Berkshire needs ‘huge’ deals, says Buffett

to substantially increase the earnings of its non-insurance group. For that to happen, we will need to make one or more huge acquisitions.”

The letter was considerably shorter than in recent years, a little over 8,000 words compared with more than 14,000 last year, and did not discuss major Berkshire stock holdings such as Apple Inc and Wells Fargo & Co. Buffett often invests in stocks when he cannot find whole companies to buy. It was also short on faulting excesses of Wall Street and Washington, and said nothing about Berkshire’s plan to create a healthcare company with Amazon.com Inc and Jpmorgan Chase & Co.

At age 87, “he doesn’t want to make any enemies,” said Bill Smead, chief executive of Smead Capital Management in Seattle, a Berkshire investor. Berkshire also posted a record $44.94 billion annual profit, though $29.1 billion stemmed from the slashing of the US corporate tax rate, which reduced the Omaha, Nebraska-based conglomerate’s deferred tax liabilities. Book value per share, measuring assets minus liabilities, rose 23% in 2017.

It has been more than two years since Buffett made a major purchase, the $32.1 billion takeover of aircraft parts maker Precision Castparts Corp, and his advancing age gives him less time to find more of the “elephants” he prefers. But he has given himself and longtime Vice Chairman Charlie Munger, 94, more freedom to focus on investing and allocating capital.

Neither has signalled any intention of stepping down soon, though Berkshire last month named two additional vice chairmen who could eventually succeed Buffett as chief executive.

AP/FILE Warren Buffett said finding things to buy at a “sensible purchase price” has become a challenge and is a major reason Berkshire is awash with $116 billion of lowyielding cash and government bonds