Buffett's Berkshire Hathaway annual report is finally out. In 2021, Berkshire Hathaway's operating profit was US$27.455 billion, an increase of 25% year-on-year, and net profit was US$89.795 billion, or about RMB567.2 billion, an increase of 111% year-on-year.
In 2021, Berkshire's stock price rose 29.6%, the best performance in nearly 8 years, and the total market capitalization continued to hit a record high. Over the same period, the S&P 500 index increased by 28.7%, and Berkshire outperformed by 0.9 percentage points, and again outperformed the S&P 500 index after two years.
Buffett repeatedly mentioned long-term value investing in his shareholder letter. He emphasized that Berkshire's market capitalization increased by 36,416 times from 1964 to 2021.
Berkshire's operating profits are mainly from four major business companies, namely insurance companies, Apple, BNSF Railway, and heavy stock BHE. Apple paid a dividend of $785 million and made a profit from its stock holdings of $5.6 billion. In addition, in 2021, the two major businesses of rail and energy set records, and Burlington Railway and Berkshire Hathaway Energy reached net profits of $6 billion and $4 billion respectively last year.
In 2021, Berkshire's repurchase amount reached about $27 billion, a new high. Buffett mentioned in the shareholder letter that there are three ways to increase the value of shareholders' investments. The first is to improve the profitability of Berkshire Hathaway Holdings' businesses, such as insurance and energy, through internal growth or acquisitions. The second is to buy equity in publicly traded excellent companies, such as investing in Apple and BYD Motors. The third way is to buy back Berkshire's shares.
Buffett currently holds the largest stocks. Apple has the highest market capitalization at $157.5 billion. Bank of America came second with a market capitalization of $44.9 billion; American Express third, with $24.8 billion; Coca-Cola fourth, with a market capitalization of $23.7 billion; and Kraft Heinz with a market capitalization of $11.7 billion.
Chinese new energy vehicle giant BYD is Berkshire Hathaway's eighth-largest heavy stock. Since Buffett spent $230 million to buy 225 million by-the-bay by-one Hong Kong stocks in September 2008, Buffett has made more than 32 times more money on BYD's investments.
By the end of 2021, Berkshire had $144 billion in cash, or about 909.6 billion yuan. Buffett always has enough cash in his hand to bottom out.
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Shanglin Academy: Yang Fei, Doctor of Economics, University Teacher, In-depth Observation of Industrial Economics and Financial Events.