Key takeaways from Warren Buffett’s annual letter to shareholders

Billionaire investor Warren Buffett on Saturday published his annual letter to shareholders of Berkshire Hathaway.

Berkshire’s gain in net worth during 2017 was $65.3 billion, which increased the per-share book value of both Class A and Class B stock by 23 per cent.

Here are the quick six takeaways:
Retirement plans
There was nothing on the retirement plans of the Oracle of Omaha in the much-awaited annual letter.

On Ajit Jain & Greg Abel
Early in 2018, Berkshire’s board elected Ajit Jain and Greg Abel as directors of Berkshire and also designated each as vice chairman. Ajit is now responsible for insurance operations, and Greg oversees the rest of our businesses.
“Charlie and I will focus on investments and capital allocation. You and I are lucky to have Ajit and Greg working for us. Each has been with Berkshire for decades, and Berkshire’s blood flows through their veins. The character of each man matches his talents. And that says it all,” Buffett said in the letter.

Top investments
Buffett listed 15 common stock investments that at yearend had the largest market value. “We exclude our Kraft Heinz holding – 325,442,152 shares – because Berkshire is part of a control group and therefore must account for this investment on the ‘equity’ method,” he said.

On its balance sheet, Berkshire carries its Kraft Heinz holding at a GAAP figure of $17.6 billion. The shares had a yearend market value of $25.3 billion, and a cost basis of $9.8 billion.

Annual meeting
The annual meeting falls on May 5th and will again be webcast by Yahoo!, whose web address is https://finance.yahoo.com/brklivestream. The webcast will go live at 8:45 a.m. Central Daylight Time. Yahoo! Will interview directors, managers, stockholders and celebrities before the meeting and during the lunch break. Both the interviews and meeting will be translated simultaneously into Mandarin. Last year, real-time viewership increased 72 per cent to about 3.1 million and replays of short segments totalled 17.1 million.

Standalone purchase
Buffett in his letter stated that the company was able to make only one sensible standalone purchase last year, a 38.6 per cent partnership interest in Pilot Flying J. With about $20 billion in annual volume, the company is far and away the nation’s leading travel-centre operator.

PFJ has been run from the get-go by the remarkable Haslam family. “Big Jim” Haslam began with a dream and a gas station 60 years ago. Now his son, Jimmy, manages 27,000 associates at about 750 locations throughout North America. Berkshire has a contractual agreement to increase its partnership interest in PFJ to 80 per cent in 2023; Haslam family members will then own the remaining 20 per cent.

“Berkshire is delighted to be their partner. When driving on the Interstate, drop in. PFJ sells gasoline as well as diesel fuel, and the food is good. If it’s been a long day, remember, too, that our properties have 5,200 showers,” he said.

Berkshire cash pile
At yearend Berkshire held $116.0 billion in cash and US Treasury Bills (whose average maturity was 88 days), up from $86.4 billion at yearend 2016.

To read this year’s edition, click here