Gerard Miller | CNBC
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Warren Buffett, the 90-year-old “Oracle of Omaha,” remains a firm believer in the American dream, saying in his annual letter to shareholders that he closely follows “never gamble against America.”
“In its brief 232 years of existence … there has not been an incubator to unleash human potential like America,” the Berkshire Hathaway president and CEO wrote in the letter published Saturday. “Despite some severe disruptions, our country’s economic progress has been impressive. Our unshakable conclusion: Never bet against the United States.”
Buffett shared a fact in the letter to illustrate Berkshire’s American credentials. He said the conglomerate owns the most US assets – 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 the list is AT&T, with property, plant and equipment of $ 127 billion,” he wrote.
The billionaire highlighted Berkshire’s two wholly-owned American companies, BNSF Railway and Berkshire Hathaway Energy (BHE), which made $ 8.3 billion in 2020 despite a drop in demand amid the Covid-19 pandemic.
“Your rail carries about 15% of all non-local ton-miles (one ton of freight moved one mile) of goods that move in the United States, whether by rail, truck, pipeline, barge or plane,” he said Buffett. “The history of America’s railroads is fascinating. After approximately 150 years of frenzied construction, deception, overbuilding, bankruptcies, reorganizations and mergers, the railroad industry finally emerged a few decades ago as mature and streamlined.”
Buffett believes that BHE will be a leader in providing clean energy in the future. BHE began an $ 18 billion effort to rework and expand a substantial portion of the aging grid that now carries electricity throughout the West, Buffett noted.
“Unlike the railroads, our nation’s power companies need a massive makeover in which the bottom line costs will be staggering,” Buffett said in the letter. “The effort will absorb all of BHE’s earnings for decades to come. We welcome the challenge and believe that the additional investment will be adequately rewarded.”
Don’t overlook central America
Buffett reminded investors that miracles happen in the central United States even though much attention is paid to coastal areas. After all, the legend started its conglomerate in Omaha, Nebraska, and its headquarters are still based in Cornhusker State.
“Success stories abound across America,” said the legendary investors. “Since the birth of our country, people with an idea, ambition, and often just a pittance of capital, have succeeded beyond their dreams in creating something new or enhancing the customer experience with something old.”
The annual letter, a Buffett tradition for six decades, offers a fresh perspective on the market after a historic rebound from the bottom of the pandemic following unprecedented stimulus.
Buffett has started hunting for bargains amid the market’s comeback. He recently held a sizable position in Chevron, a classic value game, while adding Verizon and a handful of drug stocks. Apple still ranks as the conglomerate’s largest common stock investment, which played a major role in offsetting the pandemic damage caused to Berkshire’s rail and insurance business in 2020.
Berkshire bought back $ 9 billion of its own shares in the third quarter of 2020, bringing the company’s total buybacks to $ 15.7 billion through September, a record year for buybacks.
The conglomerate is still in a huge cash war chest with more than $ 145 billion at the end of the third quarter. Berkshire put a small chunk of the cash to work in July with the purchase of Dominion Energy’s natural gas transmission and storage assets.
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