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Buffett’s investment advice and life lessons: the annual letter

by Finploris
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The 90-year-old chairman and CEO of Berkshire Hathaway released his annual letter Saturday morning along with the company’s quarterly earnings.

“Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America,” Warren Buffett said in his closely watched annual letter. Buffett shared the fact the conglomerate owns the biggest amount of U.S. assets by value than any other company. Berkshire’s three most valuable assets are the insurers, BNSF and Apple. The holding in Apple is now $120 billion worth, while only spending $31.1 billion building that share.

The “Oracle of Omaha” admitted he “paid too much” when his Berkshire Hathaway Inc spent $32.1 billion to buy Precision Castparts Corp, a metal fabrication company for aircraft and industrial parts. The conglomerate wrote off $9.8 billion of Precision’s value last August as the coronavirus pandemic undermined demand for air travel und the company’s parts for the aerospace industry. Buffett said he was “simply too optimistic about PCC’s normalized profit potential. I was wrong … in judging the average amount of future earnings and, consequently, wrong in my calculation of the proper price to pay for the business. Last year, my miscalculation was laid bare by adverse developments throughout the aerospace industry, PCC’s most important source of customers,” Buffett said.

The conglomerate has continued to repurchase a record $24.7 billion of its own stock last year and mentioned there is more to come, as the conglomerate struggled to find other game-changing acquisitions. “In no way do we think that Berkshire shares should be repurchased at simply any price,” Buffett wrote in the annual letter. “I emphasize that point because American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse.”

Berkshire Hathaway’s class A shares are up about 5%, outperforming the S&P 500 2% gain. Last year the stock gained 2.4%, falling short of the 16% gain in the S&P 500.

About Berkshire Hathaway

Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in various business sectors. The company’s segments include an international association of diversified businesses, a metal fabrication company, a specialty chemical company and a railway company. Berkshire’s principal operations are insurance business conducted worldwide on a reinsurance basis and nationwide on a primary basis.

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