Warren Buffett
Gerard Miller | CNBC
Warren Buffett, the 90-year-old “Oracle of Omaha,” remains a strong supporter of the American dream, saying in his closely-reviewed annual shareholder letter to “never bet against America.”
“In its short 232-year history … there was no incubator for unleashing human potential like America,” Berkshire Hathaway’s chairman and CEO wrote in the letter released Saturday. “Despite some serious interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: never gamble against America.”
Buffett shared a fact in the letter to illustrate Berkshire’s US credentials. He said the conglomerate owns the largest amount of US assets (tangible assets) by value than any other company in the country.
“Berkshire’s amortized cost of these domestic ‘fixed assets’ is $ 154 billion. Next in line on this list is AT&T, with property, plant and equipment of $ 127 billion,” he wrote.
The billionaire highlighted Berkshire’s two US companies – BNSF Railway and Berkshire Hathaway Energy (BHE) – which made $ 8.3 billion in 2020 despite a drop in demand during the Covid-19 pandemic.
“Your railroad carries about 15% of all non-local ton-miles (a ton of freight transported over a mile) of goods shipped in the United States, whether by rail, truck, pipeline, barge, or airplane,” Buffett said. “The history of America’s railroads is fascinating. After some 150 years of insane construction, deception, overbuildings, bankruptcies, reorganisations, and mergers, the railroad industry finally emerged as mature and rationalized a few decades ago.”
Buffett believes that BHE will be a leader in providing clean energy in the future. BHE began an $ 18 billion attempt to rework and expand a significant portion of the aging grid that now carries electricity across the West, Buffett noted.
“Unlike railways, our country’s electric utilities need a massive makeover, with the ultimate cost going to be huge,” Buffett said in the letter. “The effort will consume all of BHE’s revenues for decades to come. We welcome the challenge and believe the additional investment will be appropriately rewarded.”
Don’t forget Central America
Buffett reminded investors that miracles are happening in Central America, despite much focus on coastal areas. After all, the legend began its conglomeration in Omaha, Nebraska, and the home office remains located in Cornhusker state.
“There are success stories all over America,” said the legendary investors. “Since the birth of our country, individuals with an idea, ambition and often only a pittance of capital have managed to exceed their dreams by creating something new or by enhancing the customer experience with something old.”
Buffett also made a surprise announcement at the upcoming annual shareholders meeting, which will be held in Los Angeles on May 1. It was the first time that the meeting took place outside of Omaha. Los Angeles-based Vice Chairman Charlie Munger missed the 2020 annual meeting due to travel restrictions during the pandemic.
Berkshire repurchased nearly $ 9 billion of its own shares in the fourth quarter of 2020, bringing the company’s total repurchases through September to $ 24.7 billion – a record year for repurchases.
Buffett has started a bargain hunt amid the market comeback. Most recently, he took a significant position in Chevron, a classic value game, while also adding Verizon and a handful of drug stocks. Apple still ranks as the conglomerate’s largest common stock investment, which was instrumental in offsetting the pandemic damage to Berkshire’s rail and insurance operations in 2020.
The conglomerate is still sitting on a massive cash box with more than $ 145 billion at the end of the third quarter. Berkshire put a small portion of the cash stack to work in July with the purchase of Dominion Energy’s natural gas transmission and storage assets.
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