Warren Buffett's letter leaves some wanting more

Warren Buffett Chairman and CEO of Berkshire Hathaway

In his much-anticipated annual letter to shareholders, Buffett explained that the company's net gain of $65.3 billion in 2017 was only partly due to his employees' efforts.

"Buffett has been quick to say that he thinks that the tax policy changes were going to help Berkshire and be positive overall", said Bill Smead, chief executive of Smead Capital Management in Seattle, a Berkshire shareholder.

Berkshire said about $29.11bn of its net income was attributable to the reduction of the USA corporate tax rate from 35 per cent to 21 per cent.

"You and I are lucky to have Ajit and Greg working for us", Buffett told shareholders.

Despite sitting on more than $100 billion in cash, Warren Buffett says he was turned off by high asking prices for businesses he considered buying and that kept him from pulling the trigger on any major deals in 2017.

For all of 2017, Berkshire's net income rose 87 percent to $44.94 billion. "If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it's a bit like telling your ripening teenager to be sure to have a normal sex life".

"Performance comes, performance goes".

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Turning to investments, Berkshire's Apple holding was up to $28.2B at year-end, second only to Wells Fargo at $29.3B. Operating profit, however, fell 18 percent to $14.46 billion, hurt by a rare loss from insurance underwriting.

Book value, a metric he's called a "crude, but useful" way to track the conglomerate's worth, climbed 13 percent to $211,750 per Class A share at the end of 2017 compared to three months earlier, the company said Saturday in a statement. Berkshire's "A" shares also became the first stock ever to reach a price of $300,000.

Last year, however, was another good one for Berkshire stockholders, as the company's "A" shares rose almost 22%, vs. a gain of 19.4% for the S&P 500, a broad stock market index.

Despite our recent drought of acquisitions, Charlie and I believe that from time to time Berkshire will have opportunities to make very large purchases.

"In America, equity investors have the wind at their back", he said. The fees - typically 2% of the investment's value and 20% of the profits - eat into clients returns, Buffett argued, and said returns do not typically justify those fees compared to the returns an investor could get from a low-priced S&P 500 index fund.

Buffett touted his win in a bet that he made 10 years ago, in which he basically wagered that a low-priced index fund tracking the S&P 500 stock index would post better returns over the next decade than a portfolio of five fund of funds run by high-fee hedge fund managers, often considered the "smart money" on Wall Street.

Buffett urged investors to stick with stocks even though they can be riskier in the short-term.

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