Buffett Releases Annual Shareholder Letter Investors Must Read

[February 26, 2023](Comprehensive report by Epoch Times reporter Li Yan) Veteran American billionaire Warren‧Buffett(Warren Buffett) released the annualshareholder letter.At a critical time when interest rates are soaring and recession fears are raging, it is undoubtedly his faithfulinvestThe information followers most want to know.

Related posts

The United States added 311,000 new jobs in February, exceeding expectations

March 25, 2023

U.S.-China trade deficit continues to shrink, China’s exports remain under pressure

March 25, 2023

The 92-year-old chairman and CEO of Berkshire Hathaway released his annualshareholder letterand the conglomerate’s latest quarterly earnings.For decades, this letter has beeninvestEssential reading for readers, this year’s information is particularly exciting given the changing investment environment.

According to the release on Saturday, Berkshire Hathaway’s total operating profit in the fourth quarter of 2022 was US$6.7 billion, a decrease of 7.9% from the US$7.285 billion in total profit in the same period last year. Operating profit refers to the total profit of businesses owned by the conglomerate.

In 2022, the conglomerate’s operating profit will total $30.793 billion. This represents a 12.2% increase from 2021’s $27.455 billion.

BuffettIn his annual shareholder letter, he said Berkshire would continue to hold “significant amounts” of cash and U.S. Treasury bills, as well as its substantial businesses.He made it clear that the company’s future CEOs will have a “substantial portion” of their net worth at Berkshirestock.

“We will also refrain from any uncomfortable cash demands at inconvenient times, including financial panics and unprecedented insurance losses,” Buffett wrote in the letter. “Yes, our shareholders will continue to benefit from retained earnings. Save and prosper. At Berkshire, there will be no finish line.”

クーポン利用で1,680★円★ 楽天1位 ボーダーロング Tシャツ ボーダー ロング カットソー プルオーバー Tシャツ 長袖 クルーネック シンプル きれいめ カジュアル ガーリー ドルマン ゆったり 長袖 カジュアル 秋 冬 韓国ファッション【予約販売：11月11日に発送予定】 価格：2980円（税込、送料無料) (2022/10/12時点) 楽天で購入

berkshire last yearstockThe pace of buybacks has slowed, with a total of $5.25 billion purchased at the end of the third quarter, significantly slower than the pace in 2021. Berkshire bought back a record $27 billion of its own shares at the time, as Buffett saw fewer outside opportunities in a sky-high bull market.

Buffett himself told shareholders at last year’s annual meeting that he prefers to buy stakes in other companies rather than buy back his own stock.

Lots of cash and treasury bills

Buffett has previously said that a sharp rise in interest rates after more than a decade of near-zero interest rates could reduce the appeal of stocks and hurt asset prices.

“The impact of interest rates on asset prices, you know, is a bit like the impact of gravity on Apple.” This is a famous quote that Buffett said at Berkshire’s annual meeting in 2013. He argues that when interest rates are high, there can be a significant “gravitational pull” on value.

CNBC analyzed that it is worth noting that the yields of U.S. Treasury bonds have changed dramatically. Treasury yields have soared to their highest levels since the global financial crisis amid an aggressive Fed rate hike. Both the six-month and one-year yields were above 5% for the first time since 2007, while the benchmark 10-year yield was just below 4%.

“We had a period of about 15 years of historically abnormally low interest rates. We have relatively normal short-term interest rates right now,” said David Kass, a professor of finance at the Robert H. Smith School of Business at the University of Maryland, “to quote Buffett That said, interest rates are a major determinant of stock prices.”

【16000円OFFクーポン配布中】iPhone 14 Pro 512GB simフリー 国内正規品 Apple 本体 端末 新品 回線セット 価格：214800円（税込、送料無料) (2022/10/12時点) 楽天で購入

Perhaps that explains why Berkshire may have been more of a seller than a buyer of the stock in the fourth quarter. The conglomerate sold a large chunk of TSMC, a chip stock it had just bought in the third quarter. Berkshire also trimmed its stakes in Bank of New York Mellon and US Bancorp last quarter.

Meanwhile, Berkshire’s cash pile — nearly $109 billion at the end of September and growing to $128.651 billion in the fourth quarter — has been piling up because of rising interest rates. The firm currently holds $77.9 billion in U.S. Treasury bills.

Cass previously predicted, “One of the comments that Buffett may make in his letter is that sitting on cash is not so painful. Now there is an alternative, called Treasury bills, or short-term Treasury bills.”

mountain of cash

Buffett’s cash pile also has an advantage over rivals such as private equity firms, which have to borrow money to make deals at a time when interest rates are rising.

“Private equity funds and others who are considering acquisitions will have to come into the market and borrow (at) higher rates. This will allow Berkshire to regain a competitive advantage,” Cass said.

Berkshire last year bought insurer Alleghany for $11.6 billion in cash, its biggest deal since 2016.

Still, Berkshire’s auto insurer Geico has been under pressure recently, posting consecutive quarters of underwriting losses. But Buffett often pays little attention to changes in the company’s quarterly or annual performance.

“Investment gain/loss figures for any given quarter are generally meaningless and the net income (loss) per share figures presented may be of interest to investors with little or no knowledge of accounting rules. Extremely misleading,” a statement at the release said.

Berkshire stock is down nearly 1.6% in 2023.

Buffett has continued to boost his position in Occidental Petroleum over the past year, with Berkshire owning as much as 21 percent of the oil giant. Last August, Berkshire received regulatory approval to buy up to 50 percent of its shares, sparking speculation that the prominent investor could eventually buy the entirety of the Houston-based company.

Given Occidental’s poor performance in 2023, many are more eager to know whether Buffett is interested in owning more of the company. The stock is down about 6% this year. It is trading below $60 after more than doubling in 2022.

“He’s showing a lot of discipline here as it pertains to trading in the open markets,” said James Shanahan, an analyst at Edward Jones, which covers Berkshire. Buying OXY (Occidental Petroleum) stock online. Only a few times has he bought Occidental Petroleum stock for more than $60 per share.”

Meanwhile, Chevron remains Berkshire’s third-largest stock holding at the end of 2022, behind Apple and Bank of America.

Responsible editor: Li Huanyu#