Thanks to its huge collection of businesses — from insurance to railroads to candy — Warren E. Buffett’s Berkshire Hathaway is often seen as a barometer for the American economy.
And in that respect, its performance last year mirrored the country’s economic performance as a whole.
Berkshire reported on Saturday that it earned $45.2 billion for 2020, down 48 percent from the previous year, while its operating earnings fell. But while the pandemic had hurt many of its business lines, its profits rose 23 percent in the fourth quarter, as its stock investments were bolstered by soaring markets.
Among the biggest winners in Berkshire’s vast investment portfolio was its 5.4 percent stake in Apple, whose shares have been among the top market winners over the past year. In his annual letter to investors that accompanied the company’s financial results, Mr. Buffett noted that the iPhone maker was now one of his company’s three biggest assets, with its stake worth $120 billion as of Dec. 31. (Berkshire calculates that it paid $31 billion for its holdings.)
But Mr. Buffett also admitted to a big mistake: the $37.2 billion that he paid in 2016 to buy Precision Castparts, a maker of airplane parts, in what was Berkshire’s biggest-ever takeover. The company has failed to live up to expectations, leading up to an $11 billion accounting write-down that Mr. Buffett himself called “ugly.”
“No one misled me in any way,” he wrote in the letter. “I was simply too optimistic”
In the annual letter — which Mr. Buffett’s legions of devotees read every year, a tradition now in its fifth decade — the billionaire offered his thoughts on the company’s performance. But he made relatively few grand pronouncements on issues of global import, from the trillions spent propping up economies around the world to the 2020 presidential election results. Nor did the letter touch much on a perennial topic that the 90-year-old Mr. Buffett is asked about: who will succeed him as chief executive of Berkshire.
Mr. Buffett did offer a quick reprise of his regular encomiums to the United States, asserting, “There has been no incubator for unleashing human potential like America.”
While he allowed that progress toward improving the country has been “slow, uneven and often discouraging,” he added, “Our unwavering conclusion: Never bet against America.”
Michael J. de la Merced
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