Warren Buffett on Saturday signaled he will stick to his knitting, bemoaning the lack of good investment opportunities for Berkshire Hathaway Inc (BRKa.N) as it sits on a massive pile of cash even after repurchasing a huge amount of its own stock.
In his widely-read annual letter to Berkshire shareholders, the 91-year-old billionaire expressed strong confidence in Berkshire, saying its emphasis on investing in strong businesses and stocks benefits investors with a similar long-term focus.
"People who are comfortable with their investments will, on average, achieve better results than those who are motivated by ever-changing headlines, chatter, and promises," Buffett wrote.
Noting generally the risks of changes in world politics, terrorism, and cyberattacks, Berkshire remains wary.
Cash swelled to a near-record $146.7 billion, even after Berkshire repurchased $51.7 billion of its own stock in 2020 and 2021.
Buffett also said, "We find little that excites us" in the stock market, and that major acquisitions remain hard to come by after six years without any.
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"Today, internal opportunities deliver far better returns than acquisitions," he wrote.
Many of those opportunities appeared to pay off in 2021.
Operating profit rose 25% to a record $27.46 billion, with more than one-third from the BNSF railroad and Berkshire Hathaway Energy despite COVID-19 supply chain disruptions. In the fourth quarter, operating profit swelled 45%.
Uncle Sam does benefit from Berkshire's size, Buffett said, collecting $3.3 billion of income tax from the company in 2021 out of the $402 billion in total corporate income tax receipts received by the U.S. Treasury.
Buffett also pledged to keep more than $30 billion of cash on hand, after long saying $20 billion was the minimum. That still leaves plenty available for the right acquisition.
"They are having a tough time (making acquisitions), given frothiness in the market and difficulty competing with private equity firms and SPACs,"
Said CFRA Research analyst Cathy Seifert, referring to special purpose acquisition companies.
Berkshire's annual report, also released Saturday, included a letter from Vice Chairman Greg Abel describing the company's commitment to sustainability and protecting the environment.
Abel, 59, would become Berkshire's chief executive if Buffett were unable to continue. Portfolio managers Todd Combs and Ted Weschler, who invest $34 billion, are in line to oversee Berkshire's stock investments.
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The company's more than 90 operating units also include Dairy Queen ice cream, See's candies, and several industrial companies.
Berkshire also said on Saturday it plans for the first time since 2019 to hold its usual shareholder weekend in Omaha, including the April 30 annual meeting.
"Woodstock for Capitalists," as Buffett calls the weekend, typically draws about 40,000 people for shopping, dining, a 5-kilometer run, and other events. Proof of COVID-19 vaccination will be required to attend the annual meeting and obtain some shopping discounts. Reutres.com!
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