Warren Buffett's annual letter: Berkshire got a $29 billion gift

25 February, 2018, 00:13 | Author: Celia Hoffman
  • Berkshire Hathaway Chairman Warren Buffett talks with a shareholder before the company's annual meeting in Omaha

Berkshire's gain in net worth during 2017 was $65.3 billion which increased per-share book value by 23% since yearend 2016 to $211,750 per Class A equivalent share ($141.17 per Class B equivalent share). Cash has been piling up at Berkshire, but Buffett said most of the businesses he looked to buy a year ago were too expensive.

Warren Buffett on Saturday reported a record quarterly and annual profit for his Berkshire Hathaway conglomerate, thanks in part to a $29.1bn boost "delivered" by the Republican tax cut.

The company also saw its war chest swell: it had $116 billion in cash and US Treasury bills as of the end of 2017, a financial manna that Buffett wants to use to make significant new acquisitions.

For all of 2017, Berkshire's net income rose 87 percent to $44.94 billion.

Buffett recounted Berkshire's performance in his letter that was released Saturday morning and some noteworthy topics didn't get much attention.

Turning to investments, Berkshire's Apple holding was up to $28.2B at year-end, second only to Wells Fargo at $29.3B.

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Last month, Buffett gave greater oversight of Berkshire's non-insurance businesses such as the BNSF railroad, Precision Castparts and Dairy Queen ice cream to the energy executive Gregory Abel, while the insurance specialist Ajit Jain added supervision of insurance operations such as the Geico auto insurer.

A major reason for that decline was a $2.22bn loss from insurance underwriting, Berkshire's first full-year deficit since 2002, hurt by hurricanes Harvey, Irma and Maria and wildfires in California.

Operating earnings, which excludes some fluctuations in investments and derivatives, slumped 24 percent to $3.3 billion during the fourth quarter compared to the same period a year earlier. The compounded annual return over the last 53 years is 19.1%. Net earnings per Class A equivalent share attributable to shareholders jumped to $19,790 from $3,823 a year ago.

Warren Buffett handily won the bet he entered against hedge funds in 2007.

Buffett urged investors to stick with stocks even though they can be riskier in the short-term.

Edward Jones analyst Jim Shanahan says he expected Buffett to devote more of the letter to explaining his decision to promote and name the top two candidates to eventually succeed him as Berkshire's CEO. "Buffett doesn't dwell very long on the politics", Smead said.


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