Key Takeaways from Berkshire Hathaway Inc. (BRK.A) Chairman Warren Buffett’s Annual Letter

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Berkshire Hathaway Inc. (NYSE:BRK.A) Chairman and Investment Guru, Warren Buffett’s, annual letter has always been looked with interest across all sections of people. That was primarily because he used to talk about the current challenges that the global economy and particularly the American economy faces. Also, he talked about climate changes and that the insurance sector would not be impacted in the immediate term. However, he cautioned that even a small threat should be addressed immediately. But the most important point that everyone was looking for was the announcement of his successor, which was missing and probably a big disappointment to several.

Views About American Economy

Berkshire Hathaway Inc. (NYSE:BRK.A)’s Buffett opined that the United States’ golden goose of commerce, as well as, innovation would continue to be a driver of growth. He said that for nearly two and half centuries, it was a terrible mistake to have bet against the America. He added that the current situation was not the right one to start. He believes that big gains in the productivity sector were possible as far as most of the Corporations in the United States were concerned. The company’s Chairman pointed out that only the wealthy  had benefited in the recent past.

Buffett said that the solution was different safety nets with the objective of providing a normal life to those who were ready to work and find their specific talents based on the market forces and small value. Turning towards the ties to 3G Capital and Clayton Homes, the Chairman defended it by pointing out the significant boost in productivity, which a key factor in the economic growth of the nation. At Clayton Homes, he indicated that Kevin Clayton has one more demonstrated a solid performance that was above the industry level. The company was the second-biggest home builder in the United States.

Acquisition Fits Its Model

Berkshire Hathaway Inc. (NYSE:BRK.A)’s Chairman referred to the over $32 billion acquisition of Precision Castparts, which was acquired a month back, and described it as having fit perfectly into its business model. He expressed the confidence that it would boost its normalized EPS power substantially. As a result, the company would now own 10.25 companies, which would occupy the Fortune 500 position if they were allowed to do business on a stand-alone basis.

Berkshire Hathaway Inc. (NYSE:BRK.A)’s Buffett also stressed the point once more that the company would buy back its shares if the value trades either at or below 1.2x book. The stock is currently trading at 1.3 x book. That limits any downside risks of the shares. Some of the notable points that failed to find a place in his letter were the weakening of oil price and the strengthening of the Greenback.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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