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Read Warren Buffett's annual Berkshire Hathaway shareholder letter

Feb 23 2019 18:06
Katherine Chiglinsky, Bloomberg

Warren Buffett says he wants to spend Berkshire Hathaway Inc.’s growing pile of cash on a giant acquisition, but he doesn’t see that happening anytime soon.

“Prices are sky-high for businesses possessing decent long-term prospects,” Buffett wrote in his annual letter to investors, adding that will lead to buying more public stocks in 2019. “We continue, nevertheless, to hope for an elephant-sized acquisition.”

Berkshire’s cash pile rose to $112bn, showing how hard it’s been for Buffett to put money to work as fast as Berkshire accumulates it. The legendary investor made his name by consistently outpacing the broader market, but that’s become harder as Berkshire has grown.

While the company’s book value has increased at almost twice the rate of the S&P during his career, it has actually trailed the index over the last decade.

Read the letter below

Key Takeaways 

An eye-popping $25 billion net loss in the quarter was driven by $27.6 billion in unrealized losses from the investment portfolio.

Buffett has warned investors to look more at underlying operating figures, as accounting rules now incorporate unrealised gains and losses from stocks into net income.

He said the volatile fourth quarter featured several days where Berkshire’s stock portfolio swung more than $4 billion. Berkshire felt the ripple effects from Kraft Heinz Co.’s $15.4bn writedown in the fourth quarter.

As its biggest shareholder, Buffett’s company took a $2.7bn markdown to its stake. Berkshire benefited from its railroad and energy businesses, which along with tax cuts helped boost overall operating results to $24.8bn in 2018.

The company’s insurance businesses posted an underwriting profit of $1.57bn last year, rebounding from a $2.2bn loss in 2017, the first in 15 years. That boosted overall operating earnings at the conglomerate 71% from a year earlier.

berkshire hathaway  |  warren buffett
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