By Jonathan Stempel
In a recent report, Berkshire Hathaway announced record annual profits while increasing its cash reserves to $334.2 billion. Buffett, the 94-year-old renowned investor, used his shareholder letter to advise Washington to spend money wisely and support those facing challenges in life. Acknowledging his age, Buffett mentioned using a cane and reducing his Q&A time at the upcoming annual meeting. He expressed confidence in Vice Chairman Greg Abel’s capabilities to lead Berkshire in the future.
The annual report revealed a third consecutive year of record operating profit, reaching $47.44 billion, with a total net income of $89 billion, bolstered by gains from investments in companies like Apple and American Express. Despite cautious business valuations, Berkshire’s approach to stock investments remains prominent over holding cash. Buffett highlighted the importance of preserving a stable U.S. dollar and emphasized the vitality of fostering opportunities for all Americans to participate in economic success.
While Berkshire’s recent investments in Japanese trading houses show a shift in focus, Buffett expressed concerns about the current high stock prices and the company’s limited acquisition activity since 2016. He urged Washington to navigate economic challenges carefully, warning about potential risks to the stability of the economy. As Berkshire’s influence on the market diminishes due to its size, Buffett’s guidance emphasizes the importance of strategic decision-making in an evolving economic landscape.
The price of Berkshire Hathaway’s stock has increased by 15% in the past year, slightly trailing behind the S&P 500 which saw an 18% rise during the same period. Looking back over the last decade, Berkshire’s stock price has surged by an impressive 225%, while the index, factoring in dividends, grew by 241%. Excluding dividends, the index’s growth was still strong at 185%, as indicated by data from Reuters. Bill Smead, the chief investment officer at Smead Capital Management in Phoenix, remarked that although there will be numerous buying opportunities ahead, Berkshire Hathaway may not experience the substantial double-digit growth it once did. He foresees Berkshire as a stable investment choice for owning shares in major corporations while avoiding potential pitfalls in the market.
During the annual meeting, which draws tens of thousands of attendees, Warren Buffett is expected to take a lesser role on stage as Greg Abel and Ajit Jain, Berkshire’s Vice Chairman, join him in fielding shareholder inquiries. In a recent interview with Fortune magazine, Buffett expressed that he continues to find joy in his work and is still proficient in certain endeavors, albeit having cut back on other activities significantly. Notably, this year’s meeting will not showcase the customary film produced by Buffett’s daughter, Susie.
Buffett humorously shared insights on aging, revealing his regular Sunday conversations with his 91-year-old sister Bertie through conventional phone calls. “We delve into the delights of growing older and engage in lively discussions on topics as riveting as the comparative advantages of our walking canes,” he quipped. Reflecting on his own circumstances, he underlined the practicality of his cane in preventing potential mishaps such as stumbling and falling.
(Reported by Jonathan Stempel, in New York; Written by Carolina Mandl in New York; Edited by Diane Craft)
