Warren Buffett Gives Credit to Late Partner Charlie Munger in Annual Letter, Warns Against Trading Often
Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has credited his late partner, Charlie Munger, with being the mastermind behind the conglomerate’s success. In his annual letter to shareholders, Buffett praised Munger’s contributions and warned against listening to Wall Street pundits and financial advisers who advocate for frequent trading.
Buffett emphasized that he writes his letter with long-term investors in mind, such as his sister Bertie, who he described as “sensible” and someone who knows to ignore the advice of pundits. He highlighted the futility of trying to predict winners in the market and the importance of avoiding competitive buying.
While acknowledging that Berkshire may not deliver the eye-popping performance of its past, Buffett assured shareholders that it remains a safe place to park their cash. He explained that the lack of attractively priced acquisition targets has limited the company’s ability to make a significant impact on its results. However, Buffett reassured investors that Berkshire is prepared to take advantage of opportunities when the stock market experiences turmoil.
Investor Cole Smead of Smead Capital Management echoed Buffett’s sentiments, stating that the company is ready to make strategic purchases when the market becomes rational. He also warned about the dangers of Wall Street, likening it to a den of thieves who sell whatever they can.
Munger, Buffett’s longtime partner, passed away in November 2021 at the age of 99. Buffett expressed his gratitude for Munger’s role in shaping Berkshire Hathaway into the conglomerate it is today. He acknowledged Munger’s humility and willingness to let Buffett take credit for their joint achievements. Buffett described their relationship as part older brother, part loving father, with Munger providing guidance and support throughout their journey.
Munger’s death served as a reminder that Berkshire will eventually have to move forward without Buffett at the helm. The company has established a succession plan, with vice chairman Greg Abel slated to replace Buffett as CEO. Abel has been overseeing Berkshire’s noninsurance businesses since 2018 and is considered ready to take on the role. However, analysts question whether Abel will be willing to commit a significant amount of capital during a financial panic.
Buffett also addressed Berkshire’s performance in various sectors, highlighting the success of its insurance businesses and the disappointment in its utilities and BNSF railroad. He reiterated his intention to hold onto its stakes in Occidental Petroleum and five large Japanese trading houses, emphasizing that he has no plans to acquire the oil producer outright.
Berkshire reported a profit of $37.57 billion in the fourth quarter, more than double the previous year’s figure. However, Buffett cautioned investors to focus on the company’s operating earnings, which exclude investments. Berkshire’s operating earnings saw a 28% increase, surpassing analysts’ predictions.
Despite its strong financial performance, Berkshire continues to accumulate cash due to the lack of attractive investment opportunities. Buffett mentioned the acquisition of the remaining 20% of the Pilot truck stop business, which faced complications and legal disputes. He emphasized the importance of dealing with trustworthy partners and the difficulty of discerning sincerity and empathy.
Warren Buffett’s annual letter is highly anticipated by investors and widely regarded for its insights and wisdom. As Berkshire Hathaway’s stock reaches new heights, shareholders eagerly await the company’s future under the leadership of Greg Abel and Ajit Jain, who oversees the insurance businesses. The upcoming shareholder meeting in May may provide further clarity on their roles within the company.
In conclusion, Warren Buffett’s annual letter pays tribute to his late partner Charlie Munger and offers valuable advice to shareholders. Despite the challenges posed by a lack of attractive investment opportunities, Buffett remains confident in Berkshire Hathaway’s long-term prospects. As the company prepares for a future without Buffett at the helm, investors eagerly anticipate the next chapter in Berkshire’s storied history.
