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26 February 2018
 |
| Warren Buffett(The Total Investment & Insurance Solutions) |
Billionaire Warren Buffett says American businesses are getting a
significant boost from the tax overhaul, but health care costs remain a drag so
he hopes a new initiative his company started with Amazon and JP Morgan Chase
will deliver significant savings. The
Total Investment & Insurance Solutions
Buffett appeared on CNBC Monday after
releasing his annual letter to Berkshire Hathaway shareholders over the
weekend. Buffett's Omaha, Nebraska, conglomerate reported a $29 billion paper
gain on far-reaching changes to the U.S. tax code, and the conglomerate will
benefit from a lower tax rate going forward. The Total Investment & Insurance Solutions
"It's a huge tail wind," Buffett
said.
The tax gain Berkshire reported was mostly
related to adjustments in the paper value of its deferred taxes and unrealized
capital gains on stocks. It drove most of the increase in Berkshire's $44.9
billion profit last year, up from $24.1 billion in 2016. The Total Investment & Insurance Solutions
But Buffett says he's had a hard time finding
acquisitions at reasonable prices, so he's sitting on $116 billion cash and
short-term bonds.
Buffett said he expects he'll eventually find
a good use for a big chunk of that cash, but he may have to wait for a downturn
in the economy. If he can't find enough sizeable deals, he said Berkshire may
repurchase more stock instead of initiating a dividend. The Total Investment & Insurance Solutions
Last month, Berkshire announced its new
health care initiative with Amazon and JP Morgan. Buffett didn't discuss many
details of the plan Monday.
But Buffett said the goal is much bigger than
simply shaving 3 percent off health costs through negotiating power. The Total Investment & Insurance
Solutions
"We're looking for something much bigger
than that," Buffett said. "Hopefully we can find a way where perhaps
better care could be delivered even at a somewhat lesser cost." The Total Investment & Insurance
Solutions
Buffett said Berkshire and its partners have
been inundated with offers from companies and individuals who want to help with
the health cost project, but it's too early to consider those because the group
is still looking to hire an executive to lead the effort. The Total Investment & Insurance
Solutions
Buffett said he remains confident in Wells
Fargo and Berkshire is the bank's largest stakeholder with about 10 percent of
the bank's shares.
Buffett said he believes Wells Fargo CEO Tim
Sloan has worked to clean up the misconduct that was reported at the bank in
recent years. Regulators determined that bank employees opened millions of
unauthorized accounts to meet sales quotas. The Total Investment & Insurance Solutions
"My guess is they have scrubbed and
scrubbed and found all the things that were done wrong," Buffett said.
Buffett said it could take the bank a long
time to work its way back into regulators' good graces again. The Total Investment & Insurance
Solutions
The success Buffett has had over the years
means a lot of investors watch his moves closely. He said Monday that Berkshire
is unsurprisingly his favorite stock, but he pointed out that Apple is the
stock Berkshire bought most last year.
Buffett said investors can get clues about
what he likes best by looking at Berkshire's portfolio. Wells Fargo is the
biggest holding worth about $29 billion, but Berkshire's Apple stake isn't far
behind at $28 billion.
Several of Berkshire's other biggest stock
holdings have been held for decades. Those include large stakes in Coca-Cola
and American Express.
Beside investments, Berkshire owns more than
90 different businesses in a variety of industries, including BNSF railroad,
Geico insurance and several electric utilities and manufacturing firms.The Total Investment & Insurance
Solutions
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