In his annual letter to Berkshire Hathaway shareholders, released on Saturday, Warren Buffett celebrated the virtues of Coca-Cola, took an apparent swipe at President Joe Biden, and expressed frustration over “one of the shames of capitalism.”
The Berkshire CEO described his firm’s wins over the years, highlighting its $1.3 billion bet on Coca-Cola in 1994—worth $25 billion at the end of 2022. He noted the dividend had grown to $704 million by last year, up from $75 million the first year, writing, “Growth occurred every year, just as certain as birthdays. All [vice chairman Charlie Munger] and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.”
The legendary investor also defended stock buybacks. Last year, the U.S. government imposed a 1% tax on them—a late addition to the Inflation Reduction Act—and Biden has signaled support for raising it.
“When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive),” he wrote.
His firm has been among the largest U.S. repurchasers in recent years, buying back almost $8 billion of its own shares in 2022, $27 billion in 2021, and about $25 billion in 2020.
“There are many Berkshire centimillionaires and, yes, billionaires who have never studied our financial figures,” he wrote. “They simply know that Charlie and I—along with our families and close friends—continue to have very significant investments in Berkshire, and they trust us to treat their money as we do our own.”
Buffett also took aim at the financial trickery that managers often perform to beat analysts’ expectations.
“Even the operating earnings figure that we favor can easily be manipulated by managers who wish to do so,” he warned. “Such tampering is often thought of as sophisticated by CEOs, directors, and their advisors. Reporters and analysts embrace its existence as well.”
He called the activity “disgusting,” adding, “It requires no talent to manipulate numbers: Only a deep desire to deceive is required. ‘Bold imaginative accounting,’ as a CEO once described his deception to me, has become one of the shames of capitalism.”
Berkshire Hathaway has ranked among the most most-admired companies in the U.S. for decades. Running such a firm appears to be correlated with the longevity of CEOs, and Buffett has been in that role for more than half a century.