Warren Buffett’s Berkshire Hathaway – CNN

In its annual letter to the shareholders of Berkshire Hathaway (BRKB), investment guru Warren Buffett revealed that the company took an $ 11 billion depreciation last year on its 2016 purchase of Precision Castparts, describing it as “a mistake.”

The 90-year-old billionaire, chairman of Berkshire since 1970, said in the company’s annual letter to shareholders that the “ugly” depreciation had a simple explanation.

“I have paid too much for the business,” he said. “My miscalculation has been exposed by unfavorable developments in the aerospace industry.”

Despite this loss and the fallout from the pandemic in general, the company’s operating activities came to a solid end until 2020. The sprawling conglomerate, which owns Geico, Dairy Queen, the Burlington Northern Santa Fe Railway Company, the Duracell batteries and many other consumers, financiers, industrial and energy companies said on Saturday that they had net profit of $ 35.8 billion in the fourth quarter, an increase of 23%.

Berkshire’s operating profit rose nearly 14% in the quarter to $ 5 billion.

The Oracle of Omaha goes to Hollywood

In the letter, Buffett also revealed that Berkshire Hathaway’s annual meeting of shareholders on May 1, normally held in Buffett’s hometown of Omaha, Nebraska, will instead be televised live from Los Angeles in order for Vice President Charlie Munger, who lives in Southern California, could attend. .

Munger, 97, did not attend last year’s virtual shareholders meeting in Omaha due to the Covid-19 pandemic. Instead, Buffett was joined on stage by another Berkshire vice president, Greg Abel.

“I missed him last year and, more importantly, you clearly missed him,” Buffett said of Munger, who is also president of the California newspaper’s publisher. Daily newspaper (DJCO), which held its own shareholder meeting Wednesday in Los Angeles.

Buffett said Abel and Berkshire Third Vice President Ajit Jain will also be on stage in Los Angeles to answer questions during the May 1 virtual meeting, which is scheduled to last from 1:30 p.m. ET to 5:30 p.m. ET. Buffett said he hoped Berkshire can host an in-person meeting in Nebraska again in 2022.

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As he often does in Berkshire’s annual letter to shareholders, Buffett – who has a net worth of around $ 90 billion – has dispensed a few words of wisdom on the current state of the market.

Stay away from bonds and buy back more Berkshire shares

He is currently not a fan of bonds because despite a recent rally, yields remain historically low. “Bonds are not the place to be these days,” he wrote, adding that the 10-year Treasury yield, which now hovers around 1.46%, was 15.8% in 1981.

“In some big and important countries, like Germany and Japan, investors are getting a negative return on trillions of dollars of sovereign debt. Fixed income investors around the world – whether in pension funds , insurance companies or retirees – face a bleak future “. Buffett noted.

He also defended Berkshire’s propensity to use cash to buy back its own shares. The company spent $ 24.7 billion last year to buy back shares. Some investors have argued that Berkshire could find a better use of its cash, which totaled more than $ 138 billion in cash at the end of 2020. Berkshire could use it to make more acquisitions.

“In no way do we believe that Berkshire shares should be redeemed at any price,” Buffett wrote. “US CEOs have an embarrassing track record of spending more of the company funds on buyouts when prices have risen than when they have fallen. Our approach is exactly the opposite.”

Still, some wonder if Buffett has lost his Midas touch. Berkshire Hathaway stock has only risen 11% in the past year, compared to a gain of almost 23% for the S&P 500. The company has also fallen behind the market in the past five years. , despite being a major investor in Apple (AAPL).

‘Hamburgers and Coke’

Buffett, however, defended the firm’s investment strategy, describing it as a classic dinner party.

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“At Berkshire, we’ve been serving burgers and Coke for 56 years. We cherish the customers this fare has attracted,” Buffett wrote.

What does Warren Buffett see in Chevron?
Although he has dipped his toes into superior tech like Apple Amazon (AMZN) Recently, the majority of Berkshire’s investments have been in slower growing “value” stocks such as Chevron (CVX), Verizon (VZ), American Express (AXP) and yes, Coca Cola (KO). (Buffett is a heavy drinker of Cherry Coke.)
In other words, don’t expect Buffett to start investing in stocks even like GameStop (GME) or moose favorites such as You’re here (TSLA).

“The tens of millions of other investors and speculators in the United States and elsewhere have a wide variety of stock picks to suit their tastes. They will find CEOs and market gurus with enticing ideas,” he said. -he declares. “A lot of these investors, I should add, will be very successful.”

But Buffett emphasized a more patient approach to investing.

“All it takes is the passage of time, inner calm, broad diversification and minimization of transactions and fees,” he said.

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