Billionaire investor Warren Buffett revealed his much-anticipated letter to Berkshire Hathaway shareholders on Saturday.
Buffett's letter to his company's shareholders, an annual exercise undertaken for more than 50 years, is a closely watched event on Wall Street as investors parse the statement for insights and wisdom on the economy and financial markets.
The entire letter can be found here.
Here are some of the key highlights from the 16-page letter:
- In 2017, Berkshire saw its net worth grow $65.3 billion, boosting its per share book value by 23 percent. Of the total, only $36 billion came from Berkshire's business operations while the remaining $29 billion was delivered when Congress rewrote the U.S. Tax Code.
- Buffett listed out fifteen common stock investments that at year-end had the largest market value. The stocks included, American Express, Apple Inc, Bank of America, The Bank of New York Mellon, BYD Co, Charter Communications, The Coca-Cola Co, Delta Airlines, General Motors, The Goldman Sachs Group, Moody's Corp, Phillips, Southwest Airlines, U.S. Bancorp and Wells Fargo.
- Buffett flagged risks associated with bonds. He said it is a terrible mistake for investors with long-term horizons – among them, pension funds, college endowments and savings-minded individuals – to measure their investment "risk" by their portfolio's ratio of bonds to stocks. Often, high-grade bonds in an investment portfolio increase its risk.
- Buffett said that the company's search for new stand-alone businesses continues. The key qualities we seek are durable competitive strengths, able and high-grade management, good returns on the net tangible assets required to operate the business, opportunities for internal growth at attractive returns; and, finally, it should be available at a sensible purchase price.
- Buffett, 87, did not divulge much details on his successor. In January, he had narrowed down the list of people who could replace him to two veteran Berkshire executives, Greg Abel and Ajit Jain. "You and I are lucky to have Ajit and Greg working for us," Buffett told shareholders at the end of the letter.