Trump tax cut fuels record profit for Buffett's Berkshire

Two Things We Learned From Billionaire Warren Buffett's Annual Shareholder Letter

Two Things We Learned From Billionaire Warren Buffett's Annual Shareholder Letter

But this year's letter left some investors wanting more because he didn't say much about Berkshire's succession plan, some noteworthy investment moves or the company's new partnership with Amazon and JP Morgan Chase to reduce health care costs.

Operating earnings, which excludes some fluctuations in investments and derivatives, slumped 24 percent to $3.3 billion during the fourth quarter compared to the same period a year earlier.

Buffett reported $29 million tax gains in Berkshire's annual earnings from a change in U.S. tax rules.

He noted that Berkshire didn't go on a buying "frenzy" and acquire a bunch of companies past year, mostly because there were no desirable options that came at a "sensible" purchase price.

Still, when asked if he would have encouraged legislators to support or fight it, Buffett said he would have gone with a different bill. "Most wouldn't mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering". After all, even a high-priced deal will usually boost per-share earnings, if it is debt-financed.

Here's what to watch for in the latest letter from Buffett, 87, which is set for release online Saturday at 8 a.m.at Berkshire's home page http://www.berkshirehathaway.com/.

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Berkshire's other businesses, which include BNSF railroad, a number of electric utilities and an assortment of manufacturing and retail businesses, helped offset the insurance losses.

"In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price", wrote Buffett. Until January, he kept the names of Berkshire's internal CEO candidates secret although investors who follow Berkshire had long included Jain and Abel on their short lists.

The Oracle of Omaha made a winning 10-year bet with Protégé Partners in December 2007 that the S&P 500 would outperform a basket of fund of hedge funds. What investors then need instead is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals.

As usual, the shareholder letter provided glimpses into the state of affairs at Buffett's sprawling conglomerate.

Buffett, 87, also avoided dropping any hints about who will take the reins at Berkshire when he retires. And it holds major investments in such companies as Coca-Cola Co., Apple and Wells Fargo & Co.

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