“To attain that result, we invested about $5.8 billion during the year in capital expenditures, a sum far and away the record for any American railroad and almost three times our annual depreciation charge”, Berkshire wrote in its letter. Buffett focused on the company’s 6.4% gain in book value – the financial metric that he’s always used as an indicator of his conglomerate’s progress.
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Babies born in the United States today are actually the “luckiest crop in history”, he added.
Buffett defended the lending practices at its mobile home unit, Clayton Homes, and Berkshire’s association with the 3G Capital investment firm.
Warren Buffett wants shareholders to know that the leaders at two units of his Berkshire Hathaway Inc. are in his good graces after coming under scrutiny.
Buffett also praised the work of top insurance executives Ajit Jain and Tad Montross, and called the hiring of Todd Combs and Ted Weschler, who each handle $9 billion of investments, “one of my best moves”.
For example, Buffett says it wouldn’t make much sense to require that 11 million people keep working in farming as they did in 1900 before tractors and countless other innovations.
He assured shareholders that Berkshire’s businesses will adapt just as the company did when its original Berkshire Hathaway textile operation failed. Its insurance float was approximately $88 billion by the end of the year.
Berkshire recently bought stocks of two oil-industry companies for its investment portfolio, indicating that Mr. Buffett believes there are buying opportunities with oil at low prices.
Berkshire expects on Monday to close its acquisition of Procter & Gamble Co’s Duracell battery business, in exchange for P&G shares that Berkshire now owns.
The 85-year-old Buffett has said he has no plans to retire, and he offered no new hints about his future in Saturday’s letter – other than to joke about being 100-years-old when he announces Geico’s latest successes.
He sought to differentiate Clayton from what he said were the destructive and corrupt practices that contributed to the Great Recession of 2008.
“That may not sound impressive”, Buffett said. Berkshire’s portion of the Big Four’s 2015 earnings amounted to $4.7 billion, he said.
Berkshire’s insurance companies, which include Geico and General Reinsurance, recorded a $306 million underwriting profit, up from $191 million.
The Omaha, Nebraska-based company also has well over $US100 billion of equity investments, including American Express Co, Coca-Cola Co, IBM Corp, Kraft Heinz and Wells Fargo & Co.
“Woody Allen once explained that the advantage of being a bisexual is that it doubles your chance of finding a date on Saturday night”, Buffett said.
Despite Buffett’s wide array of topics in his 30-page letter – including that he has yet to use the mobile matchmaking service Tinder – there were several topics that were notably absent.
As to succession, Mr. Buffett noted his advancing age and that of vice chairman Charlie Munger, 92.
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There was no mention of the decrease in oil prices but the annual report of the Berkshire indicated that the decreased oil prices will affect the overall profile of the BNSF in 2016.
