Warren Buffett, in his recent annual letter to Berkshire shareholders, sought to reassure investors about the conglomerate’s enduring strength following the passing of his long-time associate Charlie Munger.
He expressed confidence in Berkshire Hathaway’s resilience, describing it as a fortress capable of weathering even unprecedented financial challenges, asserting, “Berkshire is built to last.”
While acknowledging Berkshire’s potential for sustained performance, Buffett cautioned against expecting spectacular stock price increases, noting the limited number of companies capable of significantly impacting Berkshire’s trajectory.
Despite this, Berkshire reported impressive financial results, including a record operating profit of $37.4 billion and a net profit of $96.2 billion for 2023.
Buffett highlighted Berkshire’s remarkable growth under his stewardship since 1965, with shares rising by 4,384,748%, outpacing the Standard & Poor’s 500.
He expressed confidence in Greg Abel, Berkshire’s Vice Chairman and designated successor, affirming his readiness to assume the CEO role.
However, Buffett reserved his most poignant words for Munger, whom he credited as the “architect” of Berkshire.
Reflecting on Munger’s influence, Buffett emphasised their shared philosophy of investing in exceptional businesses at fair valuations, a principle that shaped Berkshire’s success.
Buffett underscored Berkshire’s fiscal conservatism, attributing its substantial cash reserves of $167.6 billion to Munger’s prudent approach.
He likened their relationship to that of an older brother and a supportive father, emphasising Munger’s role in his development as an investor.
Analysts noted Buffett’s emphasis on Berkshire’s resilience amidst market fluctuations, portraying it as a testament to his disciplined approach.
Buffett’s cautionary stance towards market excesses and his commitment to Berkshire’s core businesses resonated with investors.
The letter also highlighted Berkshire’s diverse portfolio, including investments in companies like Apple, American Express, Bank of America, and Coca-Cola, which contributed to its substantial net profit.
Buffett’s warning about overpriced stocks and his strategic selling of equities underscored his conservative approach.
While Buffett’s letter didn’t mention Todd Combs and Ted Weschler, slated to oversee Berkshire’s investments in the future, it reaffirmed Berkshire’s commitment to its core businesses and long-term investment philosophy.
As Berkshire navigates a post-Munger era, Buffett remains focused on upholding the conglomerate’s legacy of prudent investment and sustained growth.