© Reuters.
Investing.com – CEO Warren Buffett released his famous annual letter to shareholders over the weekend, again touting his lucrative multi-year bets on and. writes Business Insider.
Buffett has defended the Berkshire share buyback and also denounced the CEOs of those companies that manipulate earnings to meet Wall Street’s expectations.
“Our satisfactory results came from about a dozen really good decisions—about one every 5 years,” Buffett said.
He cited Berkshire’s investment in Coca-Cola as a really effective choice, and American Express the 2 cornerstones of its roughly $300 billion equity portfolio. It initially invested $1.3 billion in Coca-Cola to secure a $25 billion position late last year.
In addition, last year Berkshire received $704 million in annual dividends from Coca-Cola and $302 million from American Express. By the time these positions were completed in 1994 and 1995, respectively, they were paying only $75 million and $41 million in dividends.
Buffett noted that during his nearly 60 years at Berkshire, the bulk of his betting has been mediocre, hence the lesson for investors: “Weeds wither as flowers bloom,” he said. “Over time, it only takes a few winners to create miracles.”
We also note that the 92-year-old investor came out in defense of share buybacks after the introduction of a 1% buyback tax by the US government last year and President Joe Biden’s announcement of support for raising the tax to 4%.
Buffett stated that “those who say that all buyouts are bad for shareholders or the country, or especially beneficial for CEOs, are either economically illiterate people or eloquent demagogues (which are not mutually exclusive).”
He couldn’t help but lambaste corporate leaders who take pride in rigging their companies’ financials to match and even beat analyst estimates.
“This activity is disgusting,” he said. “It doesn’t take any talent to manipulate numbers, it just takes a deep desire to deceive.”
— Materials from Business Insider were used in the preparation
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