On the evening of February 24th Beijing time, Berkshire Hathaway, a subsidiary of Buffett, released its annual report for the fiscal year 2023, as well as Buffett's annual shareholder letter.
This is Buffett's first shareholder letter since Munger passed away in November last year, and it is also the 46th shareholder letter in Buffett's life at the age of 93.
Warren Buffett stated in his annual letter to Berkshire Hathaway shareholders that Charlie Munger, who passed away in November last year, was the architect of Berkshire Hathaway, while he himself was the general contractor of the company, working day after day to build Munger's vision. To some extent, Munger's relationship with him is both a brother and a loving father.
He also stated that Reg Abel is prepared in all aspects to serve as the CEO of Berkshire Hathaway tomorrow.
As of Friday's close, Berkshire Hathaway A rose 0.55%, with a market value of $908.18 billion.
Buffett pays tribute to Munger: he is both a brother and a father, an architect of Berkshire Hathaway
The following is the original text of Buffett's handwritten letter:
Charlie Munger passed away on November 28th, only 33 days before his 100th birthday.
Despite being born and raised in Omaha, he spent 80% of his life living elsewhere. Therefore, it was not until he was 35 years old in 1959 that I first met him. In 1962, he decided to engage in financial management.
Three years later, he told me - yes! I made a foolish decision to buy the controlling stake in Berkshire. However, he assured me that since I had taken action, he would tell me how to correct my mistake.
In what I am going to talk about next, please remember that Charlie and his family did not invest a single penny in the small investment partnership I was managing at the time, and I used their money to purchase Berkshire. Furthermore, we never expected Charlie to own stocks in Berkshire.
Even so, Charlie immediately advised me in 1965, "Warren, don't have the idea of buying a company like Berkshire anymore. But now that you have control of Berkshire, buy those excellent businesses that can be bought at a fair price instead of continuing to search for those mediocre low-priced businesses. In other words, give up everything you learned from your hero Ben Graham.". It is effective, but can only be applied on a small scale After several unsuccessful developments, I followed his instructions.
Many years later, Charlie became my partner in running Berkshire, and as my old habits surfaced, he constantly pulled me back to reason. Until his death, he played this role and together with us, as well as those who invested in us early on, we ultimately achieved much better than what Charlie and I had dreamed of.
In fact, Charlie is now the "architect" of Berkshire Hathaway, while I am the "general contractor", building day after day for his vision.
Charlie never attempted to take credit for himself as a creator, but instead asked me to accept the award. To some extent, his relationship with me is both a brother and a loving father. Even if he knows he is right, he will give me control, and when I make mistakes, he never - never - reminds me of my mistakes.
In the real world, great architecture is associated with architects, and those who pour concrete or install windows will soon be forgotten. Berkshire has become a great company. Although I have been responsible for the construction team for a long time; Charlie should always be considered an architect.
Berkshire Hathaway's net profit for 2023 is approximately 690 billion yuan
In the fourth quarter of 2023, Berkshire Hathaway's net profit was $37.574 billion, compared to a profit of $18.08 billion in the same period last year; The net profit for the whole year of 2023 was 96.223 billion US dollars (approximately 690 billion yuan), with an expected profit of 40.821 billion US dollars and a net loss of 22.819 billion US dollars in the same period last year. Berkshire Hathaway's 2023 revenue was $364.482 billion, with a market expectation of $314.08 billion, compared to $302.089 billion in the same period last year. Berkshire Hathaway's cash reserves rose to a record high of $167.6 billion in the fourth quarter. Berkshire Hathaway stated that it used approximately $9.2 billion to repurchase stocks 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. Compared to the $1.1 billion in the third quarter, Berkshire's stock repurchases doubled last quarter to $2.2 billion, with a total repurchase amount of $9.2 billion for the year.
Buffett: Will indefinitely maintain investment in five Japanese companies including Itochu Corporation
Buffett stated that he expects to maintain investments in five Japanese companies, Itochu, Marubeni, Mitsubishi, Mitsui Corporation, and Sumitomo Corporation, indefinitely; It is expected to maintain investment in Western oil indefinitely.
As of the end of 2023, Berkshire Hathaway owns 27.8% of Western Oil's common stock. "We particularly appreciate the vast oil and gas resources owned by Western oil companies in the United States, as well as their leading position in carbon capture initiatives."
However, he emphasized that despite being very fond of its current holdings, Berkshire Hathaway still has no interest in acquiring or managing Western oil companies.
The investment situation in the Japanese stock market occupies a large amount of space in the letter. Berkshire Hathaway's investment in the Japanese stock market began on July 4, 2019, and currently continues to hold positions in five large Japanese companies, namely Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.
"After communicating with their management, we increased our holdings in all five companies last year. Berkshire Hathaway now holds approximately 9% of each of these five companies. Berkshire Hathaway also promised them that their shareholding will not exceed 9.9% in the future. Buffett believes that these five companies are very similar to Berkshire Hathaway's own business model and have a high degree of diversification.". At the same time, the policies of these companies are very shareholder friendly.
He said, "Since we started buying Japanese stocks, each of these five companies has reduced their outstanding shares at attractive prices. At the same time, compared to the typical situation in the United States, the management of these five companies is far less aggressive about their salaries."
In the letter, Buffett also revealed that considering the current size of Berkshire Hathaway, establishing a position through public market purchases requires considerable patience. "This process is like spinning a battleship. This is a significant disadvantage that we did not face in the early days of Berkshire Hathaway."
He stated that currently Berkshire Hathaway's total investment cost in these five companies is 1.6 trillion yen, and their year-end market value is 2.9 trillion yen. The Japanese yen has depreciated in recent years, with unrealized profits at the end of 2023 calculated in US dollars at 8 billion US dollars. However, due to holding a large amount of Japanese bonds, the depreciation of the yen also resulted in Berkshire earning $1.9 billion at the end of the year.
According to the annual report released by Berkshire Hathaway, as of December 31, 2023, approximately 79% of the total fair value of Berkshire Hathaway equity investments were concentrated in Apple, Bank of America, American Express, Coca Cola, and Chevron.