Buffett Reflects on 60 Years at Berkshire Helm: 'Cardinal Sin Is Delaying the Correction of Mistakes'

In his latest annual letter to shareholders, Warren Buffett celebrated 60 years of steering the ship at Berkshire Hathaway BRK. He also expressed confidence in the company’s future under the leadership of chosen successor Greg Abel.

What Happened: Buffett’s letter, which was released on Saturday, chronicled the journey of Berkshire Hathaway from a floundering textile company to a powerful conglomerate. While he admitted to past errors, he assured shareholders that his choice of Abel as his successor was not one of them.

“Sometimes I've made mistakes in assessing the future economics of a business I've purchased for Berkshire – each a case of capital allocation gone wrong. That happens with both judgments about marketable equities – we view these as partial ownership of businesses – and the 100% acquisitions of companies. At other times, I've made mistakes when assessing the abilities or fidelity of the managers Berkshire is hiring. The fidelity disappointments can hurt beyond their financial
impact, a pain that can approach that of a failed marriage,” Buffett wrote.

“A decent batting average in personnel decisions is all that can be hoped for. The cardinal sin is delaying the correction of mistakes or what Charlie Munger called ‘thumb-sucking.’ Problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be,” Buffett mentioned in the letter.

Also Read: Berkshire Hathaway Q4 Profits Soar 71%, Buffett Says Firm Pays More Taxes Than ‘Tech Titans’ With Market Value in ‘Trillions’

Buffett praised Abel for his knack for identifying significant investment opportunities. He also pointed out that Berkshire Hathaway now boasts a cash reserve of $334.201 billion, nearly twice the $167.6 billion it had a year ago.

“At 94, it won't be long before Greg Abel replaces me as CEO and will be writing the annual letters. Greg shares the Berkshire creed that a "report" is what a Berkshire CEO annually owes to owners. And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well,” he wrote in the letter.

"We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family's) savings. Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times," Buffett added.

Despite recent challenges in finding major acquisitions, Buffett confirmed that he has no intention of offering a dividend. He also revealed that this year’s shareholder meeting in May will be shorter than usual, with Buffett and Berkshire’s two vice chairmen fielding questions from 8 a.m. until 1 p.m.

Why It Matters: Buffett’s 60-year tenure at Berkshire Hathaway has seen the company transform into a global powerhouse. His endorsement of Abel as his successor is a testament to Abel’s capabilities and the company’s robust succession plan.

The significant cash reserves and strategic investments underscore Berkshire Hathaway’s financial strength and its ability to seize investment opportunities. Despite the challenges in finding major acquisitions, Buffett’s decision not to offer a dividend reflects his confidence in the company’s growth prospects.

The upcoming shareholder meeting will provide further insights into the company’s future direction under Abel’s leadership.

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