What Will Warren Buffett Bet on Next?

A different kind of Berkshire annual meeting

Tens of thousands of investors are flocking to Omaha this weekend, which can mean only one thing: It’s time for Berkshire Hathaway’s annual shareholder meeting, dubbed the “Woodstock for capitalists.”

The allure had long been the chance to see Warren Buffett and Charlie Munger live, answering attendees’ questions with a time-tested buddy-comedy act. But this year’s event will be the first without Munger, who died in November at age 99 — and comes amid growing questions about Berkshire post-Buffett, who’s 93.

Buffett will have a different crew answering questions alongside him on Saturday. Berkshire’s vice chairmen, Greg Abel and Ajit Jain, will be on hand for much of the day. Shareholders most likely will be focused on what Abel, Buffett’s appointed successor as C.E.O. and the head of the conglomerate’s noninsurance operations, has to say.

In Buffett’s annual letter to investors, he noted challenges to Berkshire’s biggest businesses, including the BNSF railroad (falling shipment volumes) and its utility business (forest fires). Last month, the company’s enormous real estate brokerage, HomeServices of America, also agreed to pay $250 million to settle lawsuits over inflated home-sales commissions.

Shareholders may want to hear what Jain, as the longtime mastermind behind Berkshire’s vital reinsurance operations, has to say about the business that makes most of Buffett’s investing possible.

Expect lots of questions about Berkshire’s signature investments. The company’s stock performance this year has outpaced that of Apple (one of Buffett’s biggest investments; more on that below), Microsoft and Tesla, as well as the S&P 500.

But with interest rates remaining higher for longer and many tech giants’ shares losing steam, shareholders will want to know where Buffett sees future opportunities. That may include the company’s investments in the oil and gas producer Occidental Petroleum and five Japanese trading houses, whose stocks have soared.

Attendees may also want Buffett to explain what may be his most consequential admission in recent years: Berkshire is now so big that it’s unlikely to find any major acquisitions — the historical source of Buffett’s outsize investment returns — to spend its $163 billion cash pile on. “All in all, we have no possibility of eye-popping performance,” he wrote in this year’s annual letter.

And there may be questions about Buffett’s stock-picking lieutenants. Todd Combs and Ted Weschler have been managing portions of Berkshire’s investment portfolio for years. But their performance has long lagged behind that of Buffett himself and the S&P 500, raising questions about Berkshire’s future value proposition.

HERE’S WHAT’S HAPPENING

The Justice Department’s investigation into TD Bank reportedly focuses on fentanyl. Investigators found that Chinese drug traffickers and crime groups used the Canadian bank to launder hundreds of millions in illicit drug proceeds, The Wall Street Journal reports. The accusation adds to the scrutiny of the bank’s anti-money laundering practices, which is at the center of other regulatory investigations in the U.S. and Canada.

President Biden makes his first public comments on campus protests. Biden condemned the violence on Thursday while defending the right to demonstrate peacefully. The president is eager to keep the issue from eroding his support with young voters but he has been criticized by Democrats and Republicans for not speaking out.

Arguments in the Google antitrust case conclude on Friday. The Justice Department says the company competed unfairly in making deals with Apple and other companies to lock in search functionality on smartphones and web browsers. Google counters that it earned its market edge through innovation. The trial is the biggest challenge yet to Big Tech’s dominance, and the judge’s verdict, expected later this year, could change how Google does business.

A mega buyback lifts Apple

After a rocky stretch, Apple is predicting a return to growth in 2024. That, and an unprecedented $110 billion share-buyback promise, have lifted shares by more than 6 percent in premarket trading this morning despite another sales decline and big worries about China.

Apple is the latest Big Tech giant to report results in recent weeks — next up is Nvidia on May 22. Investors are zeroing in on when huge investments, especially in artificial intelligence, will pay off.

Apple’s rally belies a litany of challenges, including a sluggish market for smartphones and wearables, intensifying competition in China, heightened regulatory scrutiny, a lackluster debut for the Vision Pro headset and questions about its A.I. efforts. (The company is expected to reveal how it will incorporate A.I. into its devices at a developers conference next month.)

Add it up, and sales have declined at the king of growth stocks in five of the past six quarters and shares are down nearly 7 percent this year. A big question on Wall Street: What will Warren Buffett’s Berkshire Hathaway do with its $157 billion Apple stake?

The big takeaways from Thursday’s earnings report:

• Sales fell 4 percent on an annualized basis to $90.8 billion last quarter, and profit dipped by 2 percent to $23.6 billion. Both reductions exceeded analysts expectations.

• Apple reported $16.4 billion of revenues in Greater China, which includes the mainland, Hong Kong and Taiwan. That’s up compared to the previous quarter, driven by the iPhone. Investors are worried about Apple’s hold on the world’s No. 2 smartphone market, where consumers are shifting to local rivals amid a wider crackdown on foreign-made tech.

The company also sought to reassure on generative A.I. Apple isn’t investing the vast sums that rival tech giants Microsoft, Amazon and Meta, are spending on the technology. That has helped protect its profit outlook, but it has also left investors unsure about its strategy.

Tim Cook, Apple’s C.E.O., tried to express confidence that the company would catch up by deploying A.I. across its devices and services. “Apple’s unique combination of seamless hardware, software and services” — including its in-house chips — will give the company an edge, he told analysts.

The Paramount race heads to a cliffhanger

After weeks of anticipation, Sony Pictures Entertainment and Apollo Global Management have made it official: They’ve formally expressed interest in buying Paramount for about $26 billion.

That puts extra pressure on the Paramount board’s special committee that’s evaluating the company’s future. Those directors are already facing a deadline on Friday for exclusive deal talks with Skydance, the studio led by the tech scion David Ellison (and the preferred suitor of Paramount’s controlling shareholder, Shari Redstone).

Is the Sony-Apollo bid a game-changer? Sony has deep experience in entertainment, with Apollo providing a big slug of capital. Sony plans to be the majority shareholder, making Paramount a division within its broader film and television empire and putting franchises like “Spider-Man” and “Mission: Impossible” under one roof.

That said, the $26 billion figure is preliminary: Sony and Apollo haven’t started due diligence, which could affect their ultimate takeover proposal.

There are regulatory concerns, including whether the Sony-Apollo bid would be hamstrung by federal restrictions on foreign ownership of broadcast networks like Paramount’s CBS.

Apollo and Sony believe workarounds are available; one could be having Apollo, which has already been approved for network ownership after acquiring Cox Media Group, own the license for CBS. Still, the F.C.C. blocked a takeover bid of the broadcaster Tegna because of Apollo’s role in financing that transaction.

What happens next? Here are some possibilities:

• Paramount’s special committee signs a deal with Skydance that includes a low breakup fee and a so-called go-shop provision that lets it negotiate with Sony and Apollo. That would likely give Skydance a chance to match, setting up a bidding war and, if Sony and Apollo won, a mandatory payout to Skydance. (It could also lead to a lower price than what a traditional auction would have fetched, giving already irate shareholders more reason to gripe — or sue.)

• Paramount could let the exclusivity period with Skydance expire at midnight tonight and open its books to Sony and Apollo. That, of course, risks the Sony-Apollo duo not making a formal bid — and Skydance walking away.

$76 billion

— What the N.B.A. is set to get from two new broadcasting agreements with Disney and Amazon, three times the size of its current deal, according to Bloomberg. The league is also reportedly considering another package with Warner Bros. Discovery and Comcast.

The F.T.C.’s surprise for Big Oil

Exxon Mobil’s $60 billion purchase of Pioneer Natural Resources is set to close on Friday. The F.T.C. gave its blessing, but the regulator extracted an unusual concession: It barred Scott Sheffield, the shale oil producer’s former C.E.O., from joining Exxon’s board, saying he colluded with OPEC to manipulate oil prices.

The accusations could lead to criminal charges and sent a shudder through an industry as deal making hits record highs.

The F.T.C.’s case: The agency said that its merger review found Sheffield’s text messages, public statements and in-person meetings with OPEC officials were evidence he tried to distort the global market for oil prices and to profit from it. “American consumers shouldn’t pay unfair prices at the pump simply to pad a corporate executive’s pocketbook,” said Kyle Mach, the F.T.C.’s deputy competition chief. The F.T.C. reportedly plans to refer Sheffield’s case to the Justice Department.

Pioneer said the F.T.C. doesn’t understand the oil industry. It disputed the accusations but said it and Sheffield wouldn’t do anything to stop the Exxon deal going through.

Others accused the regulator of overreach. Eric Grannon, an antitrust lawyer at White & Case, told The Wall Street Journal that using a merger-review process to target an executive wasn’t “principled antitrust enforcement.”

It’s another case of the F.T.C. chair, Lina Khan, pushing antitrust policy boundaries. The F.T.C. doesn’t have the authority to make criminal charges. But in 2021, after she became chair, the regulator vowed to expand its corporate referral program to other agencies that do.

M.&A. in the oil sector hit a record in the first quarter after a bumper 2023. But some analysts warn about a chill on activity if the F.T.C. takes a tougher stance on mergers. “Any C.E.O. contemplating a merger will have to worry about being singled out the way Sheffield was,” James Lucier, an analyst at Capital Alpha Partners, wrote in a client note Thursday.

THE SPEED READ

Deals

• The commodities giant Glencore is reportedly considering a takeover offer for Anglo American, potentially setting up a bidding war with BHP. (Reuters)

• U.S. Steel pushed back the expected close of its $14 billion sale to Nippon Steel to later this year, amid political opposition to the transaction. (Bloomberg)

Policy

Best of the rest

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.