Published: Sun, February 25, 2018
Finance | By Gustavo Carr

Value of Buffett's Berkshire Jumps 13 Percent on Trump Tax Cut

Value of Buffett's Berkshire Jumps 13 Percent on Trump Tax Cut

Warren Buffett wrote that his multinational conglomerate could report $65.3 billion in gains of its net worth for the year. But only $36 billion came from Berkshire's operations. 'The remaining $29 billion was delivered to us in December when Congress rewrote the US Tax Code'.

However, he added that the $65bn gain was "nonetheless real - rest assured of that".

The new law lowered the tax rate paid by U.S. companies from 35 percent to 21 percent, allowing many to undertake major new outlays and others to book significant fiscal gains.

Berkshire Hathaway wholly owns dozens of companies - from Dairy Queen to Duracell - and holds significant shares in large and diverse corporations including American Express, Apple, Bank of America, Charter Communications, Coca-Cola, Delta Air Lines, General Motors, Goldman Sachs, Moody's, Wells Fargo and Southwest Airlines.

Buffett's yearly check-in with his company's shareholders is a closely watched event on Wall Street and Main Street.

Despite sitting on more than $100 billion in cash, Warren Buffett says he was turned off by high asking prices for businesses he considered buying and that kept him from pulling the trigger on any major deals in 2017.

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The company's often-impressive pace of acquisitions had slowed a year ago, he noted, when the prices asked for businesses 'hit an all-time high, ' amid what he called 'a purchasing frenzy'.

The biggest thing missing from the deals Buffett eyed was one of the key qualities he looks for when buying a company: "a sensible purchase price". "Our smiles will broaden when we have redeployed Berkshire's excess funds into more productive assets", Buffett wrote. "Thus, upon the enactment of the TCJA, we included a net income tax benefit in our 2017 earnings of approximately $28.2 billion".

A major reason for that decline was a $2.22 billion loss from insurance underwriting, Berkshire's first full-year deficit since 2002, hurt by Hurricanes Harvey, Irma and Maria and wildfires in California.

"Though markets are generally rational, they occasionally do insane things", said Buffett, adding that investors need "an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals" even if makes them "look foolish".

Buffett emphasized that no one can predict market declines, and said that declines "offer extraordinary opportunities to those who are not handicapped by debt".

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