Warren Buffett highlights a ‘shame of capitalism’ while shooting at Biden and celebrating Coca-Cola’s virtues
In his annual letter to Berkshire Hathaway shareholders, released Saturday, Warren Buffett celebrated the virtues of Coca-Cola, gave President Joe Biden an obvious dig, and expressed frustration at “one of the shames of capitalism.”
Describing his company’s accomplishments over the years, the Berkshire CEO highlighted his $1.3 billion bet on Coca-Cola in 1994 – valued at $25 billion by the end of 2022. He noted that the dividend had grown from $75 million last year to $704 million in its first year and wrote, “Growth happened every year, just as sure as birthdays. All [Vice Chairman Charlie Munger] and I had to cash Coke’s quarterly dividend checks. We anticipate that these controls will most likely increase.”
The legendary investor also defended share buybacks. Last year the US government imposed a 1% tax on them – a late addition to the Inflation Reduction Act – and Biden has signaled support for an increase.
“If you’re told that all Buybacks hurt shareholders or for the country, or especially beneficial for CEOs, listen to either an economically illiterate or a silver-tongued demagogue (characters that are not mutually exclusive),” he wrote.
His firm has been among the largest buybacks in the U.S. in recent years, repurchasing nearly $8 billion of its own stock in 2022, $27 billion in 2021 and about $25 billion in 2020.
“There are many Berkshire centimillionaires and, yes, billionaires who have never studied our financials,” he wrote. “They just know that Charlie and I — along with our families and close friends — continue to have very significant investments in Berkshire, and they trust us to treat their money like our own.”
Buffett also took aim at the financial tricks managers often use to beat analysts’ expectations.
“Even the operating Our favored earnings metric can be easily manipulated by managers who wish to,” he cautioned. “Such manipulations are often considered sophisticated by CEOs, directors and their advisors. Reporters and analysts also applaud its existence.”
He called the activity “disgusting,” adding, “It doesn’t take talent to manipulate numbers: it just takes a deep desire to deceive.” “Bold imaginative accounting,” as one CEO once described his deception to me, has become one of capitalism’s shame.”
Berkshire Hathaway has been one of America’s most admired companies for decades. Running such a company seems tied to CEO longevity, and Buffett has been in that role for more than half a century.
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