Warren Buffett
Gerard Miller | CNBC
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Warren Buffett, the 90-year-old “Oracle of Omaha,” remains a staunch believer in the American dream, saying in his highly watched annual shareholder letter that he “never bets on America.”
“In its brief 232 years of existence … there has been no incubator to unleash human potential like America,” Berkshire Hathaway president and CEO wrote in the letter published Saturday. “Despite some severe disruptions, our country’s economic progress has been impressive. Our unshakable conclusion: never bet against the United States.”
Buffett shared an a la carte fact to illustrate Berkshire’s American credentials. He said the conglomerate owns the largest amount of U.S. assets (property, plant and equipment) in value than any other company in the country.
“The amortized cost of these Berkshire national ‘fixed assets’ is $ 154 billion. Next on this list is AT&T, with $ 127 billion in fixed assets, plant and equipment,” he wrote.
The billionaire highlighted the two U.S. wholly-owned Berkshire companies: BNSF Railway and Berkshire Hathaway Energy (BHE), which earned $ 8.3 billion in 2020 despite a collapse in demand amid the Covid-19 pandemic.
“Your railroad carries approximately 15% of all the tons of non-local miles (a ton of freight that travels a mile) of goods that move in the United States, whether by rail, truck, pipeline, barge, or plane,” said Buffett. “The history of the American railroads is fascinating. After more or less 150 years of frantic construction, garbage, excessive building, bankruptcies, reorganizations, and mergers, the railroad industry finally emerged a few decades ago as mature and streamlined.”
Buffett believes BHE will be a leader in clean energy supply in the future. BHE began a $ 18 billion effort to redevelop and expand a substantial portion of the obsolete grid that now transmits electricity throughout the West, Buffett noted.
“Unlike the railways, our country’s electric companies need a massive makeover in which final costs are staggering,” Buffett said in the letter. “The effort will absorb all the benefits of BHE over the next few decades. We welcome the challenge and believe that the added investment will be rewarded appropriately.”
Don’t forget Middle America
Buffett reminded investors that miracles occur in Middle America despite much of the attention in coastal areas. After all, the legend started his conglomerate in Omaha, Nebraska, and his local office is still located in Cornhusker state.
“Success stories abound across America,” legendary investors said. “Since the birth of our country, people with an idea, ambition and often just a little bit of capital have been successful beyond their dreams by creating something new or enhancing the customer experience with something old.”
The annual chart, a tradition for Buffett for six decades, offers a new perspective on the market after a historic rebound from the bottom of the pandemic following unprecedented stimuli.
Buffett also made a surprise announcement about its upcoming annual shareholder meeting, to be held in Los Angeles on May 1st. It was the first time the meeting has taken place outside of Omaha. Vice President Charlie Munger, who resides in Los Angeles, was absent from the 2020 annual meeting due to pandemic travel restrictions.
Berkshire repurchased about $ 9 billion of its own in the fourth quarter of 2020, bringing the firm’s total rewards to $ 24.7 billion through September, a record year of repurchase.
Buffett has started a bit of a business hunt amid the resurgence of the market. He recently took a sizeable position at Chevron, a valuable classic, while adding Verizon and a handful of drug stocks. Apple remains the largest joint stock investment in the conglomerate, which played a major role in offsetting the damage caused by the pandemic to Berkshire’s rail and insurance business in 2020.
At the end of the third quarter, the conglomerate is still sitting in a huge cash cabinet with more than $ 145 billion. Berkshire put a small portion of the cash stack into operation in July with the purchase of Dominion Energy’s natural gas transmission and storage assets.
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