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It’s tough here for a tycoon at the top of a $713 billion investment conglomerate.
Berkshire Hathaway CEO Warren Buffett, arguably the most watched investor in the world, released his much-awaited annual letter to shareholders on Saturday, the same day Berkshire announced its earnings had risen 45% in the past three last months of 2021. His verdict? Stocks are overvalued, his old-school businesses are doing just fine, and boy-oh-boy is it still disappointing to look for acquisitions right now.
Call the bull…
In his letter, Buffett sounded practically annoyed, noting that nothing “new or interesting” had happened at his company and that he and his lieutenant, Charlie Munger, found “little that excites us” in the stock market. Some criticized the two for sitting passively on Berkshire’s $146.7 billion cash pile, but Buffet and Munger stubbornly insisted stock valuations were too high.
The latest data falls on their side:
- The average company in the Russell 3000 – an index of large and small US companies – has fallen more than 30% from 52-week highs, according to the FinancialTimeswhile Berkshire stock has gained 6.4% this year and the S&P 500 has fallen 8%.
- Buffett said Berkshire’s latest profits were due to long-standing safe bets he called “Our Big Four”: its lucrative property and life insurance business, the Burlington Northern Railroad Santa Fe (which brought in a record nearly $6 billion last year), utility company Berkshire Hathaway Energy and a 5.6% stake in Apple – which Berkshire spent $31.1 billion on. dollars and is now worth around $161 billion.
“Misleading earnings ‘adjustments’ – to use a polite description – have become both more frequent and more fanciful as stocks have risen,” Buffett wrote in his letter, criticizing last year’s bull market. . “Speaking less politely, I would say that bull markets breed puffy bulls…”
Raised on their own supply: Berkshire spent $27.1 billion buying back its own shares last year and has already purchased $1.2 billion more this year.
Big bill: According to Buffett, Berkshire Hathaway — which has more national infrastructure than any American company — paid $3.3 billion in federal taxes in 2021, or 1% of all Society taxes.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.