In Omaha: Berkshire Hathaway’s 2025 Meeting with Mario Gabelli 5/2/25

0:04Hi, I'm CNBC producer Katie Kramer. We are kicking off a Squawk Pod Report special series, Our Weekend with Warren Buffett. This is the 52nd annual shareholders meeting. We're coming to you straight from Omaha, Nebraska at the Berkshire Hathaway annual meeting. They had requests for 138 ,000 tickets by mail. That's the most they've ever received. On this episode, a special interview with Berkshire Hathaway shareholder Mario Gabelli. How do we handle some of the misallocations of tariffs and how do we handle that? Those are important, and Buffett is going to talk about that. He's been a shareholder for almost 40 years, and he's a noted investor in his own right.

0:43I have gone to streaming because I can get what I want when I want it. And so the company like Netflix is currently selling at a$400 billion market value. I add the value of Paramount, Warner Brothers Discovery, Disney. I add Comcast on all of those. I don't get that at$400 billion yet. So what's going to work in the future? The Gamco Investor CEO and veteran value watcher sits down with Becky Quick in Omaha. I think I've been coming 20 and you've definitely been coming longer than I have. Yeah, no, no, probably whatever. Tempest Fugit. This special Squawk Pod reports kicking off the Berkshire Hathaway 2025 annual shareholder meeting starts right after this.

1:34We are kicking off the 2025 Berkshire Hathaway annual shareholder meeting. Mandra Sorkin along with Joe Carden. Becky is, as we mentioned, in Omaha joining us from the Berkshire Hathaway annual shareholder meeting right there, taking place all weekend. The Woodstock of capitalism. You guys should jump in on this legendary investor, longtime Berkshire shareholder. Mario Gabelli joins us. Guys, I think he was saying that he's seen 18 to 20 recessions since he started investing in 1967. Gabelli is a well-known Berkshire shareholder. He's been one for nearly four decades. He's also a value investor looking beyond hype and panic, like the market volatility of late, and focusing on fundamentals.

2:14Here's Becky Quick with one legendary investor celebrating another. All right, our next guest will give us his invaluable take on the markets, the investment landscape, and much more. Mario Gabelli, Gamco Investors Chairman and CEO who has been coming to Berkshire Hathaway meetings for... 20 plus, 22, 23. I think it's even longer. I think I've been coming 20 and you've definitely been coming longer than I have. Yeah, Tempest Fugit. Independent of that, we do host a dinner for the last 16 years tonight with about 500 or 600 and a breakfast meeting for 500 or 600. So it's always interesting to get the views of people from around the world.

2:50And that's because this is not just Mecca for capitalists, but for value investors too, for people who are looking at ways to really make sure they're looking fundamentally at how markets are operating. Does the market want good news to say, OK, maybe the economy is doing better than we thought? Or do they kind of want bad news because that would mean maybe the Fed would step in sooner rather than later? What's your take? There's a difference between trading and investing. If you're trading, which is short term dynamics, which the world likes today, then you want to worry about what you asked and what are the dynamics.

3:22I started doing research as a sell side analyst covering industries that were cyclical. How bad is bad? How long will it be bad? What's good? When will it be good? And do they get extra multiples? So creating value and keeping it for tax free, taxable accounts in environments like this is very good. So the volatility and basically looking at what's the market going to be one year, one month from now, we're going to be in the summer of 2026 and there's an election coming up. So the dynamics of the world will want to have cheerleaders and economic growth and economic sustainability. So from our end, the jobs report, yes, everybody's going to talk about it.

4:04It's important. From my end, I want to see the tax issue. We've already talked tariffs, tariffs, tariffs. You mean the extension of the tax cuts, if it happens, what they look like. Well, no, I'm more interested in the following. Individuals. Can I, as a student loan,$1.7 trillion, can I take my earnings before I pay any taxes, including the withholding for Social Security, and pay off a portion of my student loan? Can I take carried interest and eliminate it? Can I do other things like that as the individual from a corporation? My most important thing, my most important thing, and what is important now, is getting 100 % deduction for the equipment I buy.

4:44So those are the things I'm interested in. Because those are the type of things that will move the market and have a real impact on longer-term pricing for these stocks. No, it'll help America creativity, America productivity. Because if I'm a farmer, I'm worried about corn, wheat, beans. I'm worried about my cash flow. But all of a sudden, if I can write off my piece of equipment, I don't have to worry about maybe this piece of equipment is precision-cast farming. And I can, you know, look at every weed and just execute the weed rather than do a planting of a thousand, 30 ,000 acres or 20 ,000 acres.

5:19Productivity and labor. I've got a built in machine that I can operate like a drone from my premises. So those are the things that I like. And those are the kinds of stocks that we like to think about. The market really wobbled in April. We've come back quite a way from from the lows. Was that a buying opportunity? Did you take advantage of it? Well, to the degree that we have companies, so we like to be fully invested to the degree that we have companies that are in a process of being taken over. And there's a tag end of a gain and it's already a long term capital gain or it's in a tax free account.

5:57We will use that and sell it to buy things. For example, there's a company in Buffalo, New York, National Fuel and Gas. They have significant acreage that they own down to 25 ,000 or a quarter of the earth in some cases where they have that gas So what's happening AI they need data centers data centers need speed Electricity so they locate in areas of Pennsylvania with this company so go from West Virginia up to New York including the New York border and then the stock is 90 million shares. The stock NFG is a symbol and it's well run. And they are benefiting from that type of dynamic. So that's the kind of stocks we like.

6:41Obviously, this administration is much more friendly to any of the drilling companies, to any of the oil companies, natural gas, any of these things. But we've also seen commodities prices drop pretty substantially in the energy field. There's a tug of war between I want to get my inflation factors down and what does the consumer go once a week to fill up his gas tank? What does he get at the, you know, in terms of buying eggs or buying milk? Those are the kinds of things you want to be sensitive about here. They've taken the price, even though say drill, drill, drill, baby, they've taken the price of oil from$81.

7:17Today it's like 62. And that gas has come down. That's Brent. Yeah. That's for West Texas Intermediate or whatever. 59 for close enough. And basically, there's no question that we need to curtail the perception of inflation. The second part is what you're talking about. And that is we need to help continue that process of being energy independent. And so those are the tradeoffs. Now, not national fuel and gas. David Bauer is going to basically look to buy another utility company somewhere in Pennsylvania or somewhere in Maryland or one of those places. Well, forget Maryland. But friendly states.

8:00Right. And so as a result of that, you know, they're going to earn 650. We like the stock, but there's so many like that. Where are the pent up demands? Housing. commercial aviation military defense in europe so we select stocks along those lines joe's got a question for you joe nice to see you good to see you you always have deep thoughts one of your greatest calls and it's still happening is is as dogs and pets i can't believe how early you were on that and it's gotten absolutely insane and i i i think people would if it was a sick relative It's like, hey, they're on their own. If it's their dog, it's like, oh, and that, you know, that goes for food and everything else.

8:45But I wonder about media. You know, your love with media. Did you did you make any money? It's been so hard and it's been such a sickening decline in legacy media. Did you get out? Are you finding opportunities? What's what's a great question? That's a great question. The old story, give a consumer what he wants, when he wants it, at a price he can afford going back to the days of the Gladiator or when you've been on the show, Joe, for the last 40 years or 35. The point is, what works? Now, clearly, I have gone to streaming because I can get what I want when I want it. And so the company like Netflix is currently selling at a$400 billion market value.

9:29I add the value of Paramount, Warner Brothers Discovery, Disney. I add Comcast on all of those. I don't get that$400 billion yet. So what's going to work in the future? And that is to adopt and change. So the companies are doing it. They're doing it at a glacial speed, but it's going to accelerate. So what am I buying? I still like the content producers. And then sometimes like today, Joe, today you're going to be serious about serious. Okay. Since you asked that question, the stock is 20-ish. They've got 339 million shares, 10 billion of debt. When you add it up, that's$18 billion. Why is the company that we're here to for today accumulating that stock?

10:15Will it be worth 50 % higher? I think it's worth putting a bet down that they can do some of that. In addition to that, obviously, we like content to the degree that we have another round of consolidation. The second part or third part is regulation. Brendan Carr is going to change the attitude of the Federal Communications Commission towards size and scale. The same thing with Ferguson at the Federal Trade Commission. OK, those companies that derail things like iRobot, the stock, unfortunately, has gone from 60 to 70. They're gone. And we're going to be more practical. Now, you still have some issues that are like Juniper and HPE still on the pipeline.

10:51Those are the things that, you know, we tussle with every day and every moment. Mario, where do you stand on the mediation that's taking place between the administration and Paramount as it relates to the possibility of this deal going through or not? That's a great question as well. We have a company with 660 million shares selling at$11 for the non-voting stock. So let's assume it's$15. 15 times 650 is$10 billion. Joe, that was a morsel. So what happens if there's no deal? If I run Paramount, can I take my TV stations and spin them off? Because what's going to happen is you're going to lift the rule of 39%.

11:42Right now, you see a cap on what you can own. Somebody's going to buy the TV stations for$4 or$5 billion. They've been reducing debt. They're doing a good job. The content is improving. So I don't see much downside. On the upside, as you know, we're arm wrestling with the buyers because we think we need to change the price that they're paying for the voting stock. Our clients, 800 of them, 800 of our clients own 5 million of the 10 million shares in public hands of the voting stock. Sherry owns 30 and she offered 23. Take or dead or leave it. And we think there's a room for a little more. What do you think of the headlines that have come up, though, just about Sherry Redstone?

12:22Yes, I know. I basically have avoided that. Yeah, but more specifically with Sherry Redstone, potentially, these are the reports saying that she didn't want to see any more negative stories out of CBS to hold off until this deal got approved. That part I can't comment on. I think basically everyone is negotiating. Everyone's being practical. How do we get this deal done? How do we move on and have a management team to come in that understands how to compete with Netflix, how to deal with the future? And that's very good for the American political system, very good for the reporting system to the degree that, you know, they have to negotiate a settlement of a deal such as life.

13:00You know, Buffett in his annual report talks about contingent lawyers and how he won't comment on certain things. He's worried about that needless litigation. Contingent lawyers are very good because they also keep everyone honest. But we sometimes get a little carried away. Mario, what questions do you think need to get answered here as a long time Berkshire Hathaway meeting attendee and shareholder? What what questions? Well, ideal questions are what what we Andrew and Joe would ask and you are going to ask. And that is what's his take on tariffs? What's his take on the global alliances? the global relationships, because even though the United States, the world, International Monetary Fund says we're$113 trillion global economy and the United States is 30 trillion, China's 17 percent of it, but we're tied at the hip.

13:53How do we prosper in the world that we're part? And how do we handle some of the misallocations of tariffs? And how do we handle that? Those are important. And Buffett is going to talk about that. What about the cash that Berkshire has collected? I think it's over$330 billion in that cash hoard now. You think he's holding it for any particular reason? Well, we've gone through these cycles in the past, Becky. And is he going to buy his stock? Let's assume I'm correct on my net worth estimate of$500 ,000 at the end of calendar 2025. That is the value of the company that is selling at a higher price per share.

14:33I don't think he's buying stock. So he's got a caution. He is your emergency room in case the stock comes down. The second part is that from the point of view of what we would like to see is his comments about use of cash flow. And what is the intrinsic value of what he's looking at? Remember the kind of uninspiring comments that he got in January. Oh, Buffett missed it on Apple. He missed it on building cash. He's missed it on the whole market. You know, 90 days later, he is a long term marathon runner. You had the shoe company before. Dan talked about long-term running. And that's what Warren does, even though he's a young guy at 94.

15:13Mario, they're wrapping us. But I just had one. I mean, Netflix right now, Catbird Seat, I get it. But just personally, I find myself, I'm everywhere. I'm on Paramount streaming because that's where I want to be because they got some things. I'm on Max streaming because all of a sudden there's something that I want over there. I'm on Apple, Peacock. Why is it Netflix's birthright to be the most valuable streaming company? If they drop the ball on content and other places pick up the mantle there, why couldn't someone else be Netflix? What's their moat? Well, remember, when I first saw, Joe, ABC, CBS, and NBC.

15:56And then you had Murdoch come along. And now you have the consumer having a lot of ways to see content. There's no question you're going to have a number two, three, four, all of which will run together. It's delivering to the consumer what they want. And the content creation changes all the time. The fact that they were able to buy content because they had people like Sony, which I happen to like as a content supplier. Things do change. So, yes, that 400 billion dollar market value. You're going to get individuals like Zaslav recreating Warner Brothers Discovery. You're going to get Disney coming back.

16:33So there'll be a lot more. And Comcast will do a better job, and they're splitting up the company. Right. It's all about the content, like it always is. And the spinoff it makes. Yeah, last week's going, I think you'll do a great job there. Excellent. New buyer. Glad we got that in. I would bother, at the moment, I'm buying my cat stocks. Cat. Cat. Crane, Amatek, and obviously Textron. C-A-T, the three stocks. Why? Because I believe we're going to have 100 % write-off of capital equipment. It'll help the farmer. It'll help a lot of companies. And they make the parts for the commercial aviation and so on and for defense.

17:15Well, we'll be watching as the tax bill gets put together. Mario, thank you for joining us. I hope you'll come back and talk to us again soon. Always. And see you in Omaha for the next five years with Warren. We'll celebrate his 100th birthday. Yeah, come to the set, too. You're in New York. We'll see you there. Oh, there.

17:41This is just the beginning of our Squawk Pod reports coverage of the 2025 Berkshire Hathaway Annual Shareholder Meeting. Make sure you hit that follow button so you're notified every time we publish more from Omaha. We have so much more content coming your way all weekend long. Like the meeting itself, right on your feed. and we are reissuing a classic podcast series remembering the late, long-time Berkshire Hathaway vice chair Charlie Munger and his legacy. You can see more video clips, find transcripts, and get lots of information on CNBC's Buffett archive. Online, go to buffett.cnbc.com. Squawk Pod is our daily podcast featuring the best moments and guest interviews from the Squawk Box Morning Show, plus a little extra like trips to Omaha.

18:23Keep tuning in.

18:29Thank you.