The high prices of assets have resulted in a drought of operations relevant to the conglomerate, which thus accumulates a box of US $ 128,000 million that cannot be found.
However, the so-called Oracle of Omaha by its nose investor has ensured that the shareholders are not worried about the future of the company, that they inevitably face their succession in the face of the seniority of their main managers. Buffett turns 90 in August and his partner Charles Munger is 96 years old. “Berkshire is 100% prepared for our departure,” Buffett writes to Berkshire shareholders.
The financier tells this anecdote. “Three decades ago, my friend Joe Rosenfield received an irritating letter from his local newspaper at the age of 80 in the request for biographical data he planned to use in his obituary. Joe did not respond A month later, he received a second letter from the newspaper labeled ‘urgent “Charlie and I have long since entered the ‘urgent’ zone. It’s not exactly great news for us, but Berkshire shareholders don’t need to worry.”
It is still unknown who will be the CEO after Buffett’s departure, what he has proposed that his son Howard be the president, although there is no salary. Its executive successor is expected to come from the company, which in principle has already identified the candidate.
As Buffett points out to shareholders, “Charlie and I have very pragmatic reasons for wanting to guarantee Berkshire’s prosperity in the years following our departure: the Mungers have properties in Berkshire that outshine any of the other family investments, and 99 % of my net worth is in Berkshire shares. I have never sold any shares and I have no plans to do so. ” The most reputable financier of Wall Street has left specified in his will that no shares of the company be sold.
Among other pillars, Buffett bases his optimism on the future of Berkshire on the diversification and strength of business and on a team of directors, for “those who run Berkshire is much more than having a well-paid and prestigious job.”
Buffett compares corporate operations with marriages in the letter. “Upon reviewing my unequal history, he concluded the acquisitions are similar to marriage: it begins with a cheerful wedding, but the reality changes to pre-nuptial expectations. Sometimes, there is happiness beyond the hopes of any of the In other cases, the disappointment is quick. Following that analogy, I would say that our civil registry is still largely acceptable. “
Despite the difficulty of finding “elephants” to those who allocate their treasury, Buffett continues to search for relevant operations. “We constantly seek to buy new businesses that meet three criteria. First, they must have a good return on tangible net capital. Second, they must be managed by powerful and honest managers. Finally, they must be available at a reasonable price. When we detect these businesses, our preference would be to buy 100% of them. But the opportunities to make these acquisitions are rare, “says Buffett, who explains that a volatile stock market allows large positions in listed companies, but not controlling interests.
Berkshire Hathaway closed the 2019 fiscal year with a box of 128,000 million dollars and a profit of 81,417 million dollars, well above the earnings of just 4,000 million in 2018, suffered from the provisions of its investment in Kraft-Heinz.
Berkshire Hathaway invests in the most relevant listed US companies and barely revalued 11% on the Stock Exchange in 2019, compared to 31.5% of the S&P 500, including dividends. The apathy of the action caused Berkshire to move from fifth to seventh place in the ranking of the most valuable firms, behind Facebook and Alibaba.
The company’s quoted portfolio, present in 50 companies, is valued at 242,000 million dollars as of December 2019, 13% more than three months earlier. Despite the diversification of investments, more than two thirds of their bet is in the hands of Apple, Bank of America, Coca-Cola, American Express and Wells Fargo. In total, Berkshire shares are valued at 566,000 million dollars