By ANDREW BARY<\/p>\n
THURSDAY, FEBRUARY 25, 2010<\/small> <\/p>\n BERKSHIRE HATHAWAY’S EAGERLY<\/strong> awaited annual report is due to be posted on the company’s web site on Saturday morning (Feb. 27) and Berkshire watchers are eagerly awaiting CEO Warren Buffett’s thoughts on the markets, Berkshire’s businesses, and the recently concluded Burlington Northern acquisition.<\/p>\n Berkshire had a great 2009 as its shareholder equity likely increased by more than $20 billion, boosting the company’s book value to an estimated $84,000 a share from $70,530. That would be a record annual rise in Berkshire’s shareholder equity and one of the largest ever by an American company. The rise in book value reflects the sharp increase in Berkshire’s equity investments, plus operating profits that we estimate at about $5,000 per share.<\/p>\n Despite Berkshire’s<\/a><\/span> (ticker: BRKA) business success last year, Berkshire shares had a sub-par 2009, with the class A shares rising just 3%, but the stock has done well so far in 2010, helped by index-fund buying related to its recent addition to the S&P 500 index.<\/p>\n The class A shares are up about 20% at $118,700. The combination of a rising stock price and about $10 billion of share issuance in the Burlington deal means that Berkshire now ranks fourth in the U.S. stock market, based on market value. It’s now valued at $196 billion, behind only ExxonMobil<\/a><\/span> (XOM), Microsoft<\/a><\/span> (MSFT) and Wal-Mart Stores<\/a><\/span> (WMT). Quite an accomplishment for a company valued at just $20 million when Buffett took control in 1965.<\/p>\n Berkshire fans will be interested to see what Buffett has to say in his annual letter about the company’s struggling NetJets division that provides private-jet services. Hurt by the weak economy and an overly ambitious expansion plan, NetJets lost $531 million in the first nine months of 2009 and Buffett moved to replace NetJets CEO Rich Santulli, who founded the company, with David Sokol, the chairman of Berkshire’s MidAmerican Energy unit. Sokol has long been our pick as Buffett’s successor as CEO. Buffett turns 80 in 2010 and he might talk more about succession, including potential candidates to run Berkshire’s investment portfolio.<\/p>\n The company’s industrial businesses, ranging from bricks to insulation, carpets and tool-making equipment, have been hit in the recession and Buffett may discuss their outlook. Berkshire also has been less aggressive in taking on catastrophe insurance risk due to lower premiums and a desire to take less risk given Buffett’s many investments during the financial panic of late 2008 and early 2009.<\/p>\n Buffett may also touch on Berkshire’s stand-out auto insurance business, Geico, which now is facing a stronger competitive threat from rival Progressive<\/a><\/span> (PGR).<\/p>\n Buffett may also address financial reform and whether he favors any of the current proposals to force over-the-counter derivatives into exchanges and curb bank proprietary trading operations.<\/p>\n Now that Berkshire is the No. 4 company in the stock market and becoming more widely held by investors thanks in part to the stock split that has left the class B shares<\/a><\/span> (BRKB) trading around 79, Buffett may feel he has to talk more to Wall Street.<\/p>\n Aside from his occasional TV appearances, Buffett rarely communicates with investors outside of the Berkshire annual meeting in May. It’ll be interesting if Buffett considers holding investor meetings or quarterly earnings conference calls. There is very little analyst coverage of Berkshire, partly because he’s not been eager to talk to analysts, who are reluctant to take on such a large and complex company without guidance.<\/p>\n Whatever Buffett tackles in the annual letter, it should make good reading for investors this weekend (as too, ahem, should the new issue of Barron’s<\/em> magazine).<\/p>\n The 2009 letter & Annual Report will be available at EWB as soon as it becomes available.<\/span><\/p>\n Here<\/a> for the first time are the complete list of Warren Buffett’s Berkshire Hathaway letters to shareholders for download 1977 – 2009.<\/p>\n <\/span><\/p>\n Share Investor Links<\/span><\/a><\/a><\/p>\n Share Investor Blog<\/a> – Stockmarket & Business commentary Recommended Amazon Reading<\/span><\/p>\nInvestors are eagerly waiting to see what CEO Warren Buffett will say on Saturday in Berkshire Hathaway’s annual report.<\/span><\/h2>\n
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