Tax cuts boost Berkshire Hathaway book value in 2017

Randal Sanchez
February 25, 2018

Buffett said Berkshire would stick with a 'simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own'.

Buffett concluded with a little advice to fellow investors: 'Though markets are generally rational, they occasionally do insane things, ' he wrote.

Berkshire also posted a record $44.94 billion annual profit, though $29.1 billion stemmed from the slashing of the USA corporate tax rate, which reduced the Omaha, Nebraska-based conglomerate's deferred tax liabilities. Careful decisions and an aversion to debt and speculation has gotten the firm this far - and that's the course it'll stay on, he said.

Buffet said that a dearth of "sensible" valuations led it to close nearly no takeovers of companies in 2017, adding that "price seemed nearly irrelevant to an army of optimistic purchasers".

"[Investing partner] Charlie [Munger] and I believe that from time to time Berkshire will have opportunities to make very large purchases", Buffett wrote. Van Damme is also a board member of Anheuser-Busch Inbev and Restaurant Brands International.

Buffett has always been a critic of the high fees charged by hedge fund managers, especially when they continue to charge those fees during periods of poor performance.

Buffett had a mixed reaction to the tax overhaul passed by Congress a year ago.

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Buffett in 2007 bet a founder of the asset management company Protégé Partners LLC $1 million that a Vanguard S&P 500 index fund would outperform several groups of hedge funds over a decade.

Buffett has always been highly critical of the high fees charged by hedge fund operators. "Fees never falter", he wrote.

In the departure from past years, Buffett refrained from talking about the direction of the country or economy.

Buffett supported President Trump's Democratic rival, Hillary Clinton, during the 2016 election.

Gregory Abel, who had run Berkshire Hathaway Energy, is now overseeing Berkshire's non-insurance businesses such as the BNSF railroad and Dairy Queen ice cream, all of which employ 330,000 people, while insurance specialist Ajit Jain oversee the Geico auto insurer and other insurance businesses, employing 47,000.

In his annual letter to Berkshire shareholders, Buffett said finding things to buy at a "sensible purchase price" has become a challenge and is a major reason Berkshire is awash with $116 billion of low-yielding cash and government bonds.

"Berkshire's blood flows through their veins", Buffett wrote.

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