No Bombshells in Warren Buffett’s 2020 Letter to Shareholders

[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway (“Berkshire”), or any other entity referenced. Edina Realty is a subsidiary of Berkshire.]

Unless “steer clear of bonds” is a news flash, Warren Buffett’s just-released 2020 letter to shareholders is devoid of any bombshells.

So, no announcements of any major acquisitions; impending retirements (Buffett and his long-time partner, Charlie Munger, are 90 and 97 years old, respectively); or even broad stock market calls (in the long run, Buffett steadfastly maintains that equities just go one direction: “higher”).

On the subject of retirement, all Buffett has to say is that 103 years old — the age at which another Berkshire luminary stopped working daily – is “a ridiculously premature retirement age as judged by Charlie and me.”

“Buy (Back) Low, Sell High”

If this year’s letter had a headline, it would be that Berkshire’s biggest investment last year was . . . itself.

In addition to taking new positions in Verizon ($8.7 billion) and Chevron ($4.02 billion), Berkshire spent $24.7 billion buying back its own stock.

Its motivation?

The same reason to buy any stock: it’s a compelling value.

Buffett explains the move:

In no way do we think that Berkshire shares should be repurchased at simply any price. I emphasize that point because American CEO’s have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse.”

–2020 Letter to Shareholders; p. 7.

Just a “heads up” to anyone tempted to follow Buffett’s lead and buy the company’s stock: a share of the “Class A” will set you back $364,580 at Friday’s closing price.

P.S.: According to Buffett, this year’s letter does contain a potential surprise: Berkshire’s $154 billion in fixed assets places it first amongst U.S. companies (second is AT&T, with $127 billion).

Back when I was a CPA, we used to call it “Property, plant, and equipment.”

See also, “What Motivates Senior Managers at Berkshire Hathaway?“; “Warren Buffett Negotiating Secret #37“; and “Warren Buffett’s Shout-Out to Ron Peltier.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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