- Buffett Honors Munger: Warren Buffett acknowledged Charlie Munger’s significant contributions to the development of Berkshire Hathaway in his annual shareholder letter, attributing much of the conglomerate’s design and success to Munger.
- Advice Against Frequent Trading: Buffett advised shareholders to be wary of Wall Street’s encouragement to engage in frequent trading, emphasizing a long-term investment strategy.
- Berkshire’s Business Performance: The letter highlighted Berkshire Hathaway’s mixed business performance, with insurance operations thriving while utilities and the BNSF railroad lagged expectations.
- Investment Strategy: Buffett clarified his intention to maintain substantial stakes in Occidental Petroleum and five major Japanese trading houses, dismissing any plans for a full acquisition of Occidental.
- Profit and Earnings Report: Berkshire Hathaway reported a significant profit increase in the fourth quarter, with a caution from Buffett to focus on operating earnings rather than the fluctuating paper value of investments.
- Share Repurchase: The conglomerate continued its share repurchase program, spending $2.2 billion in the fourth quarter and totaling $9.2 billion for the year.
- Buffett’s Investment Philosophy: The annual letter reaffirmed Buffett’s investment principles, emphasizing value investing, long-term holdings, and skepticism towards frequent market trading.
Warren Buffett tells investors to ignore Wall Street’s pundits
Newslooks- OMAHA, Neb. (AP) —
Warren Buffett credited his longtime partner — the late Charlie Munger — with being the architect of the Berkshire Hathaway conglomerate he’s received the credit for leading and warned shareholders in his annual letter not to listen to Wall Street pundits or financial advisors who urge them to trade often.
Buffett also recounted how Berkshire’s insurance businesses thrived last year, but its massive utilities and BNSF railroad disappointed. He also told shareholders how he never plans to sell its stakes in nearly 30% of Occidental Petroleum and 9% of five large Japanese trading houses, but he reiterated that he has no plans to buy the oil producer outright.
Berkshire’s eclectic mix of businesses, combined with the strong performance of its investments, delivered a profit of $37.57 billion, or $26,043 per Class A share, in the fourth quarter. That’s more than double the $18.08 billion profit, or $12,355 per Class A share, that Berkshire reported a year earlier.
But Buffett cautioned that investors should largely ignore those bottom line figures because they are swayed so much by the paper value of its investments. Instead, he has long urged investors to pay attention to Berkshire’s operating earnings that exclude investments.
By that measure, Berkshire reported a 28% jump in operating earnings to $8.48 billion, or $5,878.21 per Class A share. That’s up from $6.63 billion, or $4,527.06 per Class A share.
The three analysts surveyed by FactSet Research predicted that Berkshire would report quarterly operating earnings of $5,717,17 per Class A share.
Berkshire’s stock has set a series of new records in recent weeks, most recently peaking at $632,820 per Class A share Friday morning as investors eagerly anticipated Buffett’s letter. Buffett is revered for his remarkably successful track record and the sage advice he has offered over the decades. His annual letter is always one of the best-read reports in the business world.
Berkshire also spent $2.2 billion repurchasing its own shares in the fourth quarter, bringing the total to $9.2 billion for the full year.
