Warren Buffett firm in record profit

Written By Unknown on Minggu, 02 Maret 2014 | 19.15

2 March 2014 Last updated at 05:42 ET

The investment firm run by the US billionaire Warren Buffett has reported a record profit for 2013.

Berkshire Hathaway made $19.5bn (£11.6bn) last year, up from $14.8bn (£8.8bn) in 2012.

"On the operating front, just about everything turned out well for us last year - in some cases very well," Mr Buffett wrote to shareholders.

However it underperformed the S&P 500 share index for the fifth year in a row.

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Fortunately, my blunders usually involved relatively small acquisitions"

End Quote Warren Buffett Chairman, Berkshire Hathaway

The growth in the company's book value - that is the company's assets minus its liabilities and Mr Buffett's preferred measure of Berkshire's performance - was 18.2% in 2013, while the S&P 500 rose 32.4%.

But Mr Buffett said that was to be expected when the S&P performed well.

"We expect to fall short... in years when the market is strong - as we did in 2013.

"We have underperformed in 10 of our 49 years, with all but one of our shortfalls occurring when the S&P gain exceeded 15%."

He added that the fund had outperformed the stock market between 2007 and 2013 and that through a full six year cycle he expected to do that again.

"If we fail to do so, we will not have earned out pay," he wrote.

Mr Buffett, ranked fourth on the Forbes rich list, pointed to a strong performance in the firm's insurance, rail and energy businesses for the increase in profit.

Blunders

These include the auto insurer Geico, General Reinsurance, Burlington Northern Santa Fe railroad and the electric utility MidAmerican Energy.

The company increased its stake in the US firms Coca-Cola, American Express, IBM and Wells Fargo but reduced its ownership in the UK retailer Tesco - to 3.7% from 5.2%.

Mr Buffett did acknowledge he had made mistakes in some of his investments in the manufacturing, service and retail industries, some of which saw "very poor returns".

"I was not misled: I simply was wrong in my evaluation of the economic dynamics of the company or the industry in which it operated,'' he said.

"Fortunately, my blunders usually involved relatively small acquisitions. Our large buys have generally worked out well and, in a few cases, more than well. I have not, however, made my last mistake in purchasing either businesses or stocks. Not everything works out as planned."


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