Investors expecting radical shifts in strategy from Warren Buffett and Charlie Munger in Berkshire Hathaway's 2018 shareholder letter were once again disappointed
Investors expecting big changes in tone, or radical shifts in strategy from Warren Buffett and Charlie Munger in Berkshire Hathaway's 2018 shareholder letter were once again disappointed. Berkshire didn't unveil a dividend, both believe the whole of the conglomerate is worth more than the sum of its component parts, and they didn't brag that hunting for acquisitions in today's market was easy.
In 2018, Berkshire's insurance businesses returned to profitability and ended the year with a record $122 billion in float. Its railroad, utilities and energy business saw operating profits rise 30% to $7.8 billion and the bevy of other businesses that Abel was tasked with overseeing generated a further $9.3 billion in operating earnings, up 29%.
According to him, book value has lost relevance because Berkshire's gargantuan $173 billion investment portfolio is a fraction of the firm's overall assets, which are now weighted to operating businesses, led by insurance. New accounting rules, he argued, undervalue these operating businesses. Most important, Berkshire expects to repurchase a ton of stock, likely at prices well above book value.
The unrealized losses may prove the point. There are few, if any, entities on the planet that could bear such downward marks. In fact, Berkshire still saw its overall cash and book value grow for the year.
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