Star investor Warren Buffet was able to increase profits of his investment company five times, although the business was actually bad. He benefits from the tax reform of US President Trump.
Warren Buffett plans big company acquisitions. "One or more massive acquisitions" are necessary to substantially improve the operating profits of his investment company Berkshire Hathaway, said the US star investor on Saturday in his annual letter to shareholders.
However, there is no real reason to complain: in the fourth quarter alone, the investment fund earned $32.6 billion, a five times higher gain over the course of a year. Buffett's conglomerate benefited enormously from the US tax reform, which reduced corporate taxes at federal level from 35 to 21 percent.
For the entire financial year 2017 the surplus increased from $24.1 billion to $44.9 billion, thanks to extra revenue due to the tax reform. The cash reserves held by the investment firm grew from $86.4 billion to approximately $116 billion.
In the day-to-day business, however, it didn't work out that well due to difficulties in the insurance sector - the operating result at the end of the year fell by 24 percent to 3.3 billion dollars.
Now, however, pressure is increasing on Buffett to use the funds for takeovers because they generate more returns than, lets say, lower-yielding government bonds. However, the investor legend is struggling with the high valuations on the capital markets, which currently makes it difficult to find companies at "reasonable prices".
Berkshire Hathaway has some 90 companies - from insurers, retailers and car dealerships to newspapers and a freight railroad. In addition, Buffett's conglomerate holds large equity interests in various listed corporations such as Apple, Coca-Cola, Goldman Sachs or Kraft Heinz. Buffett has been leading the company for over half a century. Berkshire Hathaway's shares have long been by far the most expensive stocks in the world.
Source: dpa
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