Last night, Berkshire Hathaway, a subsidiary of Warren Buffett, released its latest financial report.
The financial report shows that Berkshire Hathaway had a net profit of $37.574 billion in Q4 2023, doubling from $18.08 billion in the same period last year. This includes a paper return of approximately $29 billion from Buffet's stock portfolio of approximately $350 billion, with stock returns mainly coming from the largest holdings of Apple, accounting for approximately half of the portfolio. Throughout the year, Berkshire achieved a net profit of $96.223 billion and a net loss of $22.759 billion in 2023.
As of the end of the fourth quarter of last year, Berkshire's cash reserves rose to a record high of $167.6 billion, an increase of $10.6 billion from $157 billion in the third quarter.
So far this year, Berkshire Hathaway's B-share market has risen by over 15%, easily outperforming the S&P 500 index (7%), with a total market value of $908.2 billion, making it the only non-technical stock among the top 7 US stock market cap companies.
The total holdings of the stock god were nearly 350 billion US dollars. The quarterly financial report showed that its investment and derivative gains (mostly unrealized gains) skyrocketed to 29.1 billion US dollars, resulting in a loss of 23.5 billion US dollars in the third quarter and a profit of 11.5 billion US dollars in the same period last year. Among them, Apple's stock price rose by about 12% during the reporting period, creating over $20 billion in paper revenue for Berkshire.
It is worth noting that Berkshire emphasized in its financial report that disclosing unrealized gains is only required to comply with accounting standards, and the company believes that investment gains/losses for any specific period are "meaningless".
Based on Berkshire's disclosed stock holdings, approximately 79% of the portfolio's fair value is concentrated in five companies: Apple ($174.3 billion), Bank of America ($34.8 billion), American Express ($28.4 billion), Coca Cola ($23.6 billion), and Chevron ($18.8 billion)
It is worth noting that at fair value, its stake in Western Oil increased from $12.2 billion at the end of 2022 to $14.5 billion. Media analysis shows that Berkshire Hathaway has been increasing its holdings in energy stocks in recent quarters, with only two of the top ten holdings in the fourth quarter being energy stocks, Chevron and Western Oil.
Buffett pointed out that as of the end of 2023, Berkshire owns 27.8% of Western Oil's common stock and also holds stock warrants, allowing for a significant increase in ownership at a fixed price for over five years. However, Berkshire is not interested in acquiring or managing Western Oil.
Buffett is particularly optimistic about the significant oil and gas resources held by Western oil companies in the United States, as well as their leading position in carbon capture. Although the economic feasibility of this technology remains to be verified, both activities are highly in line with the interests of the United States. Therefore, Buffett expects Berkshire Hathaway to maintain its investment in Western oil indefinitely.
In addition, Buffett stated in his annual letter to Berkshire shareholders that Charlie Munger, who passed away in November last year, was the architect of Berkshire Hathaway, while he himself was the company's general contractor. He also stated that Reg Abel is prepared in all aspects to serve as the CEO of Berkshire Hathaway tomorrow.
Lithium futures price returns to over 100000 yuan/ton
Since Wednesday, lithium carbonate futures have bottomed out and rebounded. As of Friday's close, the main contract of lithium carbonate futures, 2407, has closed at 101800 yuan/ton, up 4.3%.
According to Wang Bolong, an analyst at the New Energy Group of Haitong Futures Investment Consulting Department, stimulated by market rumors such as "there is a gap of several million tons between the total slag account and the actual total amount in Yichun, Jiangxi" and "all lithium salt factories with slag production are not allowed to start production", lithium carbonate futures hit the limit up at one point on Wednesday, with A-shares linked to it. Perhaps due to concerns about the upstream supply side, market sentiment rose, and the lithium carbonate sector turned red overall, The price fell slightly in the afternoon, but the authenticity of this rumor is difficult to prove. The LC2407 contract immediately fell and closed at 96900 yuan/ton. In the following two days, lithium carbonate futures continued their upward trend.
Wu Jiang, senior analyst at Guotou Anxin Futures, believes that the rebound of lithium carbonate futures is mainly due to several reasons: firstly, after a significant drop in prices throughout 2023, the entire industry chain needs to adapt to new price levels. The decrease in downstream costs is improving demand, and the decline in mining product prices and profit levels will inevitably lead to a decline in production enthusiasm; Secondly, there has been a significant increase in supply disruptions, especially since the beginning of the new year when environmental issues related to slag treatment in the production of lithium mica in Jiangxi have occurred continuously, and the production of Mt Cattlin from Australia will be reduced from 205000 tons in 2023 to 130000 tons in 2024; Thirdly, there is still some uncertainty in terms of demand. Recently, the domestic stable growth trend has continued, such as the effective improvement of household consumption power, coupled with the increase in industry support policies, new energy vehicles may improve during the peak consumption season. "Under the influence of the above themes, lithium carbonate futures have shown a significant rebound."
Liu Zhongying, a researcher at Jinrui Futures Lithium Carbonate, believes that the main reason for the rebound in lithium carbonate futures on Wednesday is due to market rumors that Jiangxi's environmental inspection in April may involve the disposal of waste from lithium salt plants, which may result in some companies being restricted from starting operations. Subsequently, there were rumors of large factories increasing production in March, as well as Australian mining MT Cattlin announcing a production reduction of about 9500 tons of LCE. There were frequent positive news, and the market was driven up by emotions and funds.
Fundamentals maintain a weak supply-demand pattern
The spot market prices have remained stable recently, with a significant increase in lithium carbonate futures prices on Wednesday, driving spot prices up slightly. According to SMM, the current spot price of battery grade lithium carbonate is 96300 yuan/ton, and the price of industrial grade lithium carbonate is 89100 yuan/ton. The fundamentals maintain a weak supply-demand pattern, and salt factories are gradually resuming work. Due to the impact of low lithium prices, some salt factories in Jiangxi have a low willingness to resume production and start operations. Due to a small replenishment of inventory in the downstream market before the new year, the current enthusiasm for purchasing positive electrode materials is not high, and bulk orders are being purchased on dips.
Wang Bolong stated that since the listing of lithium carbonate futures, lithium prices have often been disturbed by market news. It is worth noting that the rumors of environmental protection issues in the Yichun lithium mine mining can have such a significant impact on the market, mainly because Jiangxi Province is the main production area of lithium carbonate in China, and the monthly total production of lithium mica extraction in this area accounts for about 30% of the national total. Naturally, changes in production in the main production area will also have an impact on the futures price. Prior to the holiday, the production plan for lithium concentrate at Greenbushes Lithium Mine, the world's largest lithium mine, was also lowered in 2024, and the concentrate pricing in its long-term underwriting pricing model was changed from "Q-1" to "M-1". Affected by the above news, coupled with the continuous fermentation of Yichun environmental protection news, the price of lithium carbonate futures has begun to rise rapidly. "The intraday market rally driven by essay writing will not last long."
There has been no significant change in the overall fundamentals. On the supply side, the weekly operating rate has continued to decline since the beginning of the year. Less than 50% of lithium salt plants that were shut down for maintenance during the Spring Festival holiday have resumed production. It is expected that production will gradually recover in the short term, and weekly production and operating rate will decline simultaneously. Correspondingly, spot inventory is high and continues to increase month on month. Warehouse receipts and inventory pressure have formed a double suppression on prices. On the demand side, the situation has not improved yet. Currently, there is a clear contradiction between the upstream and downstream of the lithium carbonate industry chain. The upstream has a strong willingness to raise prices for low-priced lithium salts and is unwilling to sell them at a profit. However, downstream enterprises only need to maintain safety production levels in order to maintain essential procurement, and their willingness to purchase is weak. They are still waiting for further decline in market prices and the certainty of orders landing Wang Bolong believes that the main difference between the bullish and bearish sides of the market is that the bulls believe that downstream demand for active replenishment after the holiday is expected, especially for positive electrode material factories with lower inventory levels before the holiday; Correspondingly, the bears believe that the production reduction of lithium salt plants may be nearing an end, and the sustained weakness of the new energy vehicle consumption market and the bottleneck of penetration rate are difficult to break through in the short term. The industry price war is reappearing, and under the pattern of weak demand and high inventory, short-term market fluctuations cannot be a sign of a fundamental reversal trend. "The subsequent prices will maintain a weak oscillation."
Wu Jiang believes that the sustainability of this round of rebound may be extended due to the time required for both confirmation and falsification during the peak consumer season. In addition, the price has dropped to 80000-90000 yuan/ton, and both mining and spot prices have stopped falling, which is significantly different from the almost daily decline in spot prices in the second half of last year. The price movement mainly revolves around expected changes, and there has been a significant increase in supply disturbances since the beginning of the year, Especially in Australia, where the mining sector accounts for the largest proportion, a quarter of the mines have experienced changes in production plans. Market sentiment has been significantly rebounded due to increased supply disruptions and demand uncertainty. The game surrounding peak season expectations and further supply disruptions is strengthening, while the pressure brought by excess is not significant in the first half of the year.
In the medium to long term, Wu Jiang believes that the judgment of excess supply of lithium carbonate is still valid in the long term. The destocking and capacity reduction of the lithium carbonate industry chain will continue in the next two years. There is overcapacity in the middle and downstream battery links and new energy vehicle manufacturers, and the fierce price war is still ongoing. Recently, BYD's main models have been reduced to 70-80000 yuan. In 2023, the industrial chain will reflect excess expectations more in the form of prices, but starting in 2024, more feedback will be provided on the new industrial chain situation in the form of production capacity and overall capital outflow. In this process, the game will strengthen, and cost disadvantaged lithium salt factories, battery factories, vehicle factories, and mining factories will bear more cash flow pressure and exit the market in order to declare the end of this round of clearing of the industrial chain. "In the middle of the year, especially around May Day, it will be an important time point for lithium carbonate to return to its downward trend, with resistance to price rebound mainly ranging from 120000 to 130000 yuan/ton."
Liu Zhongying believes that the rebound of lithium carbonate this time is difficult to sustain, and the space above is relatively limited. Recently, the market has been sensitive to bullish information, but considering that most of the new mining projects are in high volume in the first half of the year, there is still room for a decline in mining prices. The cost center is expected to continue to shift downwards, coupled with high inventory factors, the upward space for lithium prices is limited, and the surplus pattern for the whole year has not changed. Short term lithium carbonate is expected to oscillate widely, with a core price range of 92000-108000 yuan/ton. We need to continue to monitor the production capacity investment at the mining end and whether it can be fulfilled during the peak demand season in March and April.