Wednesday marked the 93rd birthday of Warren Buffett, better known as the "Oracle of Omaha". After taking the helm of Berkshire Hathaway in 1965, Buffett has seen the conglomerate's shares reach an all-time high, with record operating profits making it the largest nontech company by market capitalization. Over the past year he has continued to prove his skill as a savvy investor with a series of promising opportunities, from buying undervalued Japanese stocks to navigating an increase in interest rates. Those who have had the pleasure of meeting him, such as University of Maryland's Robert H. Smith School of Business finance professor David Kass, attest to his acuity and continued strength as an investor.
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Thanks to his huge cash claim of $147 billion at the last of June, Buffett was one of the only investors who managed to capitalize on the higher rates. His huge cache has been an area of worry for some time, but is now bringing in a considerable return with short-term rates exceeding 5%. Buffett has been investing heavily in Apple, which now takes up half of his equity portfolio due to its 40% rise this year. He regards Apple as a consumer products conglomerate and is also drawn in by its big buyback programs, ultimately gaining Berkshire over $100 billion since 2016. Regarding his investment in five Japanese trading houses this year, Chamath Palihapitiya dubbed him "the GOAT". After meeting with the heads of these firms in Japan, Buffett's visit to the country in more than a decade, to demonstrate his support has been acclaimed. This innovative investment is the first of its kind as no principal investor or hedge manager has ever invested in Japan's deflationary environment. Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo have a conglomerate structure parallel to Berkshire's and are known as consistent dividend payers and earners. According to Social Capital's Palihapitiya, what makes this trade so remarkable is that Buffett is able to hedge currency risk by selling Japanese debt and then pocketing the difference between the investments' dividends and the bond coupon payments. The last time shareholders heard from Buffett was at Berkshire's annual meeting in May. He and Charlie Munger participated in a six-hour-long Q&A that discussed relevant topics for investors - such as the banking crisis, recession risks, and even crypto.
Macrae Sykes, portfolio manager of the actively managed Gabelli Financial Services Opportunities ETF (with Berkshire as its biggest holding), was amazed by the delivery and intellectual clarity of the executives in the last shareholder meeting. He believes that their presence shows operating accountability and alignment with the brand. On New Year's Day, Munger, vice chairman of Berkshire, will turn 100.
Berkshire, with its $800 billion, 40 industries, and 60 companies, has reportedly boasted an average annual return double that of the S&P 500 since LBJ-era Buffett took control. From 1965 to 2022, Berkshire's compound annual gain was 19.8%, compared with only 9.9% for the S&P 500. This results in an overall total return of 3,787,464% vs. 24,708% for the benchmark. Countless Berkshire shareholders have become millionaires thanks to Buffett's shrewd investment tactics and long-term value philosophy. Sykes pointed out that, even at 93, Buffett remains unwavering in his "forever" holding period.
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