In his annual letter to Berkshire Hathaway shareholders, released on Saturday, Warren Buffett celebrated the virtues of Coca-Cola, took a clear swipe at President Joe Biden, and expressed his frustration about “one of the shames of capitalism.”
Berkshire’s CEO reflected on the company’s success over the years, highlighting a $1.3 billion bet on Coca-Cola in 1994-worth $25 billion by the end of 2022. The first year, writing, “Growth occurs every year, as certain as repeat year. All [Vice Chairman Charlie Munger] and we were forced to cash Coke checks for a quarter of the dividend. We expect that this scrutiny will grow.
Legendary investors also defend share buybacks. Last year, the US government imposed a 1% tax on them – the latest addition to the Inflation Reduction Act – and Biden has signaled his support for raising it.
“When you are told entire repurchases are harmful to shareholders or to the country, or especially useful for the CEO, you listen to either an economic illiterate or a silver-tongued demagogue (character that not mutually exclusive),” he wrote.
His company has been one of the biggest US buybacks in recent years, buying back nearly $8 billion of its own stock in 2022, $27 billion in 2021, and about $25 billion in 2020.
“There are many Berkshire centimillionaires and, yes, billionaires who have never studied our finances,” he wrote. “He just knows that Charlie and I—along with his family and close friends—continue to have very significant investments in Berkshire, and he trusts us to treat our money like he does.”
Buffett also addressed the financial fraud that managers often do to beat analysts’ expectations.
“Even in operation The income figures we like can be easily manipulated by managers who want to do so,” he warned. “The tampering is often considered sophisticated by CEOs, directors and advisors. Journalists and analysts also embrace its existence.
He called the activity “disgusting,” adding, “It doesn’t take talent to falsify numbers: Only a deep desire to lie is needed. ‘Courageous imaginative accounting,’ as a CEO once explained fraud to me, has become one of capitalism’s shames.”
Berkshire Hathaway has been ranked among the most admired companies in the US for decades. Running the company seems to be related to the age of the CEO, and Buffett has been in that role for more than half a century.
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