‘Sage of Omaha' Warren Buffett's $173bn Berkshire Hathaway saw operating profits of $7.3bn during the final three months of 2021, despite sitting on an historically high cash pile of $146.7bn.
The results, which were driven by strong returns from Buffett's utility holdings and BNSF Railway, mark a 45% uptick compared to the same time period during the previous year, although Buffett by his own admission has found "little that excites us" in terms of where to allocate the rest of his capital.
In a letter to shareholders published on Saturday (26 February), Buffett said: "Alas, there was little action… in 2021. We did, though, make reasonable progress in increasing the intrinsic value of your shares. That task has been my primary duty for 57 years. And it will continue to be."
ETP range gives UK investors access to Cathie Wood's ARK funds and Buffett's Berkshire Hathaway
He added that, "from time to time…. possibilities are both numerous and blatantly attractive" but that this is not the case today.
"That is largely because of a truism: long-term interest rates that are low push the prices of all productive investments upward, whether these are stocks, apartments, farms, oil wells, whatever," Buffett explained. "Other factors influence valuations as well, but interest rates will always be important."
While he said that holding such a high percentage of cash is "never a pleasant experience", it is also "never permanent" and that he has instead spent $27.1bn on buying back Berkshire Hathaway shares over the past year.
"Today, internal opportunities deliver far better returns than acquisitions," Buffett said. "The size of those opportunities, however, is small compared to Berkshire's resources."
During the past 24 months, Berkshire Hathaway has repurchased 9% of its shares for a total of $51.7bn, leaving shareholders owning 10% more of the firm's underlying investments.
"I want to underscore that for Berkshire repurchases to make sense, our shares must offer appropriate value," Buffett continued. "We do not want to overpay for the shares of other companies, and it would be value-destroying if we were to overpay when we are buying Berkshire.
"As of 23 February 2022, since year-end we repurchased additional shares at a cost of $1.2bn. Our appetite remains large but will always remain price-dependent."
