Buffett today announced his annual letter to shareholders. This letter has always been regarded as a must-read by Wall Street people. Also published is the Berkshire-Hathaway Annual Report.
The following is a summary of the main points:
Berkshire Hathaway Annual Report: Net profit almost fell short of the budget, and the repurchase amount reached a record high
In 2020, Berkshire Hathaway's operating profit was US$21.922 billion, a year-on-year decrease of 8.55%. Looking at the full year of 2020, net profit attributable to Berkshire Hathaway shareholders was US$42,521 billion. Compared to the net profit for the same period last year, the net profit for the same period last year was US$81,417 billion, which is almost lower.
According to the data, Berkshire Hathaway's operating profit for the fourth quarter of 2020 was US$5.02 billion, an increase of 14% over the previous year. Net investment income for the fourth quarter was US$30.45 billion, compared to US$24.53 billion in the same period last year.
Berkshire: Shares bought back US$24.7 billion last year, and there will be more repurchases in the future
In terms of repurchase operations that have received much attention, Berkshire Q4 spent 9 billion US dollars to buy back stocks, maintaining a record level in Q3. The total capital used by the company to repurchase shares for the whole of last year reached an unprecedented 24.7 billion US dollars. By comparison, in 2019, Berkshire spent a total of 5 billion US dollars on repurchases.
In the annual shareholder letter, Buffett also spent a lot of time talking about the logic of repurchasing benefits. Buffett said that through this year's large repurchase campaign, Berkshire shareholders increased their share of the group's business by 5.2% without paying a penny. According to the standards he and Munger have long recommended, the company carried out these repurchases because it can increase the intrinsic value of each shareholder share while at the same time allowing Berkshire Hathaway to have more capital than may be required to face opportunities or problems.
Buffett's top ten heavyweight stocks: At the end of last year, BYD held a market value of nearly 5.9 billion US dollars
In terms of asset holdings, by the end of 2020, Berkshire held shares in Apple (market capitalization: US$12.4 billion), Bank of America (market capitalization: US$31.3 billion), Coca Cola (market capitalization: US$21.9 billion), American Express (market capitalization: US$18.3 billion), Verizon (US$8.6 billion), Moody's (US$7.16 billion), Bank of America (US$6.9 billion), BYD (market capitalization: US$5.897 billion), Chevron (market capitalization: US$4.096 billion), and Charter Communications (market capitalization: US$3.45 billion).
It is worth noting that among its top ten holdings, the Chinese company BYD ranked eighth, with a market value of about 5.897 billion US dollars, accounting for 8.2%.
Buffett holds $138 billion in cash: still optimistic about the stock market
According to data from the letter to shareholders, Berkshire Hathaway's cash reserves at the end of 2020 were about 138 billion US dollars, up more than 8 billion US dollars from about 130 billion US dollars last year.
According to the data, Berkshire Hathaway achieved operating profit of US$21.9 billion in 2020, down about 9% from US$24 billion in 2019. Also, at a time when US stocks were falling sharply, Buffett did not find the “elephant” he wanted.
As can be seen from the open letter, Buffett still adheres to the concept of value investment and is very optimistic about stock market performance. Last year, he said that he is still continuously seeking opportunities to buy new businesses, but there are few large-scale acquisition opportunities that meet the requirements.
Recently, Buffett's good partner Charlie Munger commented on the brief emptiness craze at Gaming Station, saying that when investors gamble like on a racetrack, they don't dare to imagine what will happen. This kind of culture that encourages investors to gamble is really foolish.
The shareholders' meeting moved to Los Angeles on May 1 to further release the signal of successors
Buffett and Munger have reached the age of 90 and 97, respectively. They have not clearly indicated who their next successors will be, but they have begun to send out relevant signals. Buffett said the company was fully prepared for him and Munger to leave.
In a letter to shareholders, Buffett announced that this year's shareholders' meeting will be held in Los Angeles on May 1, not in Omaha. In addition to Buffett and Munger, Berkshire Hathaway's vice presidents Greg Abel and Agit Jain will also answer investor questions.
Buffett's Open Letter to Shareholders in 2021: “Never Shorten America”
The 90-year-old “Omaha prophet” Warren Buffett remains a firm believer in the “American Dream.” In his much-publicized annual shareholder letter, he said “Never short America.”
“Despite some serious disruptions, America's economic progress has been remarkable. Our unwavering conclusion is: Never gamble on America's loss.”
In his letter, Buffett shared a fact that illustrates Berkshire's credibility in America. He said the group has more assets (real estate, plant, and equipment) in the US than any other US company.