Buffett laments lack of good investments even as Berkshire returns record

FILE PHOTO: Warren Buffett, CEO of Berkshire Hathaway Inc, pauses from playing bridge as part of the company's annual meeting over the weekend in Omaha
FILE PHOTO: Warren Buffett, CEO of Berkshire Hathaway Inc, pauses from playing bridge during the company’s annual meeting over the weekend in Omaha, Nebraska, U.S. May 6, 2018. REUTERS/Rick Wilking // File Photo

February 26, 2022

By Jonathan Stempel

(Reuters) – Warren Buffett signaled on Saturday that he would stick with his knitting business, complaining about the lack of good investment opportunities Berkshire Hathaway Inc. huge cash flows even after buying back large amounts of his own stock.

In his widely read annual letter to Berkshire shareholders, the 91-year-old billionaire expressed strong confidence in Berkshire, saying that focusing on investing in strong businesses and stocks benefits the company. investors with a similar long-term focus.

“Those who are comfortable with their investments will achieve better results than those driven by ever-changing headlines, ramblings, and promises,” Buffett writes.

Overall, recognizing the risks of changes in world politics, terrorism and cyberattacks, Berkshire remains vigilant.

In 2020 and 2021, the company found even more value by buying back $51.7 billion of its own stock. “We found very little that excites us” in the stock market, said Buffett, and major acquisitions are still unlikely six years on without any acquisitions.

“Today, insider opportunities offer far better returns than acquisitions,” he writes.

Many of those opportunities look set to hit in 2021.

Operating profit jumped 25% to a record $27.46 billion, with more than a third from BNSF rail and Berkshire Hathaway Energy despite COVID-19 supply chain disruptions. In the fourth quarter, operating profit increased 45%.

Full-year net income more than doubled to a record $89.8 billion, helped by gains from Apple Inc, Bank of America Corp, American Express Co and other stocks in the company’s broad portfolio. Berkshire.

Apple shares alone hit $161.2 billion as of December 31, more than five times the $31.1 billion Berkshire paid for it.

Total share buybacks hit a record $27 billion in 2021, and Buffett said Omaha, Nebraska-based Berkshire has repurchased $1.2 billion of its stock in 2022.

“He is delivering a multifaceted growth engine story,” said Tom Russo, partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania and a longtime Berkshire investor. “The key message is that Berkshire has found some great businesses, so let’s celebrate them.”


In his letter, Buffett introduced what he called Berkshire’s “big four” including its insurance giants, BNSF, Berkshire Hathaway Energy and shares of Apple.

“Our goal is to make meaningful investments in businesses with sustainable economic advantages and a first-rate CEO,” Buffett writes.

He also said Berkshire favors an “old-fashioned earnings style,” including $6 billion last year at its BNSF rail line, casting shade on companies that can manipulate their results to boost their earnings. their stock prices.

“Deceptive “adjustments” to earnings—to use a polite description—have become more frequent and fanciful as stocks have risen, Buffett writes. “Less politely speaking, I would say that the bull market produces excited bulls….”

Berkshire ended last year with $146.7 billion in cash and equivalents, not a record but closed.

Buffett has pledged to keep more than $30 billion on hand, after a long time saying $20 billion is the bare minimum.

It was in part to protect Berkshire from losses in its insurance operations, which include car insurance company Geico and an insurance business against major disasters like hurricanes.

The company’s more than 90 operating units also include Dairy Queen ice cream, See’s candy and a number of industrial companies including Precision Castparts, an aircraft parts maker hit hard by the pandemic.

On Saturday, Berkshire also said it plans to hold its regular shareholder weekend for the first time since 2019 in Omaha, including its April 30 annual meeting.

“Woodstock for capitalists,” as Buffett calls it at the weekend, typically draws about 40,000 people to shop, eat, run 5km and other events.

Proof of COVID-19 vaccination will be required to attend the annual meeting and receive a shopping discount.

(Reporting by Jonathan Stempel in New York; editing by Megan Davies and Diane Craft) Buffett laments lack of good investments even as Berkshire returns record

Caroline Bleakley

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