Buffett acknowledged the role played by the US economy in Berkshire’s success in rhetorically questioning ‘Who has ever benefited during the past 237 years by betting against America?’ Firms such as Coca Cola, General Motors and American Express have consistently performed well for Berkshire. The popularly acclaimed ‘Oracle of Omaha’ even went on to proclaim ‘America’s best days lie ahead.’
Interestingly, Berkshire’s increase in book value per share was considerably outperformed by the S&P 500 for 2013. Buffett explained ‘Berkshire's book value and intrinsic value will outperform the S&P in years when the market is down or moderately up. We expect to fall short, though, in years when the market is strong – as we did in 2013.’ Buffett’s comments are evidenced in historical data; in his 49 years in charge of Berkshire it has seen compounded annual growth of 19.7%. For the same period the S&P 500 has increased 9.8%. Buffett also addressed his own passing in the annual statement; stressing that the firm’s ownership picture would change, ‘but not in a disruptive way’. Investors will also be interested to learn that Berkshire intends to make further large acquisitions in the coming year. The 2013 purchase of H.J. Heinz Co., in a partnership with 3G Capital, could be indicative of the manner in which future takeover developments will unfold. Indeed only last year the firm’s vice chairman Charlie Munger told Buffett he would be ‘stark raving mad’ not to pursue another one of these ‘elephants’. Investors look likely to flock to Berkshire stock in Monday trading; find the best spread for you at http://www.spreadbetting.com/individual-shares/
