Warren Buffett
Gerard Miller | CNBC
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Warren Buffett, the 90-year-old “Omaha Oracle,” remains a staunch believer in the American dream, saying in the shareholder’s annual letter carefully “never bet against America.”
“In its short 232 years of existence … there has been no incubator to unleash human potential like America,” Berkshire Hathaway president and CEO wrote in a letter published Saturday. “Despite severe disruptions, our country’s economic progress has been astounding. Our unshakable conclusion: never bet against America.”
Buffett shared a fact in the letter to illustrate Berkshire’s American credentials. He said the conglomerate has the largest amount of assets in the US (property, plant and equipment) by value than any other company in the country.
“Berkshire’s depreciated cost of these domestic ‘fixed assets’ is $ 154 billion. Next on this list is AT&T, with $ 127 billion in property, plant and equipment,” he wrote.
The billionaire highlighted the two US companies wholly owned in Berkshire – BNSF Railway and Berkshire Hathaway Energy (BHE) – which earned $ 8.3 billion in 2020, despite a drop in demand amid the Covid-19 pandemic.
“The railroad carries about 15 percent of all non-local ton-miles (one ton of freight a mile) of goods moving in the United States, whether by rail, truck, pipeline, barge, or aircraft,” Buffett said. . “The history of the American railroad is fascinating. After about 150 years of frantic construction, diving, overbuilding, bankruptcy, reorganization and mergers, the railroad industry finally emerged a few decades ago as matured and streamlined.”
Buffett believes BHE will be a leader in providing clean energy in the future. BHE has begun a $ 18 billion effort to rework and expand a substantial portion of the outdated grid that now transmits electricity throughout the West, Buffett said.
“Unlike railways, our country’s electricity utilities need a massive renovation in which the final costs will be staggering,” Buffett said in the letter. “The effort will absorb all of BHE’s gains for decades to come. We welcome the challenge and believe that the added investment will be rewarded accordingly.”
Don’t overlook Middle America
Buffett reminded investors that miracles occur in Central America, despite a strong focus on coastal areas. After all, the legend started his conglomerate in Omaha, Nebraska, and his home office remains based in Cornhusker State.
“Success stories abound across America,” said legendary investors. “Since the birth of our country, individuals with an idea, ambition and often only a small amount of capital have succeeded beyond their dreams, creating something new or improving the customer experience with something old.”
The annual letter, a tradition for Buffett for six decades, offers a fresh perspective on the market after a historic return from the bottom of the pandemic to the unprecedented stimulus.
Buffett began a bargain hunt amid a return to the market. Recently, it has taken a considerable position in Chevron, a valuable classic game, while adding Verizon, as well as a handful of drug stocks. Apple remains the conglomerate’s largest joint stock investment, which played a major role in offsetting the pandemic damage to Berkshire’s rail and insurance sector by 2020.
Berkshire bought its $ 9 billion share in the third quarter of 2020, bringing the company’s total redemptions to $ 15.7 billion by September – a record year for redemptions.
The conglomerate is still sitting on a huge cash war chest, with over $ 145 billion at the end of the third quarter. Berkshire put a small chunk of its cash into operation in July by acquiring Dominion Energy’s natural gas transmission and storage assets.
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