(Reuters) – Warren Buffett’s enthusiasm for the future of America and his company Berkshire Hathaway Inc has not been dampened by the coronavirus pandemic.
Buffett used his annual letter to investors to make sure he and his successors would be careful stewards of their money in Berkshire, where “the passage of time” and “inner calm” would help them serve.
Despite the disappearance last year of more than 31,000 Berkshire workforce jobs, Buffett maintained his business optimism, buying a record $ 24.7 billion of his shares in 2020 on a sign he considers undervalued.
He also praised the economy’s ability to withstand “severe disruptions” and enjoy “impressive” progress.
“Our unshakable conclusion: never bet against the United States,” he said. ((here))
Tom Russo, a partner at Gardner, Russo and Gardner in Lancaster, Pennsylvania and a longtime investor in Berkshire, said: “He is a deep believer in his company and the country.”
The letter breaks an uncharacteristic silence for Buffett, 90, who has been almost completely invisible to the public since the annual Berkshire meeting last May.
But despite addressing well-known issues, including the greed of Wall Street bankers to get expenses that benefit them more than the companies they represent, Buffett did not focus on the pandemic, a key factor in Berkshire’s job loss. .
Nor did it address recent social unrest or the divisive political environment that some companies now address more directly.
“The letter highlighted the innovation and values that have become the backbone of America and this is perfectly acceptable,” said Cathy Seifert, an analyst at CFRA Research with a rating of “retention” in Berkshire.
“Given the reverence investors have for him, the letter drew attention to what he was omitting,” he added. “A new generation of investors demands a certain degree of social awareness and that companies like Berkshire expose their beliefs, standards and goals.”
Buffett also noted a long-term commitment to Apple Inc., where Berkshire ended 2020 with $ 120.4 billion in shares despite recently selling several billion dollars more.
He called Apple and the BNSF railway Berkshire’s most valuable assets – “it’s almost a mess” – apart from its insurance operations, and ahead of Berkshire Hathaway Energy. “Family jewelry,” he called these four investments.
BENEFITS increase even as jobs are lost
Berkshire on Saturday also reported net income of $ 35.84 billion in the fourth quarter and $ 42.52 million a year, reflecting the large gains in its shares.
Operating income, which Buffett considers a more accurate measure of performance, fell 9% during the year to $ 21.92 billion.
Stock rewards have continued in 2021, with Berkshire repurchasing more than $ 4 billion in treasury shares. It ended 2020 with $ 138.3 billion in cash.
However, Buffett lamented fixed income as an investment, saying “bonds are not the ideal place to be these days.” Revenues from a 10-year U.S. Treasury bond fell 94%, from 15.8% in September 1981 to 0.93% at the end of 2020. Reference Treasury yields they have jumped since then, but remain low by historical measures.
“Fixed-income investors around the world (whether pension funds, insurance companies or retirees) face a bleak future,” the letter said.
Berkshire, based in Omaha, Nebraska, has more than 90 operating units, including BNSF Railroads, Geico Vehicle Insurer, Dairy Queen Ice Cream and See Candy.
Its workforce fell by 8% from a year earlier to 360,000 employees. Larger falls were recorded in BNSF, which laid off 5,600 jobs, and in See’s, where employment fell by 16%.
The pandemic affected no business in Berkshire other than Precision Castparts Corp, which lost 13,473, or 40%, of its jobs.
Berkshire bought the aircraft and industrial parts maker in 2016 for $ 32.1 billion, Buffett’s largest acquisition, and took home $ 9.8 billion as the pandemic decimated the trip and punished customers Precision aerospace.
“I paid too much for the company,” Buffett wrote. “I was just too optimistic about the normalized profit potential of PCC.
“PCC is far from my first mistake of this kind,” he said. “But it’s big.”
Berkshire said some companies are beginning to recover from the pandemic.
“Certainly, 2021 will be a much stronger year, depending on the speed of vaccinations and the opening up of the U.S. economy,” said Jim Shanahan, an analyst at Edward Jones & Co. with a rating of ” buy “in Berkshire.
Buffett also said the annual Berkshire meeting will be held in Los Angeles instead of Omaha, which will allow 97-year-old Vice President Charlie Munger, a Californian, to meet with him again and respond approximately 3-1 / 2 hours of questions to shareholders.
Vice Presidents Greg Abel, 58, and Ajit Jain, 69, who are widely considered leaders to succeed Buffett as CEO, will also be available to answer questions.
Buffett said he expects Berkshire to resume in 2022 the annual shareholder weekend in Omaha, which typically attracts about 40,000 people, a “Berkshire-style annual honest meeting to God,” he wrote.
Report by Jonathan Stempel in New York; edited by Megan Davies, Alden Bentley, Marguerita Choy and Cynthia Osterman