Buffett posts record profit but
loses again to S&P
Associated Press
By JOSH FUNK 16 hours ago
OMAHA, Neb.
(AP) — Warren Buffett's Berkshire
Hathaway reeled in record profits in 2013 as its wide-ranging
businesses capitalized on the improving U.S. economy, though its
performance again failed to keep pace with the surging S&P
500.
"On the operating front, just about
everything turned out well for us last year — in some cases very well,"
Berkshire's chairman and CEO wrote in his annual letter to shareholders
released Saturday.
Buffett touted performance gains at auto insurer
Geico and in its "Powerhouse Five" — a group of non-insurance
businesses including Burlington Northern Santa Fe railroad and electric utility
MidAmerican Energy that posted pretax earnings of $10.8 billion for 2013, up
nearly $760 million year-over-year. In total, Berkshire
owns roughly 80 subsidiaries, including clothing, furniture and jewelry firms.
It also has major investments in such companies as Coca-Cola Co. and Wells
Fargo & Co. In 2013 Berkshire spent nearly
$18 billion to buy NV Energy and about half of foodmaker H.J. Heinz.
Buffett's preferred measure of Berkshire's performance is the growth in book value — its
assets minus liabilities. By that measure, Berkshire
gained a substantial 18.2 percent in 2013, but couldn't match the S&P 500's
32.4 percent run-up. That marks the fifth straight year that the company has
underperformed the S&P. But in his letter, Buffett noted that over the full
six-year market cycle — which would include the 2008 rock-bottom market year —
the Omaha, Neb., company outperformed the benchmark index.
"Through full cycles in future years,
we expect to do that again," Buffett wrote. "If we fail to do so, we
will not have earned our pay. After all, you could always own an index fund and
be assured of S&P results."
Buffett said he and Vice Chairman Charlie
Munger will continue to look for other investments and acquisitions that allow
them to bet on the future of the American economy.
"Charlie and I have always considered
a bet on ever-rising U.S.
prosperity to be very close to a sure thing," Buffett wrote. "Indeed,
who has ever benefited during the past 237 years by betting against America?"
Buffett said Berkshire
has a solid foundation that includes roughly $48 billion cash and owning 8 ½
businesses big enough to be part of the Fortune 500 if they were separate
companies.
Berkshire earned $19.48 billion last year on total
revenue of $182.15 billion. That's up from $14.82 billion in profit and revenue
of $162.46 billion in 2012. Strong gains in the value of its investments and
derivative contracts added $4.3 billion to the results, up from $2.2 billion
the previous year. That included gains Berkshire recorded last fall as it
redeemed warrants for General Electric and Goldman Sachs stock and Mars and
Wrigley repaid Berkshire for an investment
made during the financial crisis.
Buffett has said Berkshire's operating
earnings are a better measure of how the company is performing in any given
period, because those figures exclude the value of derivatives and investments,
which can vary widely even though Berkshire
rarely sells them.
Operating earnings grew to $15.1 billion,
or $9,211 per Class A share, in 2013. That's up from $12.6 billion, or $7,629
per Class A share, in 2012. Four analysts surveyed by FactSet expected full-year
operating earnings per share of $9,106.50 per Class A share.
Warren Buffett
Warren
E. Buffett is the chairman & CEO for Berkshire
Hathaway Inc., and an adviser for the Nuclear
Threat Initiative (think tank), and a life trustee at the Urban Institute (think tank).
Note: Carnegie
Endowment for International Peace (think tank)
was a funder for the Nuclear Threat Initiative
(think tank).
Jessica Tuchman Mathews
is a director at the Nuclear Threat Initiative
(think tank), the president of the Carnegie
Endowment for International Peace (think tank), a director at the
American Friends of Bilderberg
(think tank), was an honorary trustee at the Brookings
Institution (think tank), and a 2008 Bilderberg conference participant (think tank).
Ed Griffin’s interview
with Norman Dodd in 1982
(The investigation into
the Carnegie Endowment for International Peace uncovered the plans for
population control by involving the United States in war)
Foundation
to Promote Open Society was a funder for Carnegie
Endowment for International Peace (think tank), the Urban Institute (think tank), and the
Brookings Institution (think tank).
George Soros
was the chairman for the Foundation to
Promote Open Society.
Lois
Dickson Fitt is a life trustee at the Urban
Institute (think tank), and Susan
E. Rice’s mother, was a guest scholar at the Brookings Institution (think tank), and a
director at McGraw Hill Financial Inc.
Standard
& Poor's is a subsidiary of McGraw
Hill Financial Inc.
Douglas
L. Peterson is the president & CEO for McGraw Hill Financial Inc., and was the president of Standard & Poor's.
S&P 500 index rises 4.3% in
February (Past Research for Standard
& Poor's)
Sunday, March 2, 2014
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