Warren Buffett enjoyed some major victories but faced a devastating loss in 2023.
1. Deal and Battle
Buffett started the year in style, spending $8.2 billion in January to increase his stake in Pilot Travel Centers from 38.6% to 80%.
This chain of gas stations saw its revenues grow from $20 billion in 2017, when Berkshire first bought a stake, to $45 billion in 2021. It generated more than $13 billion in revenue and nearly $300 million in pre-tax profits in the third quarter of this year alone.
It is worth noting that at the time of writing, Berkshire and the Haslam family are engaged in a legal battle. The Haslam family has sued Berkshire over accounting changes that they claim will reduce Pilot’s value and make it cheaper for Berkshire to acquire the remaining 20% stake. Berkshire, in turn, has countersued, claiming that billionaire Jimmy Haslam promised secret payments to employees that would force Berkshire to pay more for the rest of the company.
2. Annual Letter
In February, Buffett recalled in his annual letter to Berkshire shareholders the greatest achievements of the company like Abu Fakher.
The investor noted that his company’s success is largely due to “about twenty truly good decisions – about one every five years.”
Buffett emphasized Berkshire’s stakes in Coca-Cola and American Express, which cost him about $1.3 billion each nearly 30 years ago. They are now worth over $20 billion each, generating over $1 billion in annual profits.
The investor also defended buying private equity wisely and criticized the public backlash against it.
He wrote: “When you are told that all private equity purchases harm shareholders or the country, or are particularly beneficial to CEOs, you are either listening to a financially illiterate economist or a skilled orator (the characters are not completely contradictory).”
Buffett also stated that it is “disgusting” when company executives manipulate their finances to beat Wall Street expectations. He praised Berkshire’s tax contributions, reiterating his belief that Berkshire’s success will continue after his death.
3. Tokyo Trip
The 93-year-old Buffett made a rare trip to Tokyo in April after building billion-dollar stakes in five Japanese trading companies over the past few years. He revealed that Berkshire had increased its ownership to about 7.4% over the first half of the year, and shared his thoughts on the wave of regional bank failures in March during a live interview on CNBC while in Japan.
The Berkshire chairman disclosed that he had divested many bank stocks in recent years because he saw red flags in their finances and anticipated they would face problems. He also warned that inflation and recession are causing pain for many people, comparing the Bitcoin rush to a game of roulette with weak chances of winning that emit loud noises when paid to attract more bets.
Berkshire Meeting
Buffett welcomed tens of thousands of Berkshire shareholders at its annual meeting in Omaha in May. He and his business partner, Charlie Munger, answered questions for over five hours on various topics.
Berkshire’s CEO stated that the U.S. government was right to intervene and guarantee people’s deposits during the ongoing banking crisis in the spring, as failing to do so would have led to bank collapses and sent shocks through the global financial system.
He said: “A lit return can turn into a massive fire, or it can be extinguished.”
Buffett expressed caution about owning bank stocks, his concern over excessive reliance on debt in commercial real estate, and his fear that the incredible period of the U.S. economy fueled by near-zero interest rates and reckless government spending has come to an end.
He rejected
The investor also expressed concerns about the removal of the dollar as the reserve currency, as he did not see any clear alternatives to the U.S. dollar. He praised the innovation of ChatGPT but warned of the risks of artificial intelligence. He also noted that Berkshire was set to earn over $5 billion from cash and government bonds this year due to rising prices and called Apple “the best company we own.”
5. Donations of $6 billion
Buffett donated about $4.6 billion in Berkshire stock to the Bill and Melinda Gates Foundation and four other family-affiliated foundations in June. He made another gift of $900 million in stock to the same family institutions before Thanksgiving.
The investor made similarly sized gifts in 2022 and has now given away more than half of his Berkshire shares since 2006. If he had retained the shares, his net worth would now be around $260 billion, making him the richest person in the world instead of Elon Musk ($235 billion).
Buffett commented on his recent gifts by providing new details about his assets. His three children will be the executors of his will and the beneficiaries of a charitable trust that will receive more than 99% of his wealth, as he wrote, believing they are now ready for this “wonderful responsibility.”
The chairman of Berkshire also confirmed that he wants to maximize the charitable impact of his accumulated wealth. The trust will be self-liquidating after a decade and will operate with a small team, and he added that his will would be kept in the county court so that anyone can review it and ensure transparency.
6. Stock Portfolio
Buffett and his team made several notable changes to Berkshire’s stock portfolio in 2023. They exited positions in companies like Taiwan Semiconductor, US Bank, and BNY Mellon, as well as long-held stocks such as General Motors, Procter & Gamble, and Johnson & Johnson. They also reduced their stakes in Amazon, Chevron, HP, and other stocks.
On the other hand, they established new positions in Capital One and three homebuilders, and increased their stake in Occidental Petroleum to nearly 28%. Furthermore, they requested confidential treatment from the U.S. Securities and Exchange Commission for one or more of the positions in the third quarter as they were still building them, just as they did with Chevron and Verizon in 2020.
However, Berkshire sold net shares valued at around $30 billion in the first quarter of 2023, indicating that Buffett faced difficulties finding many undervalued stocks during that period.
The star of Buffett’s portfolio was Apple, with the stock price of the iPhone maker hitting a record high of $198 on December 11, valuing its nearly 6% stake at over $180 billion.
7. Farewell to Munger
Buffett’s year ended with the tragic passing of Charlie Munger, his business partner and right-hand man for more than six decades, just weeks before he would have turned 100.
Munger guided Buffett away from a singular focus on value for money towards seeking “great companies at fair prices.” He was also the “indispensable man” who helped Buffett reject all opportunities except the best ones and fostered a culture of honor and ethics at Berkshire.
Buffett stated in a press release, “Berkshire Hathaway could not have built its current status without the inspiration, wisdom, and participation of Charlie.” He will surely provide a more complete tribute to Munger in his upcoming annual letter in February.
Source: https://www.aol.com/warren-buffett-scored-big-wins-113001259.html
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