WARREN BUFFETT'S "WOODSTOCK WEEKEND" LOVE-IN

Edited by Douglas Harbrecht

Warren Buffett may be world's greatest investor, but his curve ball needs a little work. "It broke at least a foot," insisted the CEO of Berkshire Hathaway about his opening pitch -- low and away -- at the minor league baseball game between the Omaha Royals and Albuquerque Dukes on May 2.

The 8,000-plus fans at Rosenblatt Stadium loved it. And why not. About half of the crowd were Berkshire shareholders, in town for what Buffett calls Woodstock Weekend, the annual Berkshire Hathaway shareholders' meeting, which begins on May 4. These folks are a happy bunch. In the last 10 years, their stock has had an annual average return of 31.6%, vs. 17.8% for the S&P 500.

As the Oracle of Omaha sat down with his Royals cap and baseall mitt in hand, he actually looked like he expected to watch some baseball. Instead, he was quickly mobbed by shareholders with books and souvenirs. He signed autographs for six innings and called it a night. Later, he'll answer questions from the estimated 11,000 shareholders who are expected to attend the meeting.

Another must-stop on the Berkshire shareholder express: Borsheim's jewelry store, part of the $56 billion in assets managed by Buffett's conglomerate. Borsheim's, like other Berkshire-owned local businesses, is offering special discounts to shareholders this weekend.

With shareholders shopping, Buffett and partner Charlie Munger held a media briefing. As he has in his past two chairman's letters, Buffett sounded notes of caution about the torrid stock market. "We're going to need high returns on equity to justify these prices," says Buffett. "There's a real question whether they can be sustained."

Recent moves by Buffett confirm that he is having trouble finding stocks to buy. Indeed, in the last year the quintessential buy-and-hold value investor has made some un-Buffett-like investments. He sold off shares in McDonald's and other companies to purchase $4.6 billion worth of zero coupon bonds last year. He also has amassed 130 million ounces of silver, worth about $750 million, in a London warehouse.

But Berkshire shareholders like Ernie Sumner, a retired government employee, didn't make the pilgrimage to Omaha to vent concerns. Sumner confesss he doesn't understand Buffett's purchase of Dairy Queen last year. "They've got a lot of big parking lots, and no cars in them," says Sumner, whose Berkshire B shares have more than doubled since he bought them in early 1996. Still, like most Berkshire shareholders, he's giving Buffett the benefit of the doubt. "I don't know why he bought it, but I'm sure he's got his reasons."

That kind of faith has helped Berkshire's stock climb more than 50% this year. Still, maintaining those returns will only get harder, says the ever-cautious Buffett. When asked if he would buy Berkshire shares at their current price of nearly $70,000, Sumner retorted, "I haven't sold any."

Buffett works hard at lowering expectations. He says size alone will keep Berkshire from duplicating its past successes. He likened his partnership wih Berkshire shareholders to a marriage. "When you think about the most important qualities in a spouse that make for a lasting marriage, Charlie [Munger] would say it's low expectations," says Buffett.

Jokes like that are fine with Berkshire B shareholders such as Jim Wolf who rode his motorcycle from Florida to make the meeting. The market doesn't worry him. And Woodstock Weekend is a just a fringe benefit of putting his money with Warren Buffett.

By Andrew Osterland in Omaha, Neb.