After the disappointment recorded by the Berkshire Hathaway reports for the fourth quarter of the year, in which the operating profit of Warren Bassett’s investment company fell by 7.9% compared to the previous quarter, the “Oracle of Omaha” published its annual letter to investors in which it explains why the purchase of shares by the company will generate profits for the shareholders.
● Where should you invest while interest rates are rising – and 4 more articles about the situation in the markets
● A blow to the image of the Israeli economy: the FT also warns of the legal revolution
● The recent interest rate hike crossed a dramatic threshold for new mortgage holders | Weekend column
Berkshire bought back $2.855 billion worth of shares in the fourth quarter, slightly less than the same period last year, when the company bought back more than $6 billion. However, this is still more buybacks than in the third quarter of this year, when Berkshire bought about $1 billion.
“The math isn’t complicated”: Buffett defends the buyback plan
“When you are told that all buybacks are harmful to the shareholders or the country, or profitable only to the CEOs, you are listening to an economic idiot or a demagogue with a money tongue,” wrote the 92-year-old Buffett in his annual letter. Buffett initiated the repurchase program back in 2011 And has relied in recent years on repurchases in particularly competitive market times Berkshire Hathaway Corporation has spent a record $27 billion in 2021 on repurchases.
On an annual basis, Berkshire’s repurchase activity has slowed slightly and stands at about $8 billion this year. The corporation also took over the insurance company Allegheny in a huge $11.6 billion deal – Buffett’s biggest deal since 2016.
“The math isn’t complicated: when the amount of stock goes down, your interest in our many businesses goes up. Every little bit helps. If repurchases are done at accurate valuations, it benefits all shareholders in every aspect,” Buffett wrote to investors.
Buffett is still a big believer in the US economy
Buffett’s letter is always published after the publication of Berkshire’s reports and the tone of the letter is also expected to set the tone at the annual investor meeting in Omaha, Nebraska, which has been dubbed the “Woodstock of capitalists.” The billionaire investor’s letter touched on several issues, praising his 99-year-old longtime partner Charlie Manger and emphasizing how happy Berkshire is to pay a high amount of taxes due to the great benefit it has received over the years from the “American tailwind.”
“I have been investing for 80 years – more than a third of our country’s life,” wrote Buffett, “I have yet to encounter a time when it made sense to make a long-term bet against America. And I very much doubt that any reader of this letter will have a different experience in the future.”
The esteemed investor stressed in the letter that Berkshire will always continue to hold very large amounts of cash and US government bonds along with a very wide range of future businesses. Berkshire Hathaway’s available cash as of the end of 2022 was $130 billion.
Also in the letter, Buffett revealed that the next CEOs of Berkshire Hathaway will invest a significant portion of their personal wealth in the corporation’s shares. Greg Abel, Buffett’s expected successor and vice president of Berkshire’s non-insurance business, bought more than 68 million shares of the company last year dollar.
“At Berkshire, there will be no finish line,” Buffett wrote.