Warren Buffett mourns Charlie Munger, says Berkshire's 'eye-popping' performance is over
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Warren Buffett mourns Charlie Munger, says Berkshire's 'eye-popping' performance is over
(Reuters) - Warren Buffett on Saturday moved to reassure investors that his conglomerate Berkshire Hathaway (BRKa.N), opens new tab would serve them well over the long term, even as he mourned the recent passing of his longtime second-in-command Charlie Munger.
In his widely-read annual letter to Berkshire shareholders Buffett said his more than $900 billion conglomerate has become a fortress that could withstand even an unprecedented financial disaster.
"Berkshire is built to last," Buffett wrote.
Still, Buffett tempered expectations for Berkshire's stock price, saying his Omaha, Nebraska-based company "should do a bit better" than the average American corporation, but that its huge size left "no possibility of eye-popping performance."
"There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others," Buffett wrote.
The letter was accompanied by Berkshire's financial results, including a record $37.4 billion operating profit and $96.2 billion net profit for all of 2023.
Berkshire's shares have risen by 4,384,748% since Buffett took over in 1965, or 19.8% compounded annually.
The Standard & Poor's 500 (.SPX), opens new tab, in contrast, gained a mere 31,223%, or 10.2% annually, though in recent years Berkshire has performed more like the index.
The 93-year-old Buffett assured investors that Vice Chairman and designated successor Greg Abel was "in all respects ready to be CEO of Berkshire tomorrow."
But the billionaire saved his most heartfelt words for Munger, who died in November at age 99.
Buffett called Munger the "architect" of Berkshire, with Buffett being only the "general contractor," and reminded investors how Munger pushed him to buy wonderful businesses at fair prices instead of fair businesses at wonderful prices.
Berkshire's "extreme fiscal conservatism," including a reluctance to pay inflated prices, is one reason Buffett let Berkshire's cash stake swell to a record $167.6 billion.
"In a way his relationship with me was part older brother, part loving father," Buffett wrote, referring to Munger. "Even when he knew he was right, he gave me the reins, and when I blundered he never--never--reminded me of my mistake."
Edward Jones analyst Jim Shanahan said Buffett "wouldn't have been as successful" without Munger.
STICKING TO ITS KNITTING
Cathy Seifert, a CFRA Research analyst who rates Berkshire "buy," said Buffett tried to show Berkshire's ability to withstand rocky shoals, after transforming it from a failing textile company into a colossus mirroring the broader economy.
"Nothing is perfect," she said. "He tried to show there is a succession plan, and Berkshire would stick to its knitting."
Buffett likened Berkshire's caution, with the stock market now routinely setting record highs, to an insurance policy against hasty, "dumb" business decisions that would irk Munger.
