In his annual letter, Warren Buffett tells investors to ignore Wall Street pundits

Omaha, Neb. –

Warren Buffett credited his longtime partner — the late Charlie Munger — with being the architect of the Berkshire Hathaway conglomerate he’s received the credit for leading and warned shareholders in his annual letter not to listen to Wall Street pundits or financial advisors who urge them to trade often.

Buffett also recounted how Berkshire’s insurance businesses thrived last year, but its massive utilities and BNSF railroad disappointed. He also told shareholders how he never plans to sell its stakes in nearly 30 per cent of Occidental Petroleum and nine per cent of five large Japanese trading houses, but he reiterated that he has no plans to buy the oil producer outright.

Berkshire’s eclectic mix of businesses, combined with the strong performance of its investments, delivered a profit of US$37.57 billion, or US$26,043 per Class A share, in the fourth quarter. That’s more than double the US$18.08 billion profit, or US$12,355 per Class A share, that Berkshire reported a year earlier.

But Buffett cautioned that investors should largely ignore those bottom line figures because they are swayed so much by the paper value of its investments. Instead, he has long urged investors to pay attention to Berkshire’s operating earnings that exclude investments.

By that measure, Berkshire reported a 28 per cent jump in operating earnings to US$8.48 billion, or US$5,878.21 per Class A share. That’s up from US$6.63 billion, or US$4,527.06 per Class A share.

The three analysts surveyed by FactSet Research predicted that Berkshire would report quarterly operating earnings of US$5,717,17 per Class A share.

Berkshire’s stock has set a series of new records in recent weeks, most recently peaking at US$632,820 per Class A share Friday morning as investors eagerly anticipated Buffett’s letter. Buffett is revered for his remarkably successful track record and the sage advice he has offered over the decades. His annual letter is always one of the best-read reports in the business world.

Berkshire also spent US$2.2 billion repurchasing its own shares in the fourth quarter, bringing the total to US$9.2 billion for the full year.