Tax cuts boost Berkshire Hathaway book value in 2017

Javier Howell
February 25, 2018

But only $36bn came from Berkshire's operations.

For its part, Buffett said Berkshire is sitting on $116 billion of low-yielding cash and government bonds - whose average maturity was 88 days as of year-end 2017. "The remaining $29bn was delivered to us in December when Congress rewrote the United States tax code".

Warren Buffett's Berkshire Hathaway Inc on Saturday reported a record quarterly and annual profit, fueled by a big cut in the USA corporate income tax rate championed by President Donald Trump.

American tycoon Warren Buffett has played down speculation that he is putting in place plans to step down as boss of conglomerate Berkshire Hathaway, insisting that he has "never felt better". "We have $90 or $95 billion in gains, and our owners, dollar for dollar, will participate in that..."

Buffet said that a dearth of "sensible" valuations led it to close nearly no takeovers of companies in 2017, adding that "price seemed nearly irrelevant to an army of optimistic purchasers".

So Berkshire held almost $116 billion in cash and short-term bonds at year end.

In January, Buffett, 87, narrowed down the list of people who could replace him to two veteran Berkshire executives, Greg Abel and Ajit Jain.

But he said the prices asked for businesses past year "hit an all-time high", and Berkshire will be looking for those available at "a sensible purchase price". Over the past 53 years, Berkshire has grown its per-share book value at a 19.1% rate compounded annually, better than the 9.9% gain for the S&P 500 stock index, including dividends. As a result, we recorded an income tax benefit of approximately $29.6 billion and we increased regulatory liabilities of our regulated utility subsidiaries by approximately $6.0 billion for the portion of the deferred income tax liability reduction that we will be required to, effectively, refund to customers in the rate setting process.

Warren Buffett handily won the bet he entered against hedge funds in 2007.

"I want to quickly acknowledge that in any upcoming day, week or even year, stocks will be riskier - far riskier - than short-term US bonds".

Buffett gave the final details of a 10-year long bet he made against hedge funds in 2007.

"We expect Buffett's annual letter to reassure investors that his health remains remarkable and he intends to be around for awhile", said Cathy Seifert, equity analyst at CFRA Research in NY.

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