them, used the product, seen things. But it, well, as I mentioned, you know, you don't have to understand too many of them like Apple.

Well, it feels like, you know, I've compared it, the markets, to a church with a casino attached. People can move between the church and casino. I always say there are more people in the church than more people in the casino but the casino's gotten very attractive to people. You know, if you're buying one-day options or selling them, I mean, that is, that's not investing, it's not speculating, it's gambling. You know, just totally. There's nobody that can explain why they're buying an option for one day, unless they may have, maybe the fellow that, you know, made the $400-something thousand from knowing when we were going into Venezuela could do it. I mean, at trade-in. The quantity of those things is just incredible.

We've never had people in a more gambling mood than now, but that doesn't mean that investing is terrible. It does mean that prices for an awful lot of things will look very silly. I mean, you know, they had a squeeze in Avis of all things. Well, Avis has been around for 50 years, but just this past week. We have lots more re- regulation in everything now, but people spend their time figuring out how to get around the rules rather than follow the rules.

that's just a challenge.

Yeah. It's a phone call in many, in some cases. You know, we bought a business last year. It wasn't big enough to be in Meaningful, but we got a letter.

Yeah.

Bell Laboratories. No, and, you know, and sometimes there's more zeros attached to them than others and we're big enough to handle anything, and we can make decisions faster than anybody, and our word is as good. There's an awful lot of people that they're, when they're in the business of reselling something or-

you know, it's. There's, it's a lot better, if you're a good salesperson, there's no reason to be selling vacuum cleaners or, you know, as we'll sell stock. You'll make way more money.

It's where the money is.

There's more money around than ever. It, you know.

That's the most likely.

Well, the most likely time to buy things is when nobody else will answer their phones. You know, everybody else talks about their wonderful trading departments and everything. Just try them out sometime when markets are collapsing. They don't answer the phones.

If they do, the bids are subject and the offers are subject, and the spread is wide, then they'll use the information they get from you about what you want to do to go out and kill you some other way. I mean, it's really like going through a slaughterhouse. I mean, you know, you don't feel like eating hot dogs for a while.

Sure.

Well, if you saw them, then they wouldn't happen.

I mean, you've got all you don't worry about what people are talking about can happen. It's something that comes out of the blue. Something will come out of the blue.

I mean, a nuclear bomb could come out of the blue. You know.

Yeah, well, it doesn't do any good to knock on wood. That's the point.

It, you know, was the Archduke getting shot, you know, in the 1914 or something like that for World War One? It's just take everything in life. If it's something people are talking about and thinking about, it's not gonna happen.

There are things that can happen out of the blue. Actually, that's particularly true to use that phraseology now because the things that can come out of the sky, you know, we don't know what can happen tomorrow. I don't like to talk that way to people, whether it's you or anybody else, I mean, because, you know, whether it does you a lot of good to worry about that, I don't think it does do any good to worry about it. I think it's good to be cognizant of it, but the worrying about it is terrible, and I don't like to even cause that belief with people. I don't like to go around.

telling them the end is coming, the end is coming or something like that.

well, it's.

Well, we can't handle runaway inflation except not to be there in the way of it. If you look at the number of countries that have had runaway inflation since World War II, you know, in my lifetime, it's very large. Once you create that, it becomes a different world. You know, Germany obviously experienced it after World War I. But there are dozens and dozens of countries that have experienced it. Of course you have countries that have gone bankrupt like 6 or 7 times. I mean, it's just amazing what people do.

In financial markets.

Oh, no.

Well, it came close before Volcker. I mean, it was cash is trash. You know? People were losing faith in the currency, and they felt they could borrow at 12%, earn 6% on farming or something like that. They, the huge farmers in this state, Nebraska, collapse because they bought beyond the earning power, their paid interest rates beyond the earning power, just because they felt that the dollar was gonna disappear and the land wouldn't disappear. It's tragic for many people. If you're the best doctor in town or the best lawyer in town, you'll always make money under any choice. The best TV personality.

What not having faith in the money does to a country, it turns it into something else.

I, you know, I've always hoped that, you know, U.S. never does it, but we are not immune from it happening.

We have a lot of control over whether rates may go up a half a point or down a half a point, but we may have less control over whether they go up 50 points or.

Exactly.

I'll feel better when he's there than when he's not. I mean, you know, I just, I felt better when Volcker was there. Economists aren't the best at this sort of thing. You ever read any old economics book from 1950 or 1970, it was that Paul Samuelson, who was a terrific guy and smart as hell, he had the standard textbook for 25 years. If you looked up, you know, zero interest rates in year after year after year, it was a 900-page book, and there wasn't an entry for it. You know. I mean, it was the most important economic development, I mean, in terms of the impact it would have and everything during the lifetime of the students reading it.

it's what you don't think of that does all the damage.

Incredible.

Yeah.

Well, it was certainly a problem at Coca-Cola there for a good many years when I was around the company. I mean, sure, it's. You have the most problems with a really good company because it'll continue. I mean, if you're selling some product that people are buying every day, you know, you can make the wrong decision for a long time. That's one of the problems with investing that. Tim Cook, I felt was very, very good from the start. Our, most of our managers are very good at the smaller problems. Like, they can't anticipate the overwhelming problems. That's my job, or now Greg's job.

Huh?

No, I haven't met the old manager.

Well, I.

You know.

I certainly met the people at the labs.

did. I, you know, obviously I met Vicki. We made the deal.

I enjoy meeting the people. You can make mistakes with people. I mean, look at the divorce rate.

You know? That's more important than whether you got the right CEO or anything else.

Now you've got years of trial. Back when I was young, you had to make the decision, you know, or you didn't have to make a decision, but a good many people made the decision when they were 20 or 21 that-

Yeah, as they got married.

Now they spend five years and they still make the same mistakes.

Well, I don't know. It may be that people behave differently before the marriage than after. Who knows?

Exactly.

I would say that almost everybody feels either their marriage is better or worse than they anticipated a month after they were married. I, but I don't know which.

Oh

Yeah, I would be concerned if everybody was. Well, actually, the worst thing would be to have a really good imitator of any president that came along. I mean, just imagine. Well, yeah, we had that famous thing before way back in New Jersey where they the Martians coming and everything like that.

But-

What you can do, well, if you convince, what people lend you money that, where they shouldn't, you shouldn't be borrowing it. I mean, it's scary, and it's particularly scary when you have nine countries or so with the nuclear weapons and people working on it, something even more. We haven't dealt with this. We don't know what's gonna happen.

He's a terrific guy.

Well, he's very, very, very smart about businesses. Incidentally, he's getting his Canadian. I mean, he's getting his American citizenship here very soon, and he was going over with me all the things he had to learn about. I've actually spent a little time in the past with groups of individuals. Of course, my wife did, too, became an American citizen, and the things they have to learn about the Constitution and all these, and they're usually so proud when they become American citizens. I think I detected in Greg that, I mean, you know, as successful he's been and everything else, I mean, he is. It means something to him to become an American citizen.

He sits there with his young son, and the son knows more about some of the answers to the questions that he may get asked or something about becoming a citizen. It's really interesting. Where else does that happen in the world? I mean, what people, America's special and it's a miracle what America's accomplished. I mean, it's just an absolute miracle. Yet the miracle, the division of the output and everything is about as inequitable that you could come up with, while at the same time, it's got these great attractions. There is some secret sauce. I've never been able to define it precisely.

When you run a country for 200 and something years and people want to come here every year, I mean, there's at least something about it. When Greg Abel was very, you know, is looking forward to becoming an American citizen, that means something to him, and you can't buy that anyplace or package it or, you know, it won't work for a Madison Avenue approach, you know, be an American or something like that. That feeling just goes. I, in my 95 years, I've seen it, you know, it's time after time. I felt good when I heard Greg just volunteer that in the last day or two to me that he was, he's up there for his final exams here pretty soon on becoming a citizen.

He doesn't have a full, whatever the complete citizenship.

... requirement is, and you can say, "Why does he care?" I mean, he's gotten along fine without it here and everything, but he still wants to be a citizen.

Mm-hmm.

Yeah

Yeah. We've got a special sauce.

There, that, a secret sauce. It's such a good secret that I don't know what exactly it is. I do know this, that anybody that has a choice would choose to be in, born in America. I mean, you know, you can pick some very small little country, they're very happy that they're. Is this, is there any other country that everybody's, for couple hundred years, has wanted to emigrate to? I mean, it attracted some terrible people, you know, too. It worked. They had the Mafias from the different groups. Not just the Italian mafia, but all. I mean, it wasn't that they were all. We had some system for picking out the wonderful people from some other countries. It has worked.

It's worth the extremes to which it works, don't seem to belong to that kind of a society. I mean, if you were drawing up dreams for the ideal society, and you would have this kind of GDP per capita and everything, you wouldn't design the inheritance laws. I mean, you'd just do all kinds of things differently. Somehow it's worked. That doesn't mean that, we can't do better, I mean, at all.

The number one rule I'd give them is just, the, give them the Golden Rule, "Do unto others." You know, I'm not a religious guy, but I mean, nobody said it any better in, in a couple 1,000 years than that, which may be why it's lasted at a certain degree, too. I mean, it, you know, more people are reading a 2,000-year-old book about how to behave than anything that anybody's coming up with lately. Now, it's got a lot of, particularly the Old Testament, it's got different kinds of stories to some extent. If the whole world lived by the Golden Rule, it would be such a more wonderful society.

Yeah. That's true for everything from parenthood to being a boss to being all, I mean, just everything in life, and it doesn't cost you anything. In fact, it's reflected in better behavior toward you. I mean, it's the very selfish sort of thing in a, in one sense. I've never seen anybody that's unhappy that behaved that way. I've seen a lot of people.

... in a lot of different kinds of situations.

Mm.

Okay. We're clear. We're a 177-year-old company, and if we didn't have in our DNA the ability to adapt and to evolve, we wouldn't be here today, and we wouldn't be relevant still in our customer supply chains. That adaptability and innovation and really putting the customer first is what we focus on. That's core to who we are. My name is Katie Farmer, and I'm President and CEO of BNSF Railway. I have had the pleasure of working alongside the 35,000 men and women of BNSF for going on 34 years now, and I've worked in almost every area of our company, which is how I came to lead BNSF as our CEO for the last five years. We have a long, rich history. We got our start as a six-mile railroad in the state of Illinois, a little railroad called the Aurora Branch.

Over time, that railroad grew into the Chicago, Burlington and Quincy Railroad, then we continued to stitch smaller railroads together to have a route from the Midwest all the way to the Pacific Northwest. We are made up of 390 predecessor railroads, some of those railroads actually connected with the Pony Express. Our trains were used to sort mail as the train moved across the tracks. That grew into the present-day BNSF Railway. We operate in 28 states and three Canadian provinces. Every year, we move somewhere between 9 and 10 million loads, we move everything from coal to agricultural commodities to building products, construction products, chemicals, our largest business segment is our intermodal business. Our intermodal business is the movement of trucks from the highway lifted on a container or trailer onto our railroad.

We haul it the long portion of the route and then lift it off again from the train to over the road. To give you some perspective of the scope of what we move, of those 9 to 10 million units, over 5 million are intermodal. We're the industry leader in intermodal. We lift a container on or off our trains every 4 seconds, 24 by 7, 365 days a year. That just tells you a little bit about the scope of what we do and how we touch literally every part of the economy. Everything's foundational around safety for us. We're going to lead the industry in service. We're gonna continue to be productive and efficient. One of the things I'm excited about is the next 177 years.

We're at a point now where we're looking at how do we build that spirit of building and innovation to our technology and our innovation efforts. We created BNSF Tech, which is a new division of BNSF, and it's really focused on taking that, moving from looking for commercial solutions and buying technology and speeding that process up and building internally. We hired a gentleman by the name of Hari Govind, who many of you know came from GEICO and has a long track record of going in and transforming and innovating. It's not about technology for technology's sake. It's about outcomes. How do we use technology to best position us for the future, to make us a safer railroad, to give the customers a better service product, to drive productivity and efficiency?

I'm excited about the opportunities that we're gonna have going forward to really bring that spirit of building to our technology efforts. I go back to one of Warren's annual letters to the shareholders, and I remember he said that he believed that BNSF would not only be an asset for Berkshire, but an asset for our country 100 years from now. We take that responsibility very seriously, but we also really appreciate that that aligns well with the way that we have to think about our business. We make investments that are very long-term investments. Thinking about that in that longer timeframe is really important. Warren always challenges us to think about the businesses that we lead as if it were our own family's company.

You know, I've worked for BNSF since I was 20 years old, so thinking about BNSF as if it's my family's company is not a big stretch for me. I love that perspective of thinking about, how do I make sure that I'm passing this company on so as if it were a family company for the next 100 years to those who will come after us? With Greg is great to help focus on execution and making sure that every day you're making that business your family's business. You're making it better. We are very honored to be a part of the Berkshire Hathaway family. We understand the responsibility that we have, which is to operate every single day with the highest ethical standards and deliver value for the shareholder.

I want the shareholders to know that we have 35,000 proud railroaders who come to work every single day and focus on those 2 things.

Welcome back. I hope you enjoyed the break. Becky, Warren, thank you for that exceptional interview. Appreciate that. Katie and Adam, great to have you on stage. I would note both the videos were extremely well done in that it gives us a great understanding of your businesses, but also you as leaders. I'm just gonna start with a question for each of you, then we'll go to the back to the question and answer. I think, Katie, Well, I know you did. You heard me speaking earlier. I talked to our owners and shareholders around our operating performance and where we are. Highlighted we were in fifth of sixth last year. We've now moved to fourth, and we need to see. We also talked about needing significant improvement, a step change.

The one thing I didn't really touch on is I started talking about the getting to that next level. As you touched on, you have 35,000 employees, and to move the organization to look externally and recognize where do we go, how do you take on that challenge?

Yeah. Thank you, Greg, first of all, thank you for the opportunity to speak today and talk about our great company. It's a pleasure to do that, Greg, thank you. You know, we absolutely recognize that it's important for us to run an efficient operation, to have a competitive cost structure, and to continue to further close the gap between us and our competitors. You know, we have an exceptional leadership team in place that understands the importance of aligning the entire organization, as you said, Greg, the 35,000 men and women of BNSF, aligning them around that operational excellence. You saw that we made progress, as Greg said, in 2025. We continued to make progress in the first quarter of 2026, we know that we have more work to be done to drive that operational excellence across all areas of our company.

Thank you, Katie. Adam, when I was discussing your new role, and thank you for taking on that role and also retaining your role at NetJets as the CEO there. A lot on your plate and all of us here appreciate that. It's early going. You've been in the role since December as the President of Consumer Products and then Service and Retailing. What are your observations as your early observations across the 32 companies, and how are you approaching that?

Yeah, talking to the different CEOs. I, if you give me just 1 second before I answer, I just want to make just 1 brief comment. Really to both Warren and Greg. I have been CEO of NetJets for the last 10 years, but I've been with NetJets, this is my 30th year there. Only at Berkshire could you feel like the new kid on the block after being here for 30 years. you know, Warren has taught us a lot, Charlie's taught us a lot, Greg's taught me a lot. One of the things that they've said over and over is that, "Hey, bad news takes the elevator and good news takes the stairs." I really understood that many, many years ago. Until I became CEO, I found myself on the elevator a few times.

What they never told me was what happens after you get on that elevator. I just wanna point out, as the CEO for the last 10 years, there's been many times I've had to make calls on things. We run a big business and I simply wanna say that what happens after that is you have the most unconditional support, and I echo all the CEOs that are in this portfolio. I just wanna say thank you for that because it's not easy delivering sometimes good or bad news, but it's been phenomenal support.

As it relates to the actual, the other 31 CEOs in our bucket, I have to sort of start with conversation with NetJets because people have been asking me a lot in the last 5 months, "So you're still CEO of NetJets, but how are you gonna take on this other role?" I think the journey starts with the team at NetJets, and many of them are here, and they're incredible. I spent a lot of time over the last 10 plus years with them. I sat up in that stage in the arena in May of 2010, and it was a hard thing to hear, but it was the truth.

Warren talked about NetJets and stated that it was his toughest mistake that year, and but for the backing of Berkshire, that we would have been bankrupt. I don't like repeating those words, and probably shouldn't do it in front of an entire room, but it's an important pause because then you have two choices, what are you gonna go do? The team that's sitting with me today and many people back home, I do think we have a wonderful company, as Warren talked about with Charlie in 2023. I just wanna say to them, thank you, because it's been a rough road to do that, and we've accomplished a lot. Which gets me in to answer your question. I, you know, I'll be honest with you.

Thank God I have NetJets because I was able to fly around and see a lot of these companies. Unfortunately, all 31 companies are not based out of Columbus, Ohio. I've been on our airplanes a lot. If I'm honest, I was a little concerned about it. Many of the CEOs had reported directly to Warren. All of them reported to Berkshire. Here comes this guy, you know, that they're now gonna be working with. I will tell you, one of the things that struck me is how wise the CEOs are. They have the energy, intelligence, integrity that Warren always talks about. I say wise because of my concerns were quickly allayed when I started talking to them in the sense that they've been listening.

I know many in this room don't know the names of those 31 other CEOs, but they know you, and they've been listening. They absolutely understand the playbook that is the Owner's Manual. By the way, this is the almost today, the thirtieth anniversary Warren wrote the Owner's Manual, and in that was sort of our business Bible on what we needed to do. I was really pleased every one of our CEOs understands that. They've been living that, and that's gonna make the interaction much easier for me. I feel really good. I feel really good about the form of the CEOs that we have, and I know that they have ingrained in them the culture.

Part of the culture certainly is the ownership thinking, but the stewardship that is talked about, we feel a massive and deep responsibility to carry on the stewardship and the legacy of Charlie and Warren and work really hard for Greg and his team. I feel good about it.

Great. Well, we're very fortunate to have Katie and Adam in these leadership roles. It was a very purposeful to have them on stage. We want them to have the opportunity to engage with our owners, our shareholders, and we really do look forward to the questions. Thank you for joining us on stage again. Yeah, thank you. Becky, again, great to have you back. Thank you for that interview, if you'd like to start. Thank you.

Sure. I'll touch on it and then I'll make sure, 'cause it impacts really in a variety of ways all our businesses. What I'm most proud of are our businesses. We operate these businesses for the long run, just like we do for, obviously for our shareholders. We take a long-term approach. There's not many days, and I used to joke when I more had Adam's role, there wasn't a day I woke up where the phone wasn't ringing with good news. You know, that phone rang. You knew you were gonna have a bit of a challenge, and we have that portfolio. That's okay. We'd be talking, we always worked our way through it. We have a team that would lean in, and we'd come through, and it could be anything.

We never tried to use that as a reason we couldn't do something or get to the right place. What I've seen associated with the obviously the war in Iran and the various conflicts in the Middle East is, again, a team that is very much taking the approach that that's the situation we're in. We can manage our business, we very much quickly move to what's the best solution for our customers? How can we deliver and continue to deliver what we've done to them, and what's their expectations around that? Our teams will work incredibly hard to come up with solutions. I touched on LSPI, the drag reduction agent on the pipeline company. They don't usually sell a lot of product into the Middle East as far as moving.

It's more a domestic-based product for Canada and the U.S. when you think of a drag reduction agent on pipelines. Literally being cargo planes of that chemical being moved in the Middle East to help free up supply and i.e. remove that some of that constraint. There's so many things that go on when they start trying to figure out how to solve the challenge. What I would say is it doesn't mean there's not immediate impacts to our businesses. If you think of companies in America or around the globe, petroleum and natural gas matter is such a fundamental input to so many products.

The reality is, if you think, I touched on our chemical group, their input is generally a petroleum product, and the output is the various products they produce, obviously, that are byproducts of that. Their input costs have effectively doubled in a very short period of time.

Mm-hmm.

Again, we'll manage through that, and that's the beauty of being part of Berkshire. They know first we'll take care of our customer, we'll find the right answer, we'll manage the challenges, and the value creation will be there in the end. There's some short-term pressure on our chemical businesses. If you looked at their first quarter profits individually, they would be down or flat to down because they've got some challenges, for example, on the input side. They're delivering what the customer needs, and that rebalances over a period of time where our prices will move up pursuant to our contracts. We'll be treated fairly in the end in that they'll reset and then may unwind a little bit slower.

The point is, unfortunate situation, we've got, you know, men of service and women of service over there putting themselves at risk. That in itself is scary because a lot of our employees have family involved. You know, as far as running our businesses, it's really heads down. We'll get through this, and we'll keep operating everything for the long run. Again, it includes how we'll operate our assets. We're not gonna put the asset at risk to try to get to a short-term outcome because a petroleum price is higher or petroleum prices are high. It's very much continuing to take that long-term perspective. Katy, obviously it can impact demand and what's being brought in on the coast.

Are you seeing that, or what else are your observations?

It's interesting, and Warren has said this in the past before. You know, the railroad is a really good reflection of what's happening in the industrial and the consumer economies because our loadings really cut across all the various commodities. You know, we touch agricultural products. We touch coal, the industrial commodities like cement and steel and aggregates. You know, certainly our intermodal business, which is such a big part of our business, reflects what's going on with the consumer. We're seeing the impact from the conflict in the Middle East in 2 different ways. First of all, I would say that if you look across our various commodities, it's created an opportunity for some of those commodities just because of the disruption in the supply chain.

In addition to that, you know, we see commodities like aggregates and steel, things like that are favorable. We're seeing an increase in those. Some of the commodity areas that use energy in the manufacturing of those commodities are certainly being impacted by the increasing fuel prices.

Mm-hmm.

The largest segment of our business, as I mentioned, is intermodal. As fuel prices increase, our intermodal business becomes more competitive. We're seeing an increase there relative to what's happening in the Middle East. I would say in general, though, as we think about it, if fuel prices stay too high for too long, it has an impact on consumer demand. When that happens, that cuts across all of our businesses.

Have you started to see that yet? Obviously when you think of I touched on it being an input to many of our companies, but really globally it's an input to so many things. As that price pressure moves up, obviously the demand side is challenged. Are you seeing that yet?

Yeah, we're seeing that impact some of the businesses. I would also say, Greg, as we talk to some of our large intermodal customers, what they are telling us, some of the big retailers are that customers are having to make choices now. As fuel prices go up, they make choices about what they're buying. That's where I get back to if it is a prolonged higher fuel price environment, I do believe that we will see that customer impact across our businesses.

Thank you. Adam, across your businesses, what are you seeing? What are you feeling?

Yeah, I mean, certainly, you know, when you see the increases that have occurred and the instant spikes in some cases that occurred, certainly on the consumer product side, on the retail side, it has affected some of the demand on that side. I would also tell you that we have also faced multiple times at NetJets with a hundred

You know, $100 a barrel pricing. We see those spikes, we see I haven't seen it on the NetJets side. We went from really the last 2 years from about $5 to $5.40 a gallon. We're seeing spikes up to $7 a gallon. I would tell you if I see that kind of sitting at $7.25, $7.50 a gallon, you'll see it start impacting even on the higher end side on the NetJets side. We're feeling it. It's, you know, it's not the first time we've had to deal with this. You know, we're prepared to deal with those things and make adjustments where we need to. It certainly is affecting, I would say, some of the retail businesses and some of the consumer product businesses.

Great. Thank you, Adam, and thank you, Becky, for the question. We'll now move to station 5.

Great. Thank you. Associated with the letter I wrote to all of you as owners, I highlighted some important, as I've touched on, values. One of them was our decentralized model. I also touched on risk discipline, capital allocation. When we think of our businesses, we have an exceptional group of leaders and businesses. Yes, they do own their businesses. As Katie touched on it in her video, as Adam alluded to it and talked about it, there is a great deal of ownership in each of our across each of our subsidiaries, and that's absolutely how we'll continue to operate and see it as an extremely effective model. They're closest to their customers. They understand what needs to be done, and if they think like an owner, we get very good outcomes across the group of companies.

I would highlight, though, that with a decentralized model, we do not take responsibility, and I was one of those. I ran BHE. It's a great set of responsibilities where Berkshire Hathaway Energy. Shouldn't be abbreviating, sorry. When I ran it, that autonomy meant you embraced it, and there was a great amount of accountability that came with it and sheer pride that you wanted to do things right. We've got a clear set of, when we talk about integrity and how I started it, we have a lot of expectations, and that's where both on the, on the integrity, how they approach managing their business and servicing their customers, and I've said there's a lot of external factors we can observe.

Our primary engagement is with their, are they managing the risk and foremost? Do they see themselves as that chief risk officer you've heard us discuss many times? Are they good allocators of capital with the capital they have there? 'Cause even capital, you have to manage your operating expense as well. I view everything, you know, that when we're spending money, it may be a capital expenditure, it can be an operating expenditure. You're deploying our shareholders' capital. Are we doing that well? We focus on that. That's part of that equation of allocation capital. The reality is if we're seeing a situation where we're underperforming or we're seeing some potentially poor decisions, that's where we engage and have a discussion.

Usually it's relative, and I touched a bit on this with Katie. It's relative to what we see externally and just really trying to understand where our performance gaps are and then it quickly moves to how and we don't have the people at corporate to go in and quote, help. So it's not like we send in an army. There's generally some people within our subsidiaries or maybe someone we know that could help them with that, with that performance gap. 'Cause we do treasure continuous improvement and strongly, as you've heard, believe in operational excellence. There's as I've said, there's room for us to get better, and that's how we would approach the situations where we see the gap and need to close it. Katie, maybe you can probably touch on both.

Absolutely. Thank you for the question. As I said, we absolutely know that it's critically important that we continue to drive an efficient operation, that we continue to have a competitive cost structure, and that we continue to close the gap with our competitor relative to our profitability. There's a couple of specific things that we're working on, and it's really about operationalizing the improvement that we saw in 2 in 2025 into the first quarter of 2026 and making sure that we're really institutionalizing that.

The first thing that we really focused on in 2025 was we knew that we needed to improve our single car operational efficiency. When I say single car unit operational efficiency, we run a couple of different networks. We run our intermodal network, we run our agricultural and our coal network, our bulk networks. The balance of it is what we call our carload network or our single car network. That's where we have non-unit train. It takes a lot of operational focus, it takes a lot of work effort, and it consumes a lot of resources. Anything you do to improve that single car network is good for all of your customers. It frees up resources, it creates capacity. It allows you to handle the same amount of volume, if not more, with fewer assets.

That translates through then to the improvement that you're seeing in the profitability. An example of that is in the first quarter of this year, we handled more volume than we did in the first quarter of last year, but we did it with 260 fewer locomotives. That translates into a more consistent service product for our customers, and it also translates into better financial results, which is what you saw in the first quarter of 2026. We're spending a lot of time ensuring that we have operational excellence, not in just all those other networks, but in the network that frees up resources and drives improvement and operational excellence for all of our customers. The second area, and you heard Greg talk about this earlier, was around our technological transformation.

We really believe that in addition to driving that operational discipline that you saw in 2025 and into 2026, that working with the new BNSF tech organization to drive that next step level of improvement. You saw units dwell in our terminals less time. That translated through to the financial results that I talked about. You saw velocity improve as well. How do we leverage technology then to take the next step level improvement? I'm excited about what we're doing there. We're literally attracting data scientists, operations research folks, and we're putting them alongside of our operators in our network operations center. We're looking at things like digital twins, which gives us the opportunity to model how we run the railroad before we actually run the railroad.

We're looking at opportunities to do predictive ETAs for our customers, which allows our customers to have a better product. It allows us to turn the assets faster. Last, what I would say is that we're good old-fashioned going to work on attacking the largest structural cost buckets. We had a record for the first quarter in our fuel efficiency. That's the kind of thing we want to do because it makes us competitive with trucks, it is good for the environment, and it's good for our financials. Those are the things we're doing to close the gap relative to profitability. Now, your question about competing with trucks, I would say a couple of things with that. First of all, we have the largest intermodal franchise of all of the railroads. We have a unique relationship with J.B.

Hunt, we have been extremely successful in converting over-the-road freight. We've done more of that than anybody, we know how to compete with trucks. Your question about technology is a good one. I would say that we, in the past, have invested in a system called Positive Train Control, which is a safety overlay that allows us to operate the railroad efficiently. As you know, we operate in a closed circuit, we have the ability, to your point, ultimately to run the train with fewer people than we operate with today. In fact, if you go way back in time, we used to operate the trains with 5 people on the train. Now we're down to 2 people on most of our trains.

The technology will continue, just like most industries, will continue to evolve, and we're continuing to look at that as well. The last point I would say with that, though, is that we also have to be allowed to innovate, we need regulation that supports the ability for railroads to be able to compete with trucks. As you said, we know that there are trucks out there running today in our state in Texas along I-45. There was just a pilot with autonomous trucks. What we have to be able to do is to be able to compete with that and to be able to innovate. We're going to need regulations that allow the railroads to be able to do that.

That's how I think about competing, ensuring that we're closing the gap, as well as maintaining our competitive advantage with trucks.

Thank you, Katie. Adam, on that, on that point and Katie's point, you know, you came literally, Adam had left for a very brief stint 10 years ago, and had a very senior role in NetJets and had been effectively been recruited to be a CEO of another business that was going public. We were fortunate enough to convince Adam to come back. He came back to a challenging situation. The asset was underperforming. We had billions of dollars of debt back to ourselves, to the parent company. It was debt that had been incurred and some real challenges.

When you think about how we address underperformance and how do we get a business back on track, maybe you just want to touch on that period of time and that bringing the business back and how you achieved that.

Yeah. Well, one, I will tell you know, I came back on June 1st of 2015. That Monday afternoon, many of the team that's up here today, we got in a room, I asked a question about how many people really understand sort of the bookends of our business. NetJets is complicated. We're ad hoc. We're unscheduled. We fly to thousands of airports. Commercial airlines will fly to 50 to 100 airports. We fly to 150 countries around. It's a very complicated business. I asked a question to the team, "How many people do you think really understand the bookends of our business?" I didn't like the answer. I won't tell you what the answer was, but it was too few.

it sort of started there. what we did was we really said, you know, to build this culture the way we want it, if I understand what you're doing, you understand what I'm doing at deeper and wider levels, we're gonna do good things together. it sort of started on that Monday afternoon and when we started building that back. I will tell you, it was also a reinforcement from, probably from Greg. I remember my first board meeting prep, and I was excited, and we were starting to kind of move and I was talking about growth, and we're gonna get this right. We're gonna grow. Greg pulled me aside in a very kind way, and he said, "Why don't you pay $1 back to Warren and work on getting your debt down?" That was a teaching lesson.

I took that to heart. I heard it clearly, I actually already knew that. We just started really putting our blinders on, and we said, "Safety and service. Safety and service." Warren bought NetJets after becoming a customer in 1995. Bought NetJets in 1998, he did a video for us that we still use. He said, "I want safety, and I want service." We've been really focused on making sure everybody stays in that alleyway. That, in large part, plus a lot of hard work, is why we're able to pay our debt back. We're able to pay cash back to Berkshire Hathaway and move our way, as I said in the video, out of the other com and be first in the service business, I'm proud of that.

Great.

Yep.

Thank you, Adam. Thank you, Katy. Becky.

Let me start with the impact across our portfolio because it's very close to discussing the situation in the Middle East in that, yes, there was the tariffs, and each business may have fallen under a different tariff for what they were importing. We'd gone through it once already in the first term of the administration, and there were lessons learned there. We were both better prepared in how to manage through it and had realigned a certain amount of our inputs. You know, that was valuable. The second thing was it's as I described with the conflict. It was heads down, and we'll just manage ourselves through it. You know, listen, there's some cost pressures here.

We'll figure out how we're gonna continue to serve the customer. We'll work through on delivering what they need. There has to be some reasonable expectations on the other side that we'd recover those tariffs from through the either through a direct contract with them or through the product we're creating. That was a good approach in that we just held our course and wanted to continue to service them. Yes, there is financial impacts, but our team did a really remarkable job of addressing it and really minimizing the impact to any of our businesses. As far as recovering it, that would definitely be at our operating level they would be making such a decision.

Overall right now, our perspective has been there's a lot to sort out when it comes to refunds, what we're eligible for. At this point in time, we're very much taking an approach that, if it's appropriate, our teams will evaluate it. Again, it'll be a discussion with our customers and with a number of them. It's an operating subsidiary decision, but we're not naive to it in that we're encouraging them. There's a lot to be sorted out at this moment in time, and we're not pursuing them. That doesn't mean we may not have a subsidiary, and I'll look to our team on stage here, that may be pursuing one or seeking one. Katie, anything on?

It not as far as the reimbursement, but I would say just as far as the impact of the tariffs and what we're seeing with our customers, you know, I would say that in early 2025, we saw several of our customers pulling forward shipments in advance, in advance of the tariffs. You know, we certainly saw our volumes ramp up at the beginning of 2025 because people were trying to get ahead of the implementation of the tariffs. We did see, you know, an increase in volumes through early 2025. That really stabilized then in the back part of 2025. Into 2026, I would say that our customers have really adapted to the tariffs and adjusted to the tariffs.

With that said, it does cause some uncertainty, and I think where we see that really showing up is, you know, it's very difficult for our customers from a planning perspective. I think it's keeping some capital on the sidelines as far as investment in manufacturing facilities. It's just really the uncertainty of the tariffs that really is what we're seeing reflected with our customers.

Thank you. Adam?

I mean, I would echo both those points. One, I would probably use, you know, Berkshire Hathaway Automotive, Jeff Rachor, who is an excellent, you know, CEO of that division. You know, the new and used sales are, you know, slightly down in Q1 of this year compared to last year, and part of that is sort of that same effect from the tariff buying that occurred a year ago today. I had to smile because we were collecting, okay, it's changed every day, as we know, and you manage through that and just understanding the tariff bouncing ball was, you know, a job in itself. I had to smile because I was actually calling our CEOs just to get their take on it.

The 32 companies in the portfolio, consumer product services and retail. It's a stat that I love. They've actually been around on average 88 years, and only 0.5% of American businesses have been around more than 80 years. Our average in that sector from a founding standpoint is 88 years. Several of the 5 companies, specifically, companies that were founded in the 1800s. When I called those CEOs, they said, "We've been dealing with tariffs for 100 years," you know, kind of thing. Not being dismissive at all of tariffs. The point is, I look at the whole tariff conversation as you're always gonna have a curveball.

If I think of the CEOs in the last, you know, 7, 8 years, we've had to deal with a global pandemic, the highest inflation in 40 years, and now this thing, you know, the bouncing ball of tariffs. The businesses have done an excellent job of managing through that. I wouldn't put it in the fun department of the things we have to deal with, but we're learning it and I think we're in a pretty decent spot, moving forward.

Thank you, Adam. We'll move to station six.

Now I'm in trouble. Yeah, Ajit did an exceptional job of discussing Tokio Marine, and I'll touch on it. I teed it up a bit in saying it is a strategic relationship less than a financial transaction. Yes, we like the 2.5% investment into Tokio Marine, and that will be a long-term investment. It's the type of investment we put with our other 5 investments in Japan. We really think of those as forever because it goes beyond the investment, and it's very much around the relationships we wanna build there, and you'll continue to see that.

Ajit expanded on the underwriting opportunity that we do jointly participate in their risk and rewards associated with effectively also 2.5% of their book there now. That's again part of the financial transaction. There's also great deal of faith there. We, as Ajit said, really Ajit says, I take his word for that, you know, it's an exceptional company and their performance has been remarkable. We're thrilled to have them. The third thing that was touched on was the partnership highlighted a variety of things how we would like the relationship to develop, that's not defined yet. We'll continue to let that take its proper form. They're the type of partner that has the same culture, same values as us.

There's little question it's gonna be exceptional for many years to come. As far as pursuing an absolute acquisition in insurance or something like that'll evolve with time, and that would be obviously the discussions Ajit and the senior team at Tokio Marine would be having. If such an opportunity materializes, we'd be thrilled with it. To the really tough question, Canada versus U.S. in hockey. I did find a way, it can cause a lot of angst in my own family.

I remember waking up that morning and Canada was playing the men, but I'd already decided a little bit earlier that when it came to the Canadian men versus U.S. men, Connor McDavid plays for Edmonton, and therefore I was gonna cheer because being from Edmonton, I would cheer for the Canadian men's team. I've always followed the U.S. women, and I love what a program the U.S. hockey and I love USA Hockey and how they approach the coaching and the development of the youth, and I think they've done a great job there. I chose to cheer for the U.S. women, and it was the perfect outcome for me. A little selfish in finding that type of outcome.

I will say Greg and I had an Oilers-Stars bet last year.

Yes, true.

The losing person had to wear the jersey of the other, and I now own Oilers gear.

Yeah, Katie owns some Oilers jersey. Unfortunately this year, neither of us went to have that bet. They're both on the sidelines very quickly. Thank you for that question, Becky.