The head of the holding company Berkshire Hathaway Warren Buffett, considered a guru of investing, on Saturday released its annual letter to shareholders. With these letters he refers to 1965. For the whole of 2015, the shares of Berkshire Hathaway fell by 12.5%, while the S&P500 rose 1.4%, the worst performance for the investor since 2009. From the beginning of 2016 shares of the company are traded consistently around $130-135 per share.
In the letter, Buffett admits that last year he made a “few” misguided investments, in particular this applies to the purchase of whole companies. “I will make other mistakes, you can be sure of, if luck would go away, and they will affect our operations at a lower level,” he warns.
Buy shares of high-tech companies, including IBM, which brought him the loss, he considers it a mistake and not from the assets to get rid of is not going. “We expect that the value of our investment in IBM will be restored in the market and eventually will exceed the amount we paid,” he said.
As noted by Fortune, Buffett has always stressed that his investments are long term in nature and that sooner or later they will bring income, but the assets of his holding company, which in 2015 was losing in value, amounted to $1 billion vs. just $65 million a year earlier. In addition to IBM the losses Buffett brought the largest machinery group Deere and giant retail Walmart — despite the fact that Berkshire Hathaway had reduced shares of the company owned by him for over a decade.
For investors and analysts, are of great interest hints that Buffett makes in his letters. They are particularly interested in prospective acquisition of Berkshire Hathaway in large companies, Buffett himself calls calls them “elephants”. Analysts always pay attention to the financial situation of the insurance business of Berkshire Hathaway, which allowed Buffett to create such a large company. We are talking about the tools that his insurance business has received from customers but haven’t yet had time to send to cover insurance damage. These funds constitute the major share of the investments of Berkshire Hathaway.
Net profit Berkshire Hathaway, is available for distribution to shareholders, for the entire 2015 rose by a quarter, from $19,87 billion to $to 24.08 bn in fourth quarter profit rose by a third, from $4,16 billion to $5,48 billion thus, the past quarter was the most successful for the holding of Warren Buffett.
Revenue for 2015 is growing more moderately and amounted to $210,82 billion against $194,67 billion a year earlier. Revenue from insurance business (main group Buffett) amounted to almost $163 billion — more than 75% of the total turnover.
At the same time, for the entire 2015 year quotes Berkshire Hathaway fell by 12.5%, while the S&P 500 index (which is trading company of Buffett) rose 1.4%.
Coming 2016, reminiscent of Buffett, for the USA is a presidential election year. “All the candidates talk about the problems of our country (which supposedly they can handle only). As a result, in this atmosphere, many Americans believe that their children will live worse than themselves, — says the businessman. On the contrary, come now young Americans will be the happiest generation in history.”
Buffett reminds that US GDP per capita is $56 thousand “in real terms, he reminds his message last year, is this stunning sixfold increase in the level of 1930, the year I was born”. According to him, since the Americans were not smarter nor more workable, it’s just that their work has become much more effective: “this powerful trend continues, American economic miracle continues.”
Economic growth figures of 2%, which is not impressive presidential candidates in the USA, Buffett considers it extremely favorable — this growth has resulted in the growth of per capita GDP by 1.2%, but if you extrapolate for a generation, i.e. 25 years, this gives an increase of as much as 34.4 per cent. For one person this would amount to an additional $19 thousand a year for a family of four is $76 thousand “Policy today should not shed tears over the children of tomorrow”, — concludes the investor.
The distribution of this wealth in an equitable manner is another question, said Buffett, stressing its closeness to the Democrats and support the idea of raising taxes on the super rich. The gap between rich and poor, investors and workers and, primarily, between those, whose talents are highly valued on the labour market, and those equally deserving Americans who do not have marketable skills, is not going anywhere, he said. “Congress will remain the wheel of battle, money and voices will be the weapon, and the lobbying will remain a fast growing sector,” says Buffett.