(Bloomberg)-Warren Buffett’s 15-page annual letter to shareholders on Saturday only mentioned the pandemic that swept the world in 2020: the billionaire pointed out that his family The furniture company was forced to close down for a period of time due to the virus. Ninth page.
Despite the controversy caused by the presidential election and the riots in the U.S. Capitol, Buffett still avoided politics. Even after the outbreak of protests and riots across the country last year, Buffett has never involved race or inequality. He also avoids delving into the competitive trading pressures faced by his conglomerate Berkshire Hathaway Inc., a topic usually analyzed in letters last year.
“Here, your company has such a respected leader and is valued so highly-their opinions are important, their business is directly affected by the pandemic, and insurance companies are affected by global warming and social inflation. -CFRA Research analyst Cathy Seifert said in a telephone interview. “This is amazing to me. This is deaf and disappointing. “
Since the annual meeting in May last year, the 90-year-old Buffett has been exceptionally quiet when Americans face numerous problems. It is generally believed that his annual letter not only provides investors with an opportunity to help them understand their ideas on a wide range of topics and market trends, but also provides detailed information about the state of his group’s operations.
But Edward D. Jones & Co. analyst Jim Shanahan (Jim Shanahan) said in an interview that the Berkshire CEO carefully weighed his own words, some topics , Such as pandemics, may enter the controversial political arena.
“There have been many comments on the flu pandemic and its impact on the company, but I did not say anything in the letter. I think this is just an attempt to avoid saying what might be regarded as a political statement. This is what he has always Shanahan said: “In recent years, I am reluctant to do this. “
Buffett’s representatives did not immediately respond to requests for comment outside of normal office hours.
Buffett also remained silent on topics vital to his conglomerate, such as the market environment during a turbulent year, and the work of major investment representatives such as Todd Combs and Ted Weschler. According to Cole Smead, Smead Capital Management is responsible for Supervise Berkshire.
The company’s president and portfolio manager, Schmid, said: “No more content was found in the letter.” “I think this letter is a crime of negligence time and time again.”
The following is Buffett’s letter and other main content of Berkshire Hathaway’s annual report:
Berkshire Hathaway repurchased a record $24.7 billion in its own stock because Buffett worked hard to find better ways to invest his large amount of cash.
Buffett said in his annual speech on Saturday that the group has continued to buy its own shares since the end of last year, and it is likely to continue.
Buffett said in the letter: “This move increases your ownership of all Berkshire businesses by 5.2% without you having to pay too much money.” Buffett pointed out in the letter that the company “has not done so in 2020.” Any large-scale acquisition”.
Berkshire Hathaway did make little progress in reducing its cash reserves, which fell by 5% in the fourth quarter to $138.3 billion. In recent years, because Berkshire has abandoned cash faster than he discovered that high-return assets can be snapped up, Buffett has been struggling to keep up with the flow of funds, leading to a surge in stock buybacks.
2. Apple’s value to Berkshire is the same as the BNSF railroad
Berkshire’s $120 billion investment in Apple’s stock has become so valuable that Buffett puts it in the same category as the huge railroad business he has spent ten years building.
He began to increase his stake in the iPhone manufacturer in 2016 and spent only $31.1 billion to acquire all of them. The annual letter shows that since then, the value has soared to make it one of the company’s three major assets, along with his insurance company and BNSF, an American railroad purchase completed in 2010.
“In some ways, this is his business.” James Armstrong said, as the president of Henry H. Armstrong Associates (Henry H. Armstrong Associates) he manages assets including Berkshire shares . “It’s a lot of brand names, it’s global, it’s an absolutely addictive product.”
Buffett has always been opposed to technology investment, saying that he does not know enough about the company. However, the rise of NPC deputies, including Combs and Weschler, brought Berkshire into this field. In addition to Apple, the conglomerate has also increased its shares in Amazon.com Inc., cloud computing company Snowflake Inc. and Verizon Communications Inc..
3. Buffett admits mistakes in the $37.2 billion transaction
Buffett admitted that he made a mistake when he acquired Precision Castparts Corp. for $37.2 billion five years ago.
The billionaire investor said in his annual letter on Saturday: “I have paid too much for the company.” “No one misled me in any way-I am overly optimistic about PCC’s normalized profit potential.”
Berkshire Hathaway wrote down nearly $11 billion last year, which is largely related to Precision Castparts, an aerospace and energy industry equipment manufacturer based in Portland, Oregon.
The pandemic is the main culprit. As flight demand plummeted, Precision Castparts was in trouble, prompting airlines to park jets and cut schedules. Reduced number of flights means less demand for parts and new aircraft. According to Berkshire’s annual report, Precision laid off about 40% of its workforce last year.
4. Profit from the manufacturer thanks to the railway
Although the impact of the pandemic continues to affect Berkshire Hathaway’s business, the group’s operating income in the fourth quarter increased by nearly 14% over the same period last year.
This has helped the situation since BNSF’s record quarter since its purchase in 2010, and one of the best quarters for manufacturing operations since mid-2019.
5. Goodbye Omaha, hello Los Angeles
Berkshire Hathaway’s annual meeting has attracted Buffett’s support over the years to Omaha, Nebraska, where the group is located. This year, the show will move to the west coast.
The company said on Saturday that although it is still false due to the flu pandemic, the annual meeting will be filmed in Los Angeles.
This will bring the event closer to the home of Charlie Munger, Buffett’s long-time business partner. Buffett and Munger will be joined by two main representatives, Grieg Abel and Ajit Jain, who will also ask questions.
Buffett said in the letter that Buffett and Abel, who lives near Berkshire’s headquarters, faced “a dark arena with 18,000 empty seats and a camera” at last year’s annual meeting. The 90-year-old billionaire said he expects to hold a face-to-face meeting in 2022.
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