Warren Buffett, Chairman and CEO of Berkshire Hathaway.
David A. Grogan | cnbc
Warren Buffett took control Berkshire Hathaway in 1965, and nearly six decades later the “Oracle of Omaha” turns 93 on Wednesday, his group today is stronger than ever.
Berkshire’s shares have soared to an all-time high on record operating profit, making it the largest non-tech company by market capitalization. Buffett has been extremely active in the past year, wowing his followers with a number of smart moves ranging from buying underappreciated Japanese stocks to deftly controlling the rise in interest rates.
David Kass, a finance professor at the University of Maryland’s Robert H. Smith School of Business, who once hosted a private luncheon for his students and Buffett, said, “He’s still at the top of his game. His mental acuity is as good as ever.” Kind of fast.”
Buffett stood out as one of the few investors who managed to take advantage of higher rates, thanks to his mountain of cash — $147 billion at the end of June. Their huge cash pile, which was a cause for concern at times, is now yielding adequate returns with short-term rates above 5%.
Meanwhile, the veteran investor has remained focused on his favorite stocks Apple, which now accounts for half of Berkshire’s equity portfolio after its 40% rally this year. Buffett has compared the iPhone maker to a consumer products company and said he is also attracted by its large buyback programs. His Apple bets have earned Berkshire more than $100 billion since 2016.
‘Unprecedented’ investment
Buffett also added to his stake in five Japanese trading houses earlier this year, a move that led Chamath Palihapitiya to call him “the GOAT.” Buffett also traveled to Japan with his successor, Greg Abel, for the first time in more than 11 years, to meet with the heads of these companies to emphasize his support.
“It’s unprecedented in the sense that I’m not aware of any major investors, hedge managers investing in Japan,” Kass said. “The country has been in a deflationary environment for decades, and these companies were being ignored there.”
Itochu, Marubeni, Mitsubishi, mitsui And Sumitomo The group has a similar structure to Berkshire, and they have been stable dividend payers and earnings producers. Social Capital’s Palihapitiya said what makes the trade so brilliant is how Buffett is able to hedge currency risk by selling Japanese debt and then pocketing the difference between dividends and bond coupon payments from the investment.
a born leader
The last time shareholders heard from Buffett was at Berkshire’s annual meeting in May, where the investment icon conducted a six-hour marathon of questions with his longtime business partner Charlie Munger. He touched on every top topic for investors from the banking crisis to recession risks and even crypto.
Shareholders Warren Buffett and Charlie Munger look on from the overflow room during Berkshire Hathaway’s annual meeting in Omaha, Neb., on Saturday, May 6, 2023.
Rebecca H. Gratz | AP
“His delivery and his intellectual clarity at the last shareholder meeting were amazing, at a time when most executives could have retired,” said Macrae Sykes, portfolio manager of the actively managed Gabelli Financial Services Opportunities ETF, which is Berkshire’s largest holding. .
“Their presence alone really demands operational accountability and alignment with the brand. I think that can’t be underestimated,” Sykes said.
Munger, Berkshire’s vice chairman, turned 100 on New Year’s Day.
unmatched track record
Buffett’s $800 billion conglomerate, which spans 40 industries and 60 companies, boasts The average annual return of the S&P 500 doubled Since Buffett took back control for the first time in the LBJ years.
Berkshire’s compound annual return from 1965 to 2022 was 19.8%, compared to 9.9% for the S&P 500. This is a total return of 24,708% versus 3,787,464% for the benchmark. Over the years, Buffett’s smart moves and patient value philosophy have turned many Berkshire shareholders into millionaires.
Kass said, “His preferred holding period, in his words, is forever. He still has this infinite time horizon, even at age 93.”
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