More Nation
February 28, 2015
Billionaire investor Warren Buffett, shown here in 2011, released his annual letter to Berkshire Hathaway shareholders for his 50th year helming the company.
Warren E. Buffett released his annual letter to shareholders Saturday, expounding on business, reflecting on his 50 years assembling one of the world’s largest companies and adding to the growing tome of folk wisdom that has made him the rare beloved billionaire.
In it, he repeated previous statements that the Berkshire board had identified his successor as chief executive, but again did not reveal that person’s identity.
“Both the board and I believe we now have the right person to succeed me as CEO – a successor ready to assume the job the day after I die or step down,” Buffett wrote. “In certain important respects, this person will do a better job than I am doing.”
But Berkshire’s vice chairman, Charlie Munger, writing in a separate letter to mark Buffett’s 50th year at the helm of Berkshire Hathaway, suggested that one of two men was most likely to get the job.
Ajit Jain, an insurance executive at Berkshire, and Greg Abel, the head of Berkshire’s energy companies, are both “proven performers who would probably be underdescribed as ‘world-class,’” Munger wrote.
Rare criticism
Matthew Rose, head of the Burlington Northern Santa Fe railroad company, who had previously been mentioned as a potential successor to Buffett, was not mentioned in the letters. Buffett’s son, Howard, will become non-executive chairman when his father no longer serves in that role.
Moreover, Buffett reserved some rare criticism for the railroad company’s performance last year.
“During the year, BNSF disappointed many of its customers. These shippers depend on us, and service failures can badly hurt their businesses,” Buffett wrote.
“BNSF is, by far, Berkshire’s most important noninsurance subsidiary and, to improve its performance, we will spend $ 6 billion on plant and equipment in 2015,” Buffett wrote.
For the most part, however, the tone was relentlessly optimistic.
“In effect, the world is Berkshire’s oyster – a world offering us a range of opportunities far beyond those realistically open to most companies,” he wrote, discussing how Berkshire’s size gave it the capacity to invest in almost any new business.
Long term not as rosy
“The bad news is that Berkshire’s long-term gains – measured by percentages, not by dollars – cannot be dramatic and will not come close to those achieved in the past 50 years,” he wrote. “The numbers have become too big. I think Berkshire will outperform the average American company, but our advantage, if any, won’t be great.”
Last year, once again, Berkshire Hathaway shares surpassed the Standard & Poor’s 500 index, rising 27 percent in 2014 compared with a gain of 13.7 percent for the S&P.
No comments:
Post a Comment