Buffett laments lack of good investments even as Berkshire profit sets record

Warren Buffett, CEO of Berkshire Hathaway Inc, pauses while playing bridge as part of the company’s annual meeting weekend in Omaha, Nebraska, U.S., May 6, 2018. REUTERS/Rick Wilking //picture file

Join now for FREE unlimited access to Reuters.com

Register

Feb 26 (Reuters) – Warren Buffett said on Saturday he would stick to his knitting, lamenting the lack of good investment opportunities for Berkshire Hathaway Inc (BRKa.N) as he sits on a huge pile of money even after buying back a huge amount of his own stock.

In his widely read annual letter to Berkshire shareholders, the 91-year-old billionaire expressed great confidence in Berkshire, saying the focus on investing in strong companies and stocks benefits investors with a long-term view. similar.

“People who are comfortable with their investments will, on average, perform better than those who are driven by headlines, chatter, and ever-changing promises,” Buffett wrote.

Join now for FREE unlimited access to Reuters.com

Register

Generally noting the risks of shifts in global politics, terrorism and cyberattacks, Berkshire remains wary.

In 2020 and 2021, it found more value by buying back $51.7 billion of its own stock. Buffett said “we find little that excites us” in the stock market, and major acquisitions remain hard to come by after six years of none.

“Today, internal opportunities offer much better returns than acquisitions,” he writes.

Many of these opportunities seemed to pay off in 2021.

Operating profit rose 25% to a record $27.46 billion, more than a third of which came from BNSF Railroad and Berkshire Hathaway Energy despite supply chain disruptions related to the COVID-19. In the fourth quarter, operating profit jumped 45%.

Net profit for the full year more than doubled to a record $89.8 billion, buoyed by gains from Apple Inc (AAPL.O), Bank of America Corp (BAC.N) , American Express Co (AXP.N) and other stocks in the greater Berkshire region. investment portfolio.

Apple’s stake alone was $161.2 billion as of December 31, more than five times the $31.1 billion paid by Berkshire.

Share buybacks totaled a record $27 billion in 2021, and Buffett said Omaha, Nebraska-based Berkshire repurchased an additional $1.2 billion of its stock in 2022.

“It offers the story of a multi-faceted engine of growth,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania and a longtime investor in Berkshire. “The main message is that Berkshire has found some great businesses, so let’s celebrate them.”

“FOUR GIANTS”

In his letter, Buffett touted what he called Berkshire’s “giant four,” including its massive insurance operations, BNSF, Berkshire Hathaway Energy and Apple’s stake.

“Our goal is to have meaningful investments in companies with both sustainable economic benefits and a top-notch CEO,” Buffett wrote.

He also said Berkshire favored a ‘kind of old-fashioned revenue’, including $6 billion last year on its BNSF railroad, casting a shadow over companies that could manipulate their results to boost the their share price.

“Misleading ‘earnings adjustments’ – to use a polite description – have become both more frequent and more fanciful as stocks have risen,” Buffett wrote. “Speaking less politely, I would say that bull markets breed puffy bulls…”

Berkshire ended last year with $146.7 billion in cash and cash equivalents, not a record but close.

Buffett has pledged to keep more than $30 billion on hand, having long said $20 billion was the minimum.

This is partly to protect Berkshire from losses in its insurance operations, which include auto insurer Geico and a major disaster insurance business such as hurricanes.

The company’s more than 90 operating units also include Dairy Queen ice cream, See candy and several industrial companies, including Precision Castparts, an aircraft parts maker hard hit by the pandemic.

Berkshire also said on Saturday that it plans for the first time since 2019 to hold its usual shareholder weekend in Omaha, including the April 30 annual meeting.

“Woodstock for Capitalists,” as Buffett calls the weekend, typically draws around 40,000 people for shopping, dining, 5k runs and other events.

Proof of vaccination against COVID-19 will be required to attend the annual meeting and obtain discounts on purchases.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Jonathan Stempel in New York; edited by Megan Davies and Diane Craft

Our standards: The Thomson Reuters Trust Principles.

Comments are closed.