March 19, 2018

Warren Buffett to retire from Kraft Heinz

25 February 2018, 12:15 | Lorenzo Hawkins

Getty Images Warren Buffett

Warren Buffett

Berkshire's billionaire CEO says a 10-year bet he made against a group of hedge funds demonstrates several investing lessons.

Buffett declared in his 2015 annual shareholder letter that he has found the "right person", but he didn't offer any further details.

"A large portion of our gain did not come from anything we accomplished at Berkshire", Buffett assured shareholders. "The remaining $29 billion was delivered to us in December when Congress rewrote the US Tax Code".

The new law cut the corporate income tax rate to 21% from 35%, a change that has seen boosting the earnings of scores of US companies.

Back in May 2017 at the most recent Berkshire Hathaway annual meeting, Buffett had hinted at how a potential tax cut could impact the bottom line of the company. "We have $90 or $95 billion in gains, and our owners, dollar for dollar, will participate in that..."

Buffett also lamented his inability to find big companies to buy, and said his goal was to make "one or more huge acquisitions" of non-insurance businesses to bolster results.

Berkshire's cash pile swelled to $116 billion from $109 billion in the third quarter.

Two men are widely considered the frontrunners: Greg Abel, CEO of Berkshire Hathaway Energy Company, and Ajit Jain, executive vice president of Berkshire Hathaway's National Indemnity Company insurance subsidiary.

But he said the prices asked for businesses past year "hit an all-time high", and Berkshire will be looking for those available at "a sensible purchase price".

Wells Fargo and Apple were at the top of the list.

Book value, a metric he's called a "crude, but useful" way to track the conglomerate's worth, climbed 13 percent to $211,750 per Class A share at the end of 2017 compared to three months earlier, the company said Saturday in a statement. Over the past 53 years, Berkshire has grown its per-share book value at a 19.1% rate compounded annually. "Buffett doesn't dwell very long on the politics", Smead said.

"We expect Buffett's annual letter to reassure investors that his health remains remarkable and he intends to be around for awhile", said Cathy Seifert, equity analyst at CFRA Research in NY.

Known to fans as "the Oracle of Omaha", Buffett, 87, has suggested USA stocks are probably the best bet over time, encouraging people to make easy choices and stick with them, eschewing high-fee fund managers, for instance.

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