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WRAPUP 1-Warren Buffett says Berkshire needs to do 'huge acquisitions'

25 February, 2018, 01:59 | Author: Melinda Barton
  • Warren Buffett visits the BNSF booth before the Berkshire Hathaway annual meeting in Omaha

Buffett also said that while Berkshire's insurance holdings would take a $2 billion after-tax hit from losses caused by hurricanes previous year in Florida, Texas and Puerto Rico, other reinsurance companies did far worse.

That means the overall gain from the company's 1964 initial public offering to the end of a year ago would have shown a per-share increase in market value of 2,404,748 percent, according to the letter, compare to the broader market's gains of 15,508 percent during that time, when including dividends.

Berkshire said about $29.11bn of its net income was attributable to the reduction of the United States corporate tax rate from 35 per cent to 21 per cent.

Behring also said the board looks forward to continuing its partnership with Buffett's Berkshire Hathaway.

Buffett's Berkshire was sitting on more than $109 billion in cash at the end of the third quarter of 2017.

Thanks to legislation, signed by United States president Donald Trump in late December, Berkshire Hathaway was able to add an extra $29 billion to its net worth gains.

"Though markets are generally rational, they occasionally do insane things", said Buffett, adding that investors need "an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals" even if makes them "look foolish".

The "Oracle of Omaha's" famed annual letter to Berkshire shareholders has become a favourite in the investor calendar but it has attracted heightened interest this year amid rumours that the 87-year-old would unveil plans to step down.


"That. requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high", Buffett wrote.

Here's what to watch for in the latest letter from Buffett, 87, which is set for release online Saturday at 8 a.m.at Berkshire's home page http://www.berkshirehathaway.com/.

'Price seemed nearly irrelevant to an army of optimistic purchasers, ' Buffett noted. "If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it's a bit like telling your ripening teenager to be sure to have a normal sex life". Over the past 53 years, Berkshire has grown its per-share book value at a 19.1% rate compounded annually, better than the 9.9% gain for the S&P 500 stock index, including dividends.

Turning to investments, Berkshire's Apple holding was up to $28.2B at year-end, second only to Wells Fargo at $29.3B. Operating profit, however, fell 18 percent to $14.46 billion, hurt by a rare loss from insurance underwriting.

Its net earnings rose from $24.07 billion in 2016 to $44.94 billion as of December 31.

Berkshire also owns clothing, furniture and jewelry firms.

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

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