Warren Buffett's Shareholder Letter: America's Prospects & $38bn in cash for Berkshire Hathaway

Saturday, Feb 26 2011 by
8
Warren Buffetts Shareholder Letter Americas Prospects  38bn in cash for Berkshire Hathaway

As always, his shareholder letter is of hot interest, and as always he has once again lived up to expectations (Heres the link for the actual letter and this is for those who wish to read the highlights)

1)  His sheer bullishness on America, which considering their failure to yet secure a proper deficit cutting plan, at present I am not sure I agree with.  Also his point on the the housing market recovering over the next year I also have doubts about, as with the sheer fact that they have such an over supply of housing, and high unemployment, at best all I can see is a stoppage of the deterioration (Could possibly be what he means by turnaround).

2)  The fact that they have such a very large amount of cash, $38bn,  at Berkshire Hathaway (NYSE:BRK.A) and Buffet has stated (Emphased even) the fact that he wishes to make a major acquisition with this money.  I have to say I have pretty much no doubt considering his bullishness on the US, that the acquisition will be an American company. 

But it will be very interesting to see where he goes considering he has stated he wishes to further diversify away from the insurance industry, and it could be something to watch.  I would ask if anyone has any ideas of which industry he may be interested in, but knowing Buffet, the chances of you getting it right would be slim, but if anyone has any ideas, please feel free to post them.

3)  His large holding in Tesco (LON:TSCO), he now holds over 242m shares of Tesco, at a buy price at current exchange rates of about 360p.  This I feel is a very good omen for Tesco you would think, to have someone like him holding such a large amount of the company now.  (Note I believe the increase is about 16m shares over the last year or so, but don't quote me on that one)

If anyone would like to add to my points of interest please feel free to do so below.  Also what are peoples feelings on Buffett's letter?  Agreement on America?  I have to be honest I would not like to bet against him, also though I knew he was bullish on the US's prospects, I was not expecting him to be as bullish as he sounds.  Maybe he is right, and our fear of the markets tenative attitude to the US is misplaced?  Remember as he always says, buy when others are afraid, sell when they are bullish.  Though I cannot help but feel though US company balance sheets are exceptionally strong (Combined $1.3tn in cash I believe), at the moment, they are certainly not cheap.


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Tesco PLC is a retail company. The Company has retail operations across the United Kingdom, Asia and Europe. The Company engages in banking operations, through Tesco Bank. Tesco Bank’s banking products include customer accounts for credit cards, loans, mortgages and savings. The Company offers a range of 4,000 own brand products, as of December 22, 2014. The Company operates through four segments: the United Kingdom, Asia, Europe and Tesco Bank. The Company operates approximately 3,378 stores in the United Kingdom. The Company operates approximately 2,417 stores in Asia. It operates approximately 1,510 stores in Europe. Tesco Bank offers retail banking and insurance services in the United Kingdom. more »

Share Price (Full)
212.4p
Change
-0.9%
Mkt Cap (£m)
17,282
P/E (fwd)
21.1
Yield (fwd)
0.8



  Is Tesco fundamentally strong or weak? Find out More »


3 Comments on this Article show/hide all

emmany 26th Feb '11 1 of 3
1

Gray, I think this gives a nicer write up than iii's, shorter and more to the point, though you need to be a member to read it:

http://www.ft.com/cms/s/0/1e7c71f4-41c7-11e0-8366-00144feabdc0.html?ftcamp=rss#axzz1F6Bka9b8

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emmany 27th Feb '11 2 of 3

Just to note Gray, I believe it is 13m Tesco shares over the last year or so, as he purchased 229m in 2007, then added some more in early 2009, with a further purchase made in mind 2010, rising to his current total holdings of 242m as you say.

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emmany 16th Mar '11 3 of 3
3

Anyone see Buffet has just made his first purchase since he said he was itching to make a buy:

http://money.cnn.com/2011/03/15/news/companies/buffett_lubrizol_investment_oil.fortune/?section=magazines_fortune

Interesting choice of company, and just goes to show it is impossible to say what company will interest him. Just to note also, this is an interesting article on him, and why he is so successful: http://finance.fortune.cnn.com/2011/03/08/how-buffett-makes-money-even-on-bad-bets/?iid=EAL

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About Gray Woods

Gray Woods

I have worked at NICO (aka the Inland Revenue), in the promo industry, and manage an investment portfolio. In 2009, I graduated with a first degree in BA (hons) Finance and Investment Management; in 2014, I graduated with a 2:1 in BA (hons) English Literature & Creative Writing.I have followed the markets since 2002, when I was sixteen, and have been a Private Investor since late 2008.  To date, I have beaten the market every year, with my most proudest achievement coming in 2008, my first year, where I ended the year 12% up.  In my follow up year, 2009, I finished 99% up, and my best year to date came in 2010, where my portfolio finished the year 111% up (400% three year cumulative return.Rather interestingly, for the period 2008 to 2011, I posted my trades online via my investment blog (Gray's Investment Blog), so my best yearly returns to date have come in front of the world.  During those years, my blog had a following in the thousands, with sites like Stockopedia being a great help in boosting those numbers.  My goal for the blog was two fold, one, by writing of the stocks and shares that interested me I found it easier to get my head around them and come to more informed decisions; for two, I think private investors need to stick together, and I felt by sharing my research and thoughts I could help towards that goal.A change in career direction saw me close the blog down in 2011, but I still write on here (Stockopedia) now and then, offering my thoughts on the financial world, and any companies that interest me.  However, due to my involvement in the creative writing world, where I am working with award winning novelist Daren King on my first novel, my time is limited. more »



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