Buffett Rips Criticism of Buybacks

Berkshire Hathaway posts quarterly drop in operating profit
By Bob Cronin,  Newser Staff
Posted Feb 25, 2023 1:40 PM CST
Buffett Rips Criticism of Buybacks
Warren Buffett pauses during an interview in Omaha in 2018.   (AP Photo/Nati Harnik, File)

Operating earnings are the best way to assess profitability, Warren Buffett says. On Saturday, Berkshire Hathaway released results showing operating profit for the fourth quarter of 2022 was $6.7 billion, almost 8% off third-quarter earnings of $7.8 billion, CNN reports. All told, earnings fell 125% for a loss of $22.81 billion last year. "Some of it had to do with currency fluctuations and things like that," said Steven Check of Check Capital Management. "So this is a short term noise. I would not be concerned at all." Buffett made clear in his annual letter to shareholders Saturday that he's not worried. In fact, for the year, per CNBC, Berkshire's operating earnings were $30.79 billion, a 12.2% increase from 2021. Buffett addressed these topics in his letter:

  • Stock buybacks: Buffett had harsh words for those who contend companies should invest in their businesses instead of buying shares. "When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue," Buffett wrote, per the Wall Street Journal. "The math isn't complicated," the CEO said, per Yahoo Finance. "When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices."
  • Inflation battle: Comments on this topic were briefer than investors were expecting. "Berkshire also offers some modest protection from runaway inflation, but this attribute is far from perfect," the letter says. "Huge and entrenched fiscal deficits have consequences." Check took that to mean that investing in Berkshire is "better than owning a bond."
  • American faith: Buffett shared the credit, returning to the "American Tailwind" theme. The conglomerate would be happy to pay more taxes in the next decade, he said. "We owe the country no less: America's dynamism has made a huge contribution to whatever success Berkshire has achieved," he wrote.
  • Buy candy: In his closing, which included an invitation to shareholders to attend the annual meeting in Omaha, Nebraska, Buffett hawked the wares of portfolio companies that do business at the event. One is See's Candies, which he wrote is "selling products that haven't been materially altered in 101 years." Last year, per Yahoo, the See's booth averaged 10 sales per minute.
(More Warren Buffett stories.)

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