Buffett talks Coke, energy, making money to 40,000 fans

Billionaire Warren Buffett was right where he wanted to be Saturday, hosting the annual "Buffettathon" for some 40,000 people and fielding any and all questions — from sugar soft drinks to wind energy — at the Berkshire Hathaway shareholder meeting,

As he has done for years, Buffett, chairman and CEO of Berkshire, and Vice Chairman Charlie Munger, held forth to an overflow crowd at an Omaha arena.

Buffett, at 84, has earned his title of "The Sage of Omaha," not only for stewardship of a company that just reported a 10% jump in profit ($5.16 billion) Friday, but also because the company, and its subsidiaries, touch on many aspects of the American economy.

Berkshire owns roughly 80 subsidiaries, including clothing, furniture and jewelry firms. Its insurance and utility businesses typically account for more than half of the company's net income. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.

Although there are few signs that Buffett is slowing down, one thing is certain — he has no plans to retire. He says he loves his work and remains in good health.

Still, gatherers at this annual meeting listened for any clues as to which, if any, of the company's current managers will get the nod as CEO when Buffett leaves the scene.

No clues so far, but Buffett has made it clear that Berkshire plans to split his job into several parts when he leaves.

One topic up for lively discussion Saturday was Coca-Cola, a Berkshire investment, and the negative impact sugar is having on Americans' health. Buffett conceded that "no one does well ignoring consumers" and said the food and beverage companies will have to respond to consumers' changing concerns.

But he also acknowledged he sucks downs a lot of Coke himself. "A fourth of all my calories come from Coca-Cola," he said. "I'm one-quarter Coca-Cola."

"If I would have been eating broccoli and Brussels sprouts, I wouldn't have lived as long," he said, taking a piece of See's Candies from Munger. "I wouldn't be happy."

To which Munger, 91, observed: "Sugar prevents premature softening of the arteries."

"The way I look at it, it means leaving a few months early from the nursing home," he said.

On energy, Buffett summoned Berkshire Hathaway Energy CEO Greg Abel to discuss how much energy the Des Moines utility MidAmerican Energy will get from wind when its current $900 million project goes onstream. The answer: 58%.

MidAmerican said Friday it will have invested nearly $6 billion in wind energy since 2004, creating 4,000 megawatts of wind energy, enough to power about 1.2 million homes.

Munger acknowledged that all the new sources of non-fossil energy will be disruptive to energy markets but said the country has little choice. "What the hell do you do when you run out of fossil fuels?" he asked.

But not all questions are softballs. One stockholder, who said he was "disgusted," raised charges leveled against Clayton Homes, which builds, sells finances, leases and insures its manufactured houses.

The Center for Public Integrity and The Seattle Times have alleged that the company engages in predatory collection and lending practices.

Buffett defending the company, saying it has "behaved very well" and that he "makes no apologies whatsoever for Claytons' lending practices."

He noted that only about 3% of Clayton's $12 billion mortgages on 300,000 homes turn bad. "When a mortgage goes bad, two people lose, both the person who owns the house and the person who owns the mortgage," he said. Clayton doesn't "securitize" its mortgages, he said, but keeps them on its books, which adds to its risk when customers default.

As for his own investment strategy, Buffett, said he and Munger don't seek to "talk their book" — or pump up companies they've invested in, such as Coca-Cola, Wells Fargo, IBM, American Express.

"If we talked our book, we would say pessimistic things," Buffett said.

"Why would we want the stock to go up if we're going to be buying" in a year or next year, he said. "People don't seem to get that point."

Added Munger: "If people weren't so often wrong, we wouldn't be so rich."

Contributing: Donnelle Eller of The Des Moines Register