Trump tax cut fuels record profit for Buffett's Berkshire

Two Things We Learned From Billionaire Warren Buffett's Annual Shareholder Letter

Manufacturing, services and retailing operations reported that profit increased to $6.2 billion a year ago from $5.6 billion in 2016.

Warren Buffett's just released his annual letter to Berkshire Hathaway shareholders, and it included a list of the biggest stock investments held by the company.

Shanahan says it also would have been nice to read Buffett's thoughts on why he is selling off Berkshire's IBM investment but maintaining big stakes in Wells Fargo and US Bancorp. "The remaining $29bn was delivered to us in December when Congress rewrote the U.S. tax code".

The new law cut the corporate income tax rate to 21% from 35%, a change that has seen boosting the earnings of scores of USA companies.

Over time, however, Ben Graham's oft-quoted maxim proves true: "'In the short run the market is a voting machine; in the long run, however, it becomes a weighing machine, '" Buffett wrote in his newest annual shareholder letter. "We have $90 or $95 billion in gains, and our owners, dollar for dollar, will participate in that..."

Buffett, in his investor-friendly writing style, also addressed topics like the overpriced market for mergers and acquisitions and his disdain for Wall Street's high investment fees.

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Mr Buffett bemoaned frothy asset prices for curtailing Berkshire's recent acquisition activity.

The problem facing Berkshire, whose last major acquisition was a $32 billion deal to buy Precision Castparts in 2015, is that prices are not cheap and competition from other buyers, such as private equity firms, is stiff, says Pan. Net earnings per Class A equivalent share attributable to shareholders jumped to $19,790 from $3,823 past year.

Last year, however, was another good one for Berkshire stockholders, as the company's "A" shares rose almost 22%, vs. a gain of 19.4% for the S&P 500, a broad stock market index.

Treasury yields have been rising since the start of the year, stemming from brewing inflationary pressures and massive bond supply to help fund US President Donald Trump's tax overhaul. The S&P 500 index fund Buffett backed easily outpaced the hedge funds.

Buffett urged investors to stick with stocks even though they can be riskier in the short-term.

In last year's letter, Buffett said Jack Bogle, the Vanguard Group founder considered to be the father of indexing, was the person who had done the most for American investors.

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