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Berkshire's B-Share Generation

OMAHA (TheStreet) -- Nick Antoine traveled to Berkshire Hathaway's annual shareholder meeting with air miles and lodged in a "dirt cheap" hotel room with a ceiling that leaked water from an overflowing toilet a floor above.

The 24 year-old Princeton University graduate was forced to splurge on taxis due to unseasonably cold weather at the May 4 investor gathering in Omaha, Nebraska.

Antoine entered Princeton on track to become a musician and had been a semi-professional saxophone player in his high school years in New Jersey. Those plans changed, however, when he read Benjamin Graham's The Intelligent Investor and Berkshire CEO Warren Buffett's essay The Superinvestors of Graham-and-Doddsville over a few days in his freshman year of college.

Also see: Cover Your Private Equity With Buffett Boxers

"It was like a light switch had been turned on in my head. I'll never forget it," Antoine says.

Antoine decided on a history major and now aspires to become a professional investor or an entrepreneur. Saturday was his first shareholder meeting after buying shares in Berkshire's Class B stock last year.

"I didn't go to see Warren speak because he has a lot of money, I went because he thinks differently and I want that type of thinking to rub off on me," Antoine says. "I'm interested in developing a skill set that will set me apart from the rest of my generation."

Berkshire's 82-year old CEO and Chairman has referred to the annual meeting as 'Woodstock for Capitalists,' but the event has also caught on with members of the Millenial generation such as Antoine. They seek out the 'Oracle of Omaha' and his 89-year old lieutenant Charlie Munger for guidance on how to position their careers amid a tepid post-crisis economic recovery.

Twenty-somethings like Antoine describe the pilgrimage to Omaha as an affirmation of independent thinking in business and investment. Buffett's values and Munger's lucidity also carry an appeal beyond their stewardship of Berkshire and its more than 80 operating subsidiaries.

Those youthful shareholders are building in number, according to longtime attendees of Berkshire's meeting. The company has dramatically expanded its investor base since splitting Class B shares, first issued in 1996, by 50-to-1 in 2010.

Class A shares closed at $166,100.00 on Thursday, while Class B shares ended the trading session at $110.66 a share.

Both classes of stock receive invitations to Berkshire's annual meeting, though no 20-something interviewed for this article owned A shares.

Call them Berkshire's growing B share generation.

Ryan J. Morris, 28, head of burgeoning investment firm Meson Capital may have cut an even thriftier itinerary in Omaha than Antoine.

At Berkshire's meeting a year before, Morris booked a $48-a-night room in what he calls a "scummy motel" to share between himself and three friends from the hedge fund industry. They tried to subsist on free food and Berkshire-owned See's Candies and Dairy Queen, in a contest of sorts to see who could be the most frugal.

Morris says his friends wouldn't let him book accommodations this year. For Saturday's meeting, Morris and four colleagues piled into a slightly more upscale hotel room, but maintained a premium on value.

"It's the one time of year when my friends from all over the country are in the same place," Morris says of the 30 or so value investors he now regularly sees at the Berkshire meeting. He compares it to attending old friend's wedding.

Morris, who lives in San Francisco, started reading Berkshire's annual letters at the age of 12. He bought one Berkshire B share before the stock was split as part of the firm's acquisition of BNSF Railways.

"I just own a nominal amount to go to the meeting," Morris says.

After graduating with a master's degree in engineering from Cornell University in 2008, Morris created VideoNote, a software company, though he now describes himself as a passive owner.

Morris then founded Meson Capital at the market bottom in February 2009 and earned a 753% gross return in the fund's first year.

Meson Capital has underperformed the S&P 500 in recent years, but remains up 172% net of fees in its history, outperforming the S&P, in what Morris calls a 'lumpy' performance. He was profiled by Bloomberg BusinessWeek in a December 2012 issue.

"I'm not doing this to earn fee income. I'm doing this because I want to be the best investor I can," says Morris, who relishes the intellectual challenge of managing money and the practical skills he's learned in negotiating a portfolio of small cap stocks he compares to Warren Buffett's earliest investments.

Morris currently serves as chairman of InfuSystem Holdings and Lucas Energy after winning activist campaigns in recent months.

As an 11 year-old growing up in Hong Kong, Jason Fang, 30, learned the principles of vertical integration when his favorite comics company Marvel bought distributor Heroes World in 1994. He mentions Fortune Magazine as another popular publication from his youth.

Fang graduated Stanford University in 2005 and earned master's degrees in management science and engineering a year later. After a stint at a startup in Palo Alto, Fang now is a part-time consultant and bides his time practicing money management with his savings.

"Priority number one is saying without any hesitation I can be a good steward of other people's money," Fang says of his goal to start an investment fund. "For me, it could mean I am living on Ramen for the next few years."

Fang's interest in investing was piqued by Peter Lynch's One Up On Wall Street. He grew more familiar with Buffett after investing in Berkshire at the onset of the financial crisis. Saturday was Fang's fifth shareholder meeting.

One year, he spoke in front of a near 30,000 audience at Berkshire's meeting when a shareholder commented that the firm's MidAmerican Energy unit was contributing to global warming. Fang argued it wasn't Buffett and Munger's practice to intervene with operating subsidiaries like MidAmerican, even if issues such as climate change have legitimacy.

Berkshire's audience took an aversion to his comments and the shareholder motion on combating climate change was overwhelmingly rejected.

Warren Buffett said at Berkshire's shareholder this past Saturday few seeking to raise their own funds will succeed. He nonetheless advised aspiring professional investors to have an audited track record as early as possible. "To attract money, you should deserve money," Buffett said.

Even if a majority of Buffett devotees are unlikely to manage money professionally, Morris of Meson Capital maintains the 'Oracle' isn't a false idol.

"The ties between investing and business are very close," says Morris, who sees Buffett and Munger's teamwork, ability to delegate responsibility and ethics as transferable to life outside the investment world.

For young attendees, the Berkshire meeting is a whirlwind.

Saturday morning, Morris waited in rainy darkness outside Omaha's CenturyLink Center so he could grab a seat close to Buffett and Munger's podium. Once inside, Morris found himself standing next to George Lucas, the billionaire Star Wars creator. He also ran into Mario Gabelli, head of GAMCO Investors, who recommended Morris for a board seat on Telecom & Data Systems in April.

"It's just so cool that you could catch up with these famous billionaire investors, but that we are all students of the grand masters, Buffett and Munger," says Morris. "It has this leveling effect."

At a gathering hosted by Whitney Tilson of Kase Capital, Antoine, the Princeton graduate, ran into William Ackman, the billionaire head of hedge fund Pershing Square Capital Management.

They discussed books they were reading, a recent investing competition run by Pershing at Columbia University and work of mathematician Kurt Godel. Ackman's last leisure read was The China Study, a popular book covering nutrition, weight loss and health, according to Antoine, who had met the hedge funder before as an intern at Tilson's Value Investing Congress.

Tilson says he has been going to the Berkshire meeting for 15 years.

"It is heartening to see how many young people are attending," he says.

Meetings like the one between Ackman and Antoine are the kind of thing that attracts newcomers like James Sullivan, 26, an aspiring financial professional and 2011 graduate of New York University School of Law.

"The beauty of the meeting is you could be worth $100 million to $200 million or you could have just one B share. It does have a democratic appeal in that everyone is there to learn and be proselytized," Sullivan says.

Sullivan also says Buffett's six-hour question and answer session can be a calming influence against the mania of asset bubbles. "Rationality will win out in the long-run."

Some Berkshire neophytes inherited the gospel of Buffett from their parents.

Dennis E. Prendeville, 62, bought Berkshire A shares with a market order in the stock market crash of 1987. Prendeville, who has been an investor his whole life and even published a book Common Stock Price Histories, 1910-1987, says it took three days to find out he had bought Berkshire shares in the rout.

Prendeville says gains he made on A shares helped him open a water park in his hometown Anchorage, Alaska about a decade ago. His 22 year-old son is now a regular at Berkshire's shareholder meeting.

"Warren Buffett and Charlie Munger are great role models and a lot of young people are recognizing it," says Prendeville, who has been attending the meeting in Omaha since 1995.

Prendeville's son owns B shares.

"He could have an A share if he bought it on margin," he says.

-- Written by Antoine Gara.

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