Warren Buffett tells investors to ignore Wall Street pundits while paying tribute to Charlie Munger
OMAHA, Neb.– Warren Buffett called his longtime partner – the late Charlie Munger – the architect of the Berkshire Hathaway conglomerate. He took credit for leading, warning shareholders in his annual letter not to listen to Wall Street experts or financial advisors who urge them to trade frequently. .
Buffett also talked about how Berkshire’s insurance business thrived last year, but its massive utility companies and BNSF Railroad disappointed. He also told shareholders that he never plans to sell his shares in nearly 30% of Occidental Petroleum and 9% of five major Japanese trading houses, but reiterated that he has no plans to buy the oil producer outright.
Berkshire’s eclectic mix of businesses, combined with the strong performance of its investments, delivered fourth-quarter profits of $37.57 billion, or $26,043 per Class A share. That’s more than double the profit of $18.08 billion, or $12,355 per Class A share, that Berkshire reported a year earlier.
But Buffett warned that investors should largely ignore these numbers because they are so influenced by the paper value of their investments. Instead, he has long urged investors to pay attention to Berkshire’s operating profits, which exclude investments.
On that metric, Berkshire reported a 28% increase in operating profit to $8.48 billion, or $5,878.21 per Class A share. That’s up from $6.63 billion, or $4,527.06 per Class A share.
The three analysts surveyed by FactSet Research predicted Berkshire would report quarterly operating profit of $5,717.17 per Class A share.
Berkshire shares have set a series of new records in recent weeks, most recently peaking at $632,820 per Class A share on Friday morning, as investors eagerly awaited Buffett’s letter. Buffett is revered for his remarkably successful track record and the sage advice he has provided over the decades. His annual letter is always one of the most widely read reports in the business world.
Berkshire also spent $2.2 billion on share buybacks in the fourth quarter, bringing its full-year total to $9.2 billion.
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