Warren Buffett's annual meeting is usually a chance for the billionaire to show how others' mistakes enrich Berkshire Hathaway shareholders...

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Warren Buffett’s annual meeting is usually a chance for the billionaire to show how others’ mistakes enrich Berkshire Hathaway shareholders. This weekend’s gathering may focus on whether Berkshire itself made missteps.

Berkshire has profited for years from reinsurance clients who were willing to pay for a type of coverage some credit-rating companies deemed foolish, though usually legitimate. Now the policies, which often offer an immediate accounting benefit at the expense of long-term earnings, have embroiled Berkshire in state and federal probes of at least three companies that may have used them improperly.

“There are many areas of irrational behavior that have rewarded Berkshire over the years,” said Thomas Russo, a partner at Gardner Russo & Gardner, which has about 15 percent of its $2 billion in Berkshire stock. “The question for Buffett is: In providing these policies, is he participating in that conduct? Are they somehow culpable? I don’t think so.”

The meeting in Omaha, Neb., attended by about 19,000 shareholders and admirers last year, is investors’ first chance to ask Buffett, 74, about the investigations by New York Attorney General Eliot Spitzer and regulators in the United States and Australia. Transactions between a Berkshire unit and American International Group (AIG), the world’s largest insurer, led to last month’s ouster of Maurice “Hank” Greenberg as AIG’s chief executive.

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Berkshire and Buffett haven’t been accused of wrongdoing in the AIG transaction, and Spitzer, who had investigators interview him April 11, said then that Buffett was a “cooperative witness” rather than a target.

Buffett has often benefited from others’ mistakes, buying billions of dollars of assets on the cheap.

Berkshire bought more than $7 billion of junk bonds in 2002 as investors panicked. Buyers flooded back within a year, driving up the price on the high-yield, high-risk debt.

“In your lifetime you will get a chance to profit from others’ folly in a huge way,” Buffett told University of Tennessee business school students in 2003. “The trick is to profit from it, not participate in it.”

The billionaire’s investing skill and defense of shareholders’ rights have won him legions of followers. A $10,000 investment in Berkshire the day Buffett took control in 1965 would be valued at about $46 million today. Shares of Berkshire rose $1,295.10 to $83,600.10 yesterday. The stock has fallen 10 percent during the past 12 months.

The probes have shined a spotlight on a type of reinsurance known as finite that accounted for at least 22 percent of Berkshire’s insurance reserves at year-end, according to the company’s annual reports. The contracts typically allow the buyer, another insurer, to increase its reported net worth, while giving up future income from investments.

“Warren Buffett is above reproach,” said Bobby Kotick, who is chief executive officer of Activision, the third-largest U.S. video-game maker. He has owned Berkshire shares since 1984.

Kotick and Donald Yacktman, president of Yacktman Asset Management, are among Berkshire shareholders who say Buffett’s track record suggests he will emerge unscathed from the reinsurance probes.

“As a human being, he puts his pants on one leg at a time, and so he could have made a mistake along the way,” Yacktman said. “Is it probable? No.”