Berkshire Hathaway says tax law gives it $29-billion boost

Alicia Cross
February 25, 2018

The long-time bull on USA companies and the economy issued his latest letter to Berkshire Hathaway Inc shareholders on Saturday.

Morgan Stanley estimates that Berkshire could see an earnings boost of as much as $35 billion in last year's final quarter.

Berkshire on Saturday reported a record quarterly and annual profit, benefiting from a lower USA corporate income tax rate.

The renowned investor used his letter to shareholders to blame high valuations for Berkshire's recent "drought" of deals but revealed that Donald Trump's tax cuts had provided a $29bn boost to its war chest to help make "huge acquisitions" this year.

"If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it's a bit like telling your ripening teenager to be sure to have a normal sex life", Buffett said.

Berkshire's cash pile swelled to $116 billion from $109 billion in the third quarter.

Berkshire CEO Warren Buffett said he expects the company's insurers will have to pay about $3 billion in claims related to the hurricanes that struck Texas, Florida and Puerto Rico last fall.

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"In our search for new stand-alone businesses, 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, a sensible purchase price", wrote Buffett.

In last year's letter, Buffett said Jack Bogle, the Vanguard Group founder considered to be the father of indexing, was the person who had done the most for American investors.

Besides the statistics, here are two things we learned (or did not learn) from Buffett's letter to shareholders. Jain will now oversee all of the conglomerate's insurance businesses while Abel will oversee all of the conglomerate's non-insurance business operations.

Warren Buffett is 87 years old and has not named a successor yet.

In his much-awaited letter, always full of wisdoms and ideas on investment, the Oracle of Omaha warned that in any upcoming day, week or even year, stocks will be riskier - far riskier - than short-term U.S. bonds, warns Warren Buffett, the Oracle of Omaha.

The Oracle of Omaha made a winning 10-year bet with Protégé Partners in December 2007 that the S&P 500 would outperform a basket of fund of hedge funds. A willingness to look unimaginative for a sustained period - or even to look foolish - is also essential.

Berkshire owns more than 90 subsidiaries, including clothing, furniture and jewelry firms.

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