Warren Buffett notes Weschler, Combs control $34B of investments: annual letter
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Long associated with Warren Buffett's investment acumen, Berkshire Hathaway's (NYSE:BRK.B)
(NYSE:BRK.A) collection of equity investments are run by the company's long-time investment managers Todd Combs and Ted Weschler, Buffett said in his 2021 letter to shareholders.
Notably, he said, "At year end, this valued pair had total authority in respect to $34B of investments." In addition, a significant portion of investments that the two manage are from various pension plans of Berkshire-owned businesses, which aren't included in the table of its top equity holding.
Buffett's calling attention to Combs and Weschler as the investment managers means that one can no longer solely attribute the company's investment decisions to Buffett. He has in recent years emphasized the company's plans for a post-Buffett future. Last year, he named Greg Abel to eventually succeed him as CEO.
The company's biggest equity stake is in Apple (NASDAQ:AAPL) stake, with a market value of $161.2B at 2021's end. That's followed by Bank of America (NYSE:BAC), with $46.0B value, American Express (NYSE:AXP), at $24.8B, and Coca-Cola (NYSE:KO) at $23.7B.
Buffett highlighted the company's contribution to the U.S. Treasury, saying that when Berkshire (BRK.B) prospers, the U.S. also shares in that success. In 2021, the company paid $3.3B in federal income taxes. That's ~0.8% of the $402B total corporate income tax receipts the U.S. Treasury reported for the year.
He attributes the company's prosperity to the fact that Berkshire (BRK.B) operates in the U.S. "Our shareholders should acknowledge â indeed trumpet â the fact that Berkshireâs prosperity has been fostered mightily because the company has operated in America," he wrote.
While Berkshire Hathaway (BRK.B) (BRK.A) is mostly viewed as a "somewhat strange collection of financial assets," the company owns and operates more U.S.-based infrastructure assets "than any other American corporation," Buffett said.
In the letter, he featured the company's "four giants" that account for a large chunk of Berkshire's value â its insurance business, Apple (AAPL), railroad BNSF, and its BHE energy unit.
Insurance: Buffett is a big fan on insurance float â the amount of money collected from premiums that he has on hand to invest. "The insurance business is made to order for Berkshire. The product will never be obsolete, and sales volume will generatlly increase along with both economic growth and inflation."
On Apple (AAPL): Berkshire's (BRK.B) stake in the tech giant grows as Apple buys back its own shares. Its ownership of 5.55% increased from 5.39% a year ago. "That sounds like small potatoes. But consider that each 0.1% of Apple's 2021 earnings amounted to $100M. We spent no Berkshire funds to gain our accretion. Apple's repurchases did the job." And last year the tech company paid Berkshire $785M in dividends, which are included in Berkshire's (BRK.B) GAAP earnings.
BNSF: "Your railroad had record earnings of $6B in 2021...the old-fashioned sort of earnings that we favor: a figure calculated after interest, taxes, depreciation, amortization, and all forms compensation." He also pointed out that the railroad's trains traveled 143M miles and carried 535M tons of cargo last year â both "far exceed those of any other American carrier."
BHE: The unit earned a record $4B in 2021, up more than 30-fold from the $122M it earned in 2000, when Berkshire (BRK.B) first purchased a BHE stake; now owns 91.1% of the company. He pointed out that the unit now details plans and performance in renewables and transmissions every year since 2007. BHE has reduced its greenhouse gas emissions to 63.5M metric tons in 2021 from 79.9M metric tons in 2005; it targets 39.9M metric tons in 2030.
Earlier, Berkshire Hathaway buys back $6.9B of stock in Q4, operating earning rise 45% Y/Y