Berkshire Hathaway (BRKa.N) on Saturday reported record annual profits and boosting its cash stake to $334.2 billion, as Warren Buffett used his annual shareholder letter to caution Washington to spend money wisely and take care of those who get the “short straws in life.”
Buffett’s admonition came as many investors worry U.S. lawmakers won’t rein in soaring fiscal deficits, and could make them worse by extending tax cuts backed by President Donald Trump.
The 94-year-old Buffett, the world’s sixth-richest person and arguably its most famous investor, also acknowledged his advanced age, telling shareholders he uses a cane and will spend less time fielding their questions at Berkshire’s annual meeting on May 3.
He nonetheless assured shareholders they would be in good hands after he turns over the conglomerate’s reins to Vice Chairman Greg Abel, saying the 62-year-old Abel has “vividly shown his ability” to deploy capital.
“It won’t be long” before Abel takes over, Buffett said.
Buffett’s letter was accompanied by Berkshire’s annual report, where it reported a third straight record annual operating profit, rising 27% to $47.44 billion.
Quarterly operating profit rose 71% to $14.53 billion, also a record, and which analysts viewed as solid.
Net income for the full year totaled $89 billion, including gains from Berkshire’s common stock investments such as Apple (AAPL.O) and American Express (AXP.N)
Berkshire’s cash stake reflected high business valuations and nine straight quarters of selling more stocks than it bought. The selling included Apple, which remained its largest stock investment.
“Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities,” Buffett wrote.
‘FISCAL FOLLY’
He urged lawmakers to help preserve a stable U.S. dollar, saying “fiscal folly” can destroy the value of paper money and the country has at times “come close to the edge.”
Buffett said long-term success of Berkshire and the American economy, which he called the “American miracle,” has depended on people’s ability to participate.
That, he said, is something Uncle Sam can encourage, or take away.
“Take care of the many who, for no fault of their own, get the short straws in life. They deserve better,” Buffett wrote, addressing the government.
“And never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part,” he added.
Cathy Seifert, an analyst at CFRA Research who rates Berkshire “hold,” said: “Talking about the business of America being messy was his way of addressing the political landscape and its impact on the macroeconomic environment. He is warning Washington: Be careful where you tread.”
