2018-02-23 09:35:00 Fri ET
trust perseverance resilience empathy compassion passion purpose vision mission life metaphors seamless integration critical success factors personal finance entrepreneur inspiration grit
Warren Buffett releases his annual letter to Berkshire Hathaway shareholders as of February 2018. Buffett discusses Berkshire's core cash ambition, its reinsurance business, the recent increase in corporate net worth, and his succession plan. First, Buffett highlights the importance of *float* for insurance companies like Berkshire Hathaway, i.e. the company collects insurance premiums that have not been paid out as claims. Buffett and Munger can invest the float as these premiums absorb losses gradually throughout the life of each insurance policy. As this reinsurance counterbalances long-tail losses, Berkshire grows its float to extraordinary levels over time.
Second, corporate cash stockpiles surge to $116 billion, so Buffett prefers to keep this cash position for near-term mergers and acquisitions (instead of dividends and share repurchases). However, Buffett considers most recent takeover targets with no sensible purchase prices at the current stage of the real business cycle. Also, Buffett emphasizes the fact that debt-free investors can better take advantage of short-term stock market crashes such as Black Monday in 1987, the Asian financial crisis in 1997, and the global economic recession in 2008.
Berkshire experiences a one-time hefty increase in net worth by $65 billion or 23% due to the Trump tax cuts. The tax credits not only strengthen Berkshire's current fortress balance sheet, but also allow Buffett and Munger to cast a broader net of potential M&A deals.
Third, Buffett declares that Berkshire's next CEO will oversee company operations while the other half of this job will be given to stock-pickers who specialize in asset management. On the latter investment front, the likely successors are Todd Combs and Ted Weschler. The high-skill money managers both have successfully grown their assets under management (AUM) to $25 billion in early-2018.
Under this succession plan, Combs and Weschler will continue to implement the value investment philosophy in the post-Buffett reinsurance business structure.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2017-11-27 07:39:00 Monday ET

Is it anti-competitive and illegal for passive indexers and mutual funds to place large stock bets in specific industries with high market concentration? Ha
2019-02-15 11:33:00 Friday ET

President Trump is open to extending the March 2019 deadline for raising tariffs on Chinese imports if both sides are close to mutual agreement. These bilat
2026-10-31 12:38:00 Saturday ET

Today tech titans and billionaires continue to reshape global pharmaceutical investments for both better healthspan and longer lifespan. We discuss, desc
2024-07-31 09:28:00 Wednesday ET

In the modern monetary system, each new CBDC helps anchor public trust in money in support of economic welfare, especially in a cashless society. In our
2020-01-15 08:31:00 Wednesday ET

Anti-competitive corporate practices may stifle U.S. innovation. In recent decades, wage growth, economic output, and productivity tend to stagnate as U.S.
2024-03-19 03:35:58 Tuesday ET

U.S. presidential election: a re-match between Biden and Trump in November 2024 We delve into the 5 major economic themes of the U.S. presidential electi