Warren Buffett notes that Weschler and Combs control $34 billion investments: annual letter (NYSE: BRK.A)
Long associated with Warren Buffett’s investment acumen, Berkshire Hathaway (NYSE: BRK.B) (NYSE: BRK.A) the collection of participations is ensured by the management of the company longtime investment managers Todd Combs and Ted Weschler, Buffett said in his 2021 letter to shareholders.
Notably, he said, “at the end of the year, this valued pair had total authority over $34 billion in investments.” In addition, a significant portion of the investments the two manage come from various Berkshire-owned company pension plans, which are not included in the chart of its major holdings.
The fact that Buffett is drawing attention to Combs and Weschler as investment managers means that the company’s investment decisions can no longer be attributed solely to Buffett. He has focused in recent years on the company’s plans for a post-Buffett future. Last year, he named Greg Abel to eventually succeed him as CEO.
The company’s largest stake is in Apple (NASDAQ:AAPL) stake, with a market value of $161.2 billion at the end of 2021. This is followed by Bank of America (NYSE: BAC)worth $46.0 billion, American Express (NYSE:AXP)at $24.8 billion, and Coco-Cola (NYSE:KO) at $23.7 billion.
Buffett highlighted the company’s contribution to the US Treasury, saying that when Berkshire (BRK.B) thrives, the US shares in that success too. In 2021, the company paid $3.3 billion in federal income taxes. That’s about 0.8% of the $402 billion in total corporate tax revenue the US Treasury reported for the year.
He attributes the company’s prosperity to the fact that Berkshire (BRK.B) operates in the United States “Our shareholders should recognize – trumpeting effect – the fact that Berkshire’s prosperity has been greatly aided because the company has operated in America,” he wrote.
While Berkshire Hathaway (BRK.B) (BRK.A) is mostly considered a “somewhat odd collection of financial assets,” the company owns and operates more U.S.-based infrastructure assets” than any other American company,” Buffett said.
In the letter, he outlined the company’s “big four” that account for much of Berkshire’s value – its insurance business, Apple (AAPL), railroad BNSF and its energy unit BHE.
Insurance: Buffett is a big fan of the insurance float — the amount of money collected from premiums 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 generally increase with 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 5.55% stake has fallen from 5.39% a year ago. “It looks like small potatoes. But consider that every 0.1% of Apple’s revenue in 2021 was $100 million. We spent no Berkshire fund to earn our increment. Apple’s buyouts did the job.” And last year, the tech company paid Berkshire $785 million in dividends, which are included in Berkshire’s GAAP earnings (BRK.B).
BNSF: “Your Railroad Had Record Revenues of $6 Billion in 2021…the Old Fashioned Type of Revenue We Favor: A Calculated Figure after interest, taxes, depreciation, amortization and all forms of compensation.” He also pointed out that the railroad’s trains traveled 143 million miles and carried 535 million tons of freight last year – both “exceeding far ahead of any other US carrier.”
BHE: The unit earned a record $4 billion in 2021, more than 30 times more than the $122 million it earned in 2000, when Berkshire (BRK.B) first bought a stake in BHE; now owns 91.1% of the company. He pointed out that the unit now details renewable energy and transmission plans and performance every year since 2007. BHE has reduced its greenhouse gas emissions to 63.5 million metric tons in 2021 from 79.9 million metric tons in 2005; it is targeting 39.9 million metric tons in 2030.
Earlier, Berkshire Hathaway repurchased $6.9 billion in shares in the fourth quarter, driving operating profits up 45% year-on-year