Never bet against America, says Buffett; reveals $10-billion mist

Singles out Apple among top three valuable holdings; snaps up record $24.7 billion of own stock

Warren Buffett’s enthusiasm for the future of America and his company Berkshire Hathaway Inc has not been dimmed by the coronavirus pandemic.

Buffett used his annual letter to investors to assure he and his successors would be careful stewards of their money at Berkshire, where “the passage of time” and “an inner calm” would help serve them well.

Despite the disappearance last year of more than 31,000 jobs from Berkshire’s workforce, Buffett retained his trademark optimism, buying back a record $24.7 billion of its stock in 2020 in a sign he considers it undervalued.

He also hailed the economy’s capacity to endure “severe interruptions" and enjoy “breathtaking” progress.

“Our unwavering conclusion: Never bet against America,” he said.

Tom Russo, a partner at Gardner, Russo & Gardner in Lancaster, Pennsylvania and longtime Berkshire investor, said: “He’s a deep believer in his company and the country.” The letter breaks an uncharacteristic silence for the 90-year-old Buffett, who has been almost completely invisible to the public since Berkshire’s annual meeting last May.

But while touching on familiar themes, including Wall Street bankers’ avarice for dealmaking fees that benefit them more than companies they represent, Buffett did not dwell on the pandemic, a prime factor behind Berkshire’s job losses.

 

He also did not address recent social upheavals or the divisive political environment that some companies now address more directly.

“The letter highlighted the innovation and values that have become the backbone of America, and that’s perfectly acceptable,” said Cathy Seifert, an analyst at CFRA Research with a “hold” rating on Berkshire.

“Given the reverence that investors have for him, the letter was striking for what it omitted,” she added. “A new generation of investors demands a degree of social awareness, and that companies like Berkshire set out their beliefs, standards and goals.”

Buffett also signalled a long-term commitment to Apple Inc, where Berkshire ended 2020 with $120.4 billion of stock despite recently selling several billion dollars more.

He called Apple and the BNSF railroad Berkshire’s most valuable assets — “it’s pretty much a toss-up” — other than its insurance operations, and ahead of Berkshire Hathaway Energy. “The family jewels,” he called those four investments.

Warren Buffett makes mistakes too

The 90-year-old billionaire on Saturday admitted he “paid too much” when his Berkshire Hathaway Inc spent $32.1 billion in 2016 to buy aircraft and industrial parts maker Precision Castparts Corp, its largest acquisition.

Berkshire wrote off $9.8 billion of Precision’s value last August, as the coronavirus pandemic sapped demand for air travel and the Portland, Oregon-based unit’s products.

In his annual letter to investors, Buffett said he bought “a fine company — the best in its business,” and Berkshire was “lucky” to have Precision Chief Executive Mark Donegan still in charge.