The 93-year-old investing legend assured shareholders that the investment conglomerate, which is now the biggest financial firm by market capitalization, was ‘built to last’.
Berkshire’s Class A shares were trading 1.4% higher, while Class B shares, which carry higher voting rights and whose value is 1/1,500th of Class A shares, gained 1.3%. The conglomerate last had a market cap of over $915 billion.
In his annual letter to shareholders, Buffett, however, toned down expectations for share price, saying it did not have many lucrative investment opportunities left.
He told investors that Berkshire would perform slightly better than the “average American corporation”, but anything beyond that is “wishful thinking”, even as it had a cash pile of $167.6 billion.
“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others… All in all, we have no possibility of eye-popping performance,” Buffett wrote. Investors closely watch Berkshire as its results are often seen as a bellwether for the U.S. economy. “While this reads as if Buffett is saying that global equities are fairly valued, the truth is more nuanced than that,” Nicholas Colas, co-founder of DataTrek Research, wrote in a note.
“Berkshire is a huge business and needs to take substantial positions in large companies in order to ‘move the needle’. Markets are generally good at pricing those sorts of stocks, hence the lack of opportunities.”
Buffett in his letter also mourned the passing of his longtime second-in-command Charlie Munger, while assuring investors that vice Chairman and designated successor Greg Abel was “ready to be CEO of Berkshire tomorrow”.
Berkshire’s annual operating profit climbed 21% to $37.4 billion on improved underwriting and higher investment income from the insurance segment. Operating profit for the fourth quarter also came in ahead of analysts’ expectations.
Separately, it disclosed on Monday that the U.S. government has threatened to sue its PacifiCorp unit over its alleged failure to cover $356 million in costs associated with the 2020 Slater wildfire in southern Oregon and northern California.
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