It’s time again for Warren Buffett to post his annual letter to Berkshire Hathaway shareholders, a yearly missive complete with reflections on the past year, dad jokes and, of course, investing insights.
The letter is expected to post on Berkshire’s website Saturday morning. Investors will be on the lookout for answers to a few key questions — from the perennial concern about who will run Berkshire after Buffett is gone, to what the billionaire thinks about Kraft Heinz’s disastrous week.
Takeover tactics
Berkshire lost big bucks this week after a bombshell earnings report from Kraft Heinz in which the company reported massive write downs and revealed that its accounting practices are the target of a Securities and Exchange Commission investigation.
The company’s stock price tanked. And Berkshire’s stake in the company shed more than $4 billion in value. Barclays downgraded its earnings estimate for Berkshire.
The big question now is whether Buffett has buyer’s remorse: Berkshire took the rare move in 2015 of partnering with a private equity firm to orchestrate the Kraft Heinz merger, which some are now condemning as a catastrophic decision. Buffett typically eschews private equity for its focus on cost cutting over long-term growth potential.
With the bad news, will Buffett blame bad takeover tactics?
Stock picks and dumps
Berkshire curiously bought and sold a $2 billion stake in Oracle after holding the investment for just one quarter, according to a recent filing. It’s still not clear whether the Oracle investment was made by Buffett or his portfolio managers — but it was unusual nonetheless. Berkshire typically holds its investments over much longer periods of time.
Buffett’s legendary investment company has also trimmed its stake in Apple recently. Berkshire made its first play at the tech giant just over two years ago, at a time when investors were wary of the tech giant because of slowing iPhone sales.
Apple has seen ups and downs since then, and some wonder whether Buffett waited too long to start investing in the company.
Apple is still the top holding for Berkshire even after it trimmed its stake.
Line of succession
Speculation about whether Buffett will announce his successor swirls every year.
Berkshire executives Greg Abel and Ajit Jain have long been considered frontrunners. But Buffett has consistently avoided the question.
He indicated in his 2015 annual shareholder letter that he had found the “right person” for the job, but he’s yet to make an announcement.
Health care
Last year, Buffett announced that he and fellow billionaires Jeff Bezos and Jamie Dimon would launch a health care company aimed at giving their employees better coverage and care.
The CEOs selected Dr. Atul Gawande, a renowned surgeon and writer, to head the venture — but we still don’t know exactly what their plan entails.
Meanwhile, health care costs in America continue to balloon. Buffett has described the US health care industry as a “tapeworm of costs.”
The state of the union
When it comes to America and its future, Buffett has been known to be unflinchingly optimistic.
But could that change? Economic growth is slowing around the world. The political climate is hot as ever. The US-China trade dispute remains unresolved. Markets have been volatile, and some analysts think there’s more upheaval in store.
