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Sanibel Captiva Investment Advisers President Pat Dorsey on what to expect from Warren Buffett’s annual letter to Berkshire Hathaway shareholders.
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-- Hathaway stock Warren Buffett's company hit an all time high yesterday.
This company has been out one of the most watched the all time because Warren Buffett runs at the key of course -- been one of the most brilliant investors are time.
Somebody who has watched him since he was -- -- young -- pat Dorsey of -- about capital.
And let's talk about what you expect from the annual shareholder meeting pat when it comes out after the bell today.
It is -- I keep saying a must -- for all investors the website nearly it's totally overwhelmed everybody jumps on -- as soon as it comes out because.
He did is still in what you get from the shareholder letter that you -- Well I think the most did the things like most of the -- letters how plain spoken and on incidents.
UB a lot of shareholder letters and you hear company so well we -- record earnings when they might have been up 1% over last year they like to guild the Lily is at work.
Whereas Buffett is always very honest usually starts off by talking about a couple of mistakes.
Sometimes talks about accounting issues or other issues the economy.
And then often talks about where he sees Berkshire going in the future.
I'll tell you -- he talks about mistakes I remember the year he made about investment and ConocoPhillips.
He -- -- at the highs and it was -- first line there isn't a company in the world that puts its biggest mistake in the first line of the first page.
And he said we did some dumb things and one of them was by ConocoPhillips.
When oil was at a 147 dollars a barrel.
What were some of his dumbest moves this year if there -- -- -- -- will will probably hear about is is investment in some bonds issued by a company called TX you now called Energy Future Holdings he remember this is the largest private equity buyout of all time in 2007.
And Buffett bought about two billion of high yield bonds and he of course since then natural gas prices have really been in the toilet.
Which has made Energy Future Holdings to issue not performed very well he's already written off about 11 point three billion of these bonds and warned that they could be a total loss.
My suspicion is that they are now a total loss they'll probably talk about that a -- OK I think you're right on that one let's go to acquisitions he just made a whopper of one of that was high spending more than 23 billion dollars to invest -- it with Ritchie capital.
He never says what he's gonna buy.
-- any clues in -- and if so is there something interesting that you think he may look at -- with his elephant gun as a target as he likes to say.
I think it's acquisitions are likely to -- one of two categories.
One is like the -- deal a way to earn a better rate of return on his big cash pile.
He's of course is that equity volume Hines got all the protocol oppressed but the most interesting part of that was he bought.
9% preferred stocks -- -- eight billion dollars into preferred stock -- 9%.
But so much better yield in the basically nothing you're getting on cash right now.
So that's category one and acquisitions investments the second category are investments that absorbed cash he's a -- things like utilities and Burlington northern.
They basically require deployment of Berkshire's cash -- a good but not awesome rate of return.
'cause it it almost -- puts them on auto pilot he's 82 years old he needs that huge cash -- to constantly be working to grow the company's he has he has said that.
But what he hasn't said is through his successor is any chance it would be revealed.
That it is I don't know going to be at Columbia Business School.
They Parse some 400000.
Words that Buffett has written in the past and they found that he mentioned a -- -- a guy who runs its insurance business is brilliant.
-- about a hundred times more than everybody else -- -- company he's got some 75 to eighty different managers under his points.
Yeah I mean he does work more directly with the G and a lot of his managers.
Given -- she is responsible for pricing very unusual insurance risks so mean that's part of the reason but certainly he's have been very fulsome and his admiration pre G.
The question really is you know AG has been in eight capital -- her kind of in a very you know narrow world of insurance over time.
And the question is is that would Buffett wants in his next -- in his in his successor.
Or does he wants -- -- real operational experience running a large enterprise like -- Matt rose at Burlington northern.
But you know it he's not gonna give us any clues if he really does only does -- on air.
I watch shopper Ted Wexler to attempt Wexler is one of those two -- and talk comes who are running his Newport -- -- Stock portfolio he has that sort of correct sentiment he likes -- ought to do so that's important.
Picked up thank you so much we appreciate it I -- you'll be watching the annual shareholder letter comes out right after the bell David -- and I we'll have the latest juicy tidbits that are with in it for you coming up.
