Warren Buffett’s Berkshire Hathaway posted a profit of nearly $ 40 billion in the fourth quarter, an increase of more than 10% over the same period in 2020. Annual profits have more than doubled, to just under $ 90 billion.
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Buffett himself also made good money in 2021. Its net worth reached $ 115 billion, according to Forbes magazine, making it the eighth richest man on earth.
Operating profit, Buffett’s preferred measure of profitability, climbed 45 percent in the fourth quarter to $ 7.3 billion, and rose 25 percent to $ 27.5 billion year-over-year.
Berkshire Hathaway also points to its confidence in its shares – the company announced that during the quarter it bought shares of itself (Babek) for $ 6.9 billion, a move that also helped it increase profitability per share. Overall, in 2021 Buffett bought Berkshire shares for a record $ 27 billion, preferring to increasingly focus on internal opportunities, while the surrounding market has risen in price. Berkshire’s cash pile stood at $ 146.7 billion as of the end of last year.
Alongside the results, Berkshire published Buffett’s annual letter to investors, including details of the traditional shareholders’ meeting to be held in Omaha in late April. The foundation said anyone wishing to attend the event would have to present proof of vaccination against Corona.
Berkshire’s “Four Giants.”
In his letter, Buffett praised technology giant Apple, which he sees as one of the four pillars that drives Berkshire Hathaway – a conglomerate of companies, mostly in traditional economics, that Buffett has put together for the past 50 years. He said that thanks to Apple CEO Tim Cook, Apple is the second most important holding in Berkshire, right after its insurance companies department.
Buffett said the success of 2021 was largely due to the “four giants”: the company’s insurance business; Burlington Northern Santa Fe railroad; Berkshire’s huge energy investments; And, as mentioned, almost 5.6% of Apple shares.
Apple is Berkshire’s largest holding by a large margin, and the stock enjoyed an overall return, including dividends, of 35% last year.
In his letter, Buffett notes that “but Tim’s ‘managerial touch’ also affects the rest of his ‘electorate’.”
Berkshire began buying shares of Apple in 2016, under the influence of Buffett’s deputies, Todd Combs and Ted Weschler. Berkshire is the largest shareholder in Apple, apart from mutual funds and various index funds. Over the years, Berkshire has benefited from regular dividends from Apple, averaging about $ 775 million a year.
“Apple – our giant by end-of-year value measurement – is a different type of holding. Here, our ownership stands at 5.55%, compared to 5.39% last year,” Buffett wrote in the letter. “This increase looks like small money, but keep in mind that every 0.1 percent of Apple’s profits in 2021 reached $ 100 million. We did not spend Berkshire money to achieve the growth. The buyback that Apple did did the job.”
By mid-2018, Berkshire had amassed a 5% stake in the iPhone maker, which was then worth $ 40 billion. Today, Apple’s investment is worth more than $ 160 billion, and it accounts for 40% of Berkshire’s portfolio.
“It’s important to understand that only Apple’s dividends are counted in Berkshire’s accounting profit statements – and last year, Apple paid us $ 785 million in such dividends. But our ‘share’ of Apple’s profits reached $ 5.6 billion,” Buffett wrote. Much of what the company kept “was used to repurchase Apple shares.”
Record profits for the energy department and the railways
Buffett said in a letter that investors may be surprised to find out how much Berkshire depends on the American economy for its success. Berkshire owns, among others, the Dorsel battery plant, the paint company Benjamin Moore, the construction company Clayton and the tile company Shaw.
“Many people perceive Berkshire as a large and somewhat bizarre collection of financial assets. In reality, Berkshire is the owner and operator of more American ‘infrastructure’ assets – classified in our balance sheet reports as assets, factories and equipment – than are owned or operated by any other American corporation,” he wrote. Buffett.
Buffett praised railroad company BNSF and energy department BHE as the other two giants in the conglomerate, each of which posted record profits in 2021.
“BNSF, our third giant, continues to be the main artery of U.S. commerce, making it an essential asset not only for Berkshire but for America as well,” Buffett wrote. In “, he added.
As mentioned, Berkshire’s operating profit rose by 45% in the last quarter, thanks to rapid recovery in the areas of railways, energy companies and other home services, immediately after the start of the recovery from the plague.
In response to growing criticism in recent years, and especially in the past year after a series of investigations into how wealthy Americans, as well as corporate America, evade paying taxes while the working person pays more, Buffett noted in his letter that Berkshire Hathaway “paid $ 3.3 billion last year in federal tax And income tax, as well as hefty sums in taxes in the U.S. and other countries. ”The statement“ I have already donated to the firm, ”he said, is an irrefutable statement regarding Berkshire shareholders.
Wall Street seems to continue to reward Oracle from Omaha, praising Berkshire for the impressive results. Buffett’s company is currently traded at almost $ 715 billion, and its share price is not far from an all-time high. The stock rose 7% this year, while the rest of the market fell, in part because investors began to value shares as safe assets.
The annual meeting returned to Nebraska
Berkshire has almost $ 147 billion in cash, and it has made a large portion of its profits from Geico and other insurance companies. Shares of Berkshire (BRKA), which have never been split, are trading at nearly $ 48,000 per share. The company’s Class B shares (BRKB), which are traded at a more affordable price of about $ 320, are in the S&P 500 index and are held by many private investors.
Many of these shareholders are expected to come to Omaha this past weekend of April for the annual Berkshire shareholders’ conference, which will be the first physically attended by participants since 2019. In 2020 the annual meeting was held online because of the plague, and last year it was held in Los Angeles, to be Close to the home of Buffett’s longtime friend and business partner, 98-year-old Charlie Manger, who lives in Southern California.
This year, the meeting in Omaha will be held again, on April 30, and will be attended, according to a statement from Saturday, Buffett, Manger, Ajit Jain, the Supervisor of Insurance Business, and Greg Abel, the Supervisor of the Company’s business outside the insurance business, who last year It has been announced that he will succeed the CEO.