Warren Buffett, in his letter to shareholders Saturday, said his company Berkshire Hathaway enjoyed a $29 billion gain from the recent change to the tax code, bemoaned the lack of good deals for acquisitions and reminded investors that owning a low-priced basket of stocks through index funds is the best way to build wealth over time.
Berkshire said Saturday it earned $32.6 billion, or $13.19 per Class B share, in the fourth quarter because of the tax law changes. Over the past 53 years, Berkshire has grown its per-share book value at a 19.1% rate compounded annually.
The recently passed GOP tax law has been kind to Warren Buffett's Berkshire Hathaway, to say the least. Both men were named vice chairmen.
Warren Buffett on Saturday said he needs to make "one or more huge acquisitions" to increase Berkshire Hathaway Inc BRKa.N earnings, but admitted that finding a deal at "a sensible purchase price" has become a challenge. That kept Berkshire from making the kinds of big deals Buffett prefers.
Buffett also noted how long interest rates red into the stock market gains.
Leverage might boost returns when prices go up, but it's devastating when prices go down, which is when solvent investors are able buy cheaply.
"Prices for decent, but far from spectacular, businesses hit an all-time high", he said.
Buffett's company, Berkshire Hathaway, has a broad financial reach that extends to virtually every part of the economy. "Indeed, price nearly seemed relevant to an army of optimistic purchasers", wrote Buffett.
Kraft's shares were down 1.4 percent in extended trading on Friday.
The immediate net windfall for Berkshire was $29 billion, which helped push Berkshire's net earnings to $44.94 billion in 2017 from $24.07 billion the prior year while offsetting declines in certain businesses.
Thanks to the trio of hurricanes last fall, which caused $100 billion in damage by Buffett's estimates, Berkshire Hathaway's insurance business took a loss for the first time in 14 years. He's the chief executive officer of Berkshire Hathaway, which has 63 subsidiaries, including Geico, Business Wire, Fruit of the Loom and NetJets.