Value of Buffett's Berkshire Jumps 13 Percent on Trump Tax Cut

Billionaire investor Warren Buffett used his widely-read annual letter to Berkshire Hathaway shareholders on Saturday to again call out the wasteful fees that many money managers charge. After all, even a high-priced deal will usually boost per-share earnings, if it is debt-financed.

A major reason for that decline was a $2.22bn loss from insurance underwriting, Berkshire's first full-year deficit since 2002, hurt by hurricanes Harvey, Irma and Maria and wildfires in California.

The problem facing Berkshire, whose last major acquisition was a $32 billion deal to buy Precision Castparts in 2015, is that prices are not cheap and competition from other buyers, such as private equity firms, is stiff, says Pan.

Edward Jones analyst Jim Shanahan said he expected Buffett to devote more of the letter to explaining his decision to promote and name the top two candidates to eventually succeed him as Berkshire's CEO.

Every year, the world's third-richest man pens a much-anticipated letter (pdf) to shareholders of his company, Berkshire Hathaway. Buffett briefly mentioned that move in two paragraphs at the very end of his letter. "I was expecting more", Fox said.

Berkshire's other businesses, which include BNSF railroad, a number of electric utilities and an assortment of manufacturing and retail businesses, helped offset the insurance losses.


Greg Abel and Ajit Jain joined Berkshire's board in January and took on additional responsibilities.

Warren Buffett is 87 years old and has not named a successor yet. Many investors consider Abel, a decade younger than Jain, the frontrunner. But the biggest contributor to the $29 billion windfall, by far, was Berkshire's huge unrealized gains on stocks (a net figure of more than $100 billion at yearend) and a tax item that goes with them.

"It is a awful mistake for investors with long-term horizons - among them, pension funds, college endowments and savings-minded individuals - to measure their investment "risk" by their portfolio's ratio of bonds to stocks", Buffett wrote. Buffett challenged the asset manager to pick a group of hedge funds that it thought would beat an S&P 500 Index fund over 10 years.

Proceed to Buffett's appraisal of what happened. Buffett said investors need "an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals".

Buffett said investors shouldn't assume that bonds are less risky than stocks. We also hold it today after a million or so "partners" have joined us at Berkshire. Hello, Coca-Cola, American Express, Apple, and Wells Fargo!


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