NEW YORK - Warren Buffett isn’t going to tie up his investors’ resources on something just because other companies are doing it. That kind of common-sense thinking is what brings tens of thousands of investors to Omaha each year for the annual meeting of Berkshire Hathaway, the $520 billion investment company he runs with Charlie Munger. An aversion to virtue signaling is a strength, which taken too far becomes a missed opportunity.

Buffett’s shareholder festival on Saturday was free from the lofty talk of climate change and social purpose often heard from other investors, including index fund leaders BlackRock and State Street. He robustly defended capitalism, arguing that the economy works despite automation and dislocations. Politically motivated investment is basically taboo. Running a business, he says, means that “you don’t put your citizenship in a blind trust, but you also don’t speak on behalf of your company.”

As if to underline the point, Berkshire Hathaway has promised to inject $10 billion into Occidental Petroleum’s $38 billion bid for shale oil producer Anadarko Petroleum. The Permian Basin in Texas, where both companies produce lashings of crude, is going to be one of the planet’s biggest contributors of carbon emissions. Buffett’s investment is a bet on the oil price, juiced up with generous terms for Berkshire Hathaway. It’s also a way to ensure oil continues to spring from the ground for decades to come.

Making money and benefitting future generations aren’t incompatible goals, and Berkshire is already proof of that. Its energy operations have long embraced renewables. And Occidental is enlightened, as U.S. oil companies go. It has been investing in capturing carbon dioxide in the atmosphere to use in its fracking operations, partly because tax credits make it economic to do so.

Buffett mentioned his Occidental investment several times as proof that Berkshire Hathaway can make big bets quickly. But he didn’t mention the climate implications, and his investors didn’t ask. That’s kind of the point: baby boomers flock to the Sage of Omaha because he doesn’t burden them with weighty musings on what’s good for the planet. Years from now, their children may not agree that decades of slightly above-market returns justified that increasingly contrarian position.

CONTEXT NEWS

- Berkshire Hathaway held its annual shareholder meeting on May 4, drawing tens of thousands of investors to Nebraska for a wide-ranging public audience with Chairman Warren Buffett and Vice Chairman Charlie Munger.

- Asked about the backlash against capitalism, Buffett defended his focus on financial returns, saying that Berkshire Hathaway was “not going to tie up resources doing things just because it is the standard procedure in corporate America,” the New York Times reported.

- Berkshire Hathaway plans to invest $10 billion in Occidental Petroleum to help finance the U.S. oil producer’s $38 billion bid for rival Anadarko Petroleum. He told CNBC on May 6 that the investment was a bet on the oil price over the long term.

(Editing by Rob Cox and Amanda Gomez)

© Reuters News 2019