At 91, Warren Buffett still isn’t in any hurry

One of the keys to a long and healthy life is finding meaningful activities to keep you occupied. Evidence for this can be found in many peer-reviewed medical studies, but also the annual reports of Berkshire Hathaway Inc. In the 2021 edition, which dropped this morning, 91-year-old Berkshire Chairman Warren Buffett tells of how, after some early career missteps, he and long-time business partner Charlie Munger, 98, “found what we love to do” at Berkshire — and offers no sign that they plan to stop. It is of course not entirely up to them when they will stop.
The question of succession was answered at last year’s Berkshire annual shareholder meeting, when Munger seemingly let slip and then Buffett confirmed that Greg Abel, who oversees Berkshire’s non-insurance operating companies and is now 59, would take over as Berkshire chairman upon Buffett’s departure.
This, and the fact that Buffett mostly sat on his hands over the past year, not making any major acquisitions or investments, left not a whole lot to report in this year’s letter. Sitting on his hands when markets are frothy is long-established Buffett practice, and it paid off in a small way over the past couple of months as a stock market correction ended Berkshire’s pandemic-long run of underperformance versus the Standard & Poor’s 500 Index.
This inaction has also left Berkshire with a gob-smackingly large pile of cash, $144 billion, of which $120 billion is held in US Treasury bills, a stake that, Buffett reports, “leaves Berkshire financing about 1⁄2 of 1% of the publicly-held national debt.” He also mentions that Berkshire was responsible for 0.8% of US federal corporate income tax revenue in 2021, which adds a nice symmetry.
Berkshire did spend $27 billion in 2021 buying back its own shares, a course of action Buffett long recommended for other companies and finally started doing at Berkshire in 2011. Mainly, though, it’s waiting for a moment of opportunity when valuable assets can be had on the cheap, moments that have been in short supply in recent years. In 2019 Buffett wrote of his and Munger’s eagerness to make an “elephant-sized acquisition,” but they have yet to let that eagerness get the better of their dislike of overpaying for things.
During periods of market froth there are always those who question whether this value-oriented approach to investing still works. Of course it does, but given the time periods involved professional investors with clients to answer to can find it quite difficult to execute successfully.

—Bloomberg