OMAHA, Neb. — Warren Buffett credited his longtime partner — the late Charlie Munger — with being the architect of the Berkshire Hathaway conglomerate he’s received the credit for leading and warned shareholders in his annual letter Saturday to not take heed to Wall Street pundits or financial advisors who urge them to trade often.
Buffett said he all the time writes his letter with smart, long-term investors like his sister Bertie in mind and tries to inform them what he thinks they’d prefer to learn about Berkshire.
“She is smart – very sensible – instinctively knowing that pundits should all the time be ignored,” Buffett wrote about Bertie. “In any case, if she could reliably predict tomorrow’s winners, would she freely share her invaluable insights and thereby increase competitive buying? That may be like finding gold after which handing a map to the neighbors showing its location.”
Warren Buffett credited the late Charlie Munger with being the architect of Berkshire Hathaway.
Buffett told investors that Berkshire is a protected place to park their money so long as they don’t expect the “eye-popping performance” of its past because there are not any attractively priced acquisition targets on the market large enough to make a meaningful difference within the Omaha, Nebraska-based company’s results. But he said Berkshire might be able to swoop in with its $167.6 billion every time the casino-like stock market seizes up.
Munger, Buffett’s longtime investing partner, died in November at age 99 — taking away one in every of the important thing sounding boards Buffett relied on over the many years as Berkshire acquired corporations like See’s Candy, Geico insurance, BNSF railroad, and others to reshape the failing textile mill they took over within the Sixties into the huge eclectic conglomerate Berkshire is today.
Buffett already devoted a part of last 12 months’s annual letter to Berkshire shareholders to a tribute to Munger, but this 12 months’s version led off with much more praise for the revered curmudgeon’s contributions to Berkshire through the years. Buffett said “Charlie was the ‘architect’ of the current Berkshire” who realized early on that it was higher to purchase wonderful businesses at fair prices.
“Charlie never sought to take credit for his role as creator but as an alternative let me take the bows and receive the accolades,” Buffett wrote. “In a way, his relationship with me was part older brother, part loving father. Even when he knew he was right, he gave me the reins, and once I blundered he never – never – jogged my memory of my mistake.”
Warren Buffett told investors to disregard Wall Street pundits. REUTERS
Buffett also recounted how Berkshire’s insurance businesses like Geico thrived last 12 months, but its massive utilities and BNSF railroad disenchanted. He also told shareholders how he never plans to sell its stakes in nearly 30% of Occidental Petroleum and 9% of 5 large Japanese trading houses, but he reiterated that he has no plans to purchase the oil producer outright.
Berkshire’s eclectic mix of companies, combined with the strong performance of its investments, delivered a profit of $37.57 billion, or $26,043 per Class A share, within the fourth quarter. That’s greater than double the $18.08 billion profit or $12,355 per Class A share, that Berkshire reported a 12 months earlier.
But Buffett cautioned that investors should largely ignore those bottom line figures because they’re swayed a lot by the paper value of its investments. As a substitute, he has long urged investors to listen to Berkshire’s operating earnings that exclude investments.