Warren Buffett Praises Performance, but Offers No Surprises in Annual Letter

February 22, 2020
Business

Mr. Buffett also noted that Berkshire valued its roughly 27 percent stake in Kraft Heinz, the packaged foods company that was one of its biggest recent deals — and one of its most prominent investing flops in recent years — at about $13.8 billion. By contrast, Mr. Buffett’s annual letter in 2018 valued its Kraft Heinz stake at $17.6 billion.

The billionaire also took time to complain about the poor state of many corporate boards:

Too few women serve on them.
Directors are often captive to the management teams they are meant to supervise, particularly when it comes to acquisitions that chief executives want to make. “Don’t ask the barber whether you need a haircut,” he wrote.
Too many directors go along with management teams in hopes of getting a good reference so they can be added to a second corporate board and earn more paychecks. “When seeking directors, C.E.O.s don’t look for pit bulls,” Mr. Buffett wrote. “It’s the cocker spaniel that gets taken home.”

Yet as in many years past, this year’s letter did not dwell on the topic Berkshire shareholders want most desperately to know: who will succeed Mr. Buffett, now 89, as the conglomerate’s chief executive. Time and again, Mr. Buffett has said only that he has someone in mind, and in the meantime has no plans to retire anytime soon.

In Saturday’s letter, Mr. Buffett reiterated that Berkshire was “100 percent prepared” for the day that he and his longtime business partner, Charles T. Munger, 96, leave the scene. The reasons: Berkshire’s investments are strong and prudent, the company’s businesses are overseen by able managers and its remaining directors are trusted to stay the course.

The letter reflected one more sign that Mr. Buffett was willing to share the limelight with his lieutenants, Ajit Jain and Greg Abel, both of whom have been widely speculated as potential successors.

Mr. Buffett said that he would allow attendees of Berkshire’s annual shareholder meeting in May to direct questions — part of a longstanding tradition where he and Mr. Munger answer queries on any topic — to either of those man.

Also left unaddressed in the letter was Mr. Buffett’s most recent deal, the sale of Berkshire’s newspaper holdings, in a sign that he was giving up on the news business.

Article source: https://www.nytimes.com/2020/02/22/business/dealbook/berkshire-hathaway-warren-buffett-letter.html