Warren Buffett, Berkshire Hathaway’s chairman and CEO, has reaffirmed his commitment to investing in stocks despite the company’s substantial cash holdings. In a letter to shareholders, Buffett stated that he remains committed to deploying a “substantial majority” of the company’s money in equities.
Buffett noted the value of Berkshire’s non-quoted controlled securities increased last year and expressed concerns about the impact of fiscal policy on businesses. The investor also acknowledged his own mistakes, stating it is easier to change course when investing in marketable equities.
Berkshire has reduced its stake in certain banks, including Capital One, which has seen significant gains in recent years. Buffett attributed this move to ensuring that Berkshire has adequate dry powder if an opportunity arises. However, analysts have questioned the reasoning behind these sales, citing strong demand for some of the stocks Berkshire has been shedding.
Despite this, Buffett remains optimistic about certain financial stocks like American Express and Visa. The investor expressed confidence in these companies’ long-term prospects and the importance of patience and sticking with quality businesses.
Buffett also highlighted the impact of climate change on businesses, particularly those in the insurance industry. He noted that property damage from extreme weather events is becoming increasingly unpredictable and costly.
As Buffett prepares to transition into a new role as CEO, he reassured shareholders that Greg Abel will take over as CEO and continue writing annual letters.
Source: https://www.americanbanker.com/news