OMAHA, Nebraska — Warren Buffett praised his longtime partner, the late Charlie Munger, for being the architect of the Berkshire Hathaway conglomerate, telling shareholders in his annual letter Saturday , warned against listening to Wall Street experts and financial institutions. Advisors who encourage you to trade frequently.
Buffett said he always writes letters with smart long-term investors like his sister Bertie in mind and tries to tell them what they want to know about Berkshire.
“She is sensible, very sensible, and instinctively knows that experts should always be ignored,” Buffett wrote of Barty. “After all, if she could reliably predict tomorrow's winners, wouldn't she freely share her valuable insights and thereby increase competitive purchasing? It’s like giving a map to your neighbor.”
Buffett told investors that Berkshire is a safe place to put their money, as long as they don't expect “spectacular performance” in the past. The Omaha, Nebraska-based company's performance. But he said Berkshire is ready to swoop in with its $167.6 billion every time a stock market like casinos is seized.
Cole Smeed, an investor at Smead Capital Management, said that while Buffett reassured investors that he was “ready to buy when things finally become reasonable,” he said, “It's like a den of thieves.” “And they'll be sold,” he said, warning of the dangers on Wall Street. What they can sell you to you. ”
Munger, Buffett's longtime investment partner, died in November at the age of 99. As Berkshire buys companies like See's Candy, Geico Insurance and BNSF Railway to help turn around bankrupt textile mills, Buffett is deprived of one of the key voice boards he has relied on for decades. Ta. It took over in the 1960s and became the large, eclectic conglomerate that Berkshire is today.
Buffett already devoted part of last year's annual letter to Berkshire shareholders to praise Munger, but this year's version further praises the esteemed villain's contributions to Berkshire over the years. It started with “Charlie was the 'architect' of what Berkshire is today, realizing early on that it was better to buy great companies at fair prices,” Buffett said.
“Charlie never tried to take credit for his role as creator, but instead he let me take a bow and take the credit,” Buffett wrote. “In a way, his relationship with me was that of an older brother and a loving father. Even when he knew he was right, he would hand over the reins to me, and even when I messed up, he would never, ever… It didn’t remind me of my mistake.”
Mr. Munger's death is yet another reminder that Berkshire will one day have to move forward without the 93-year-old Mr. Buffett at the helm.
Berkshire has a succession plan in place, with Vice Chairman Greg Abel eventually replacing Buffett as CEO and the company's two other investment managers taking over the stock portfolio. announced. Mr. Abel has already overseen all of Berkshire's many non-insurance businesses since 2018, and executives at those companies say investors need not worry about Mr. Abel's ability to lead the companies. ing. Berkshire allows the company to run itself on a day-to-day basis to a large extent, with headquarters deciding where to invest all the cash the company generates.
Buffett told investors in a letter that Abel is “ready in every way to be Berkshire's CEO tomorrow.”
Edward Jones analyst Jim Shanahan found this comment about Abel comforting, but the problem is that Abel may be afraid that his first big investment will go to waste, so the financial It's about being ready to take advantage of the big opportunities when panic occurs.
“I have no doubt, given his management background, that he could come in and run Berkshire today, but I don't know if he's ready to commit huge amounts of capital. No,” Shanahan said.
Buffett also talked about how Berkshire's insurance business flourished last year, but its large utilities and BNSF Railway were disappointing. He also told shareholders that he never intended to sell his roughly 30% stake in Occidental Petroleum and 9% stake in five major Japanese trading companies, but that he had no plans to buy oil producers outright. repeated.
Berkshire's eclectic mix of businesses, combined with strong investment performance, resulted in fourth-quarter earnings of $37.57 billion, or $26,043 per Class A share. This is more than double the profit of $18.08 billion ($12,355 per Class A share) that Berkshire reported the previous year.
But Buffett cautioned that investors should largely ignore these bottom-line numbers because they are largely influenced by the paper value of their investments. Instead, he has long urged investors to focus on Berkshire's operating income, which excludes investments.
According to this measure, Berkshire reported a 28% increase in operating income to $8.48 billion, or $5,878.21 per Class A share. This was an increase from $6.63 billion, or $4,527.06 per Class A share.
Three analysts surveyed by FactSet Research expected Berkshire to report quarterly operating profit of $5,710,717 per Class A share.
Berkshire's stock has set a series of new records in recent weeks, most recently hitting an all-time high of $632,820 per Class A share on Friday morning as investors awaited Buffett's letter. was recorded. Mr. Buffett is respected for his track record of remarkable success and for the sage advice he has provided over the decades. His annual letter is one of his most read reports of all time in the business world.
Berkshire also spent $2.2 billion on stock buybacks in the fourth quarter, bringing the full year total to $9.2 billion.
But Berkshire's cash pile continues to pile up at record levels because Buffett can't find large investments at reasonable prices.
One of Berkshire's biggest acquisitions recently was buying the remaining 20% of the Pilot Truck Stop business it hadn't already acquired as part of a 2017 deal. But the deal with the Haslams was thrown into turmoil last year when both Berkshire and the Haslams accused each other of trying to manipulate the pilot's earnings to influence the price Berkshire would have to pay.
Dueling lawsuits over the deal made headlines over allegations of bribery and other wrongdoing before being settled in January. Last month, Berkshire completed its acquisition of the nation's largest truck stop operator for just $2.6 billion.
Buffett did not comment directly on the trade, but said it was wisdom he had learned over the years, echoing the classic advice from 1863 that urged all banks to “never do business with bad guys.” He may have been hinting at that at the time.
Buffett said, “Human feelings aren't that easy. Honesty and empathy are easy to fake. That's as true today as it was in 1863.”
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