More stories

  • in

    Read Warren Buffett’s latest annual letter to Berkshire Hathaway shareholders

    Warren Buffett’s Berkshire Hathaway raised its stakes in Mitsubishi Corp., Mitsui & Co., Itochu, Marubeni and Sumitomo — all to 7.4%.
    Bloomberg | Bloomberg | Getty Images

    Warren Buffett released Saturday his annual letter to shareholders.
    In it, the CEO of Berkshire Hathaway discussed how he still preferred stocks over cash, despite the conglomerate’s massive cash hoard. He also lauded successor Greg Abel for his ability to pick opportunities — and compared him to the late Charlie Munger. More

  • in

    This ETF provider thinks it’s time to rethink investing in China

    Investors may want to reduce their exposure to the world’s largest emerging market.
    Perth Tolle, who’s the founder of Life + Liberty Indexes, warns China’s capitalism model is unsustainable.

    “I think the thinking used to be that their capitalism would lead to democracy,” she told CNBC’s “ETF Edge” this week. “Economic freedom is a necessary, but not sufficient precondition for personal freedom.”
    She runs the Freedom 100 Emerging Markets ETF — which is up more than 43% since its first day of trading on May 23, 2019. So far this year, Tolle’s ETF is up 9%, while the iShares China Large-Cap ETF, which tracks the country’s biggest stocks, is up 19%.
    The fund has never invested in China, according to Tolle.

    Arrows pointing outwards

    Tolle spent part of her childhood in Beijing. When she started at Fidelity Investments as a private wealth advisor in 2004, Tolle noted all of her clients wanted exposure to China’s market.
    “I didn’t want to personally be investing in China at that point, but everyone else did,” she said. “Then, I had clients from Russia who said, ‘I don’t want to invest in Russia because it’s like funding terrorism.’ And, look how prescient that is today. So, my own experience and those of some of my clients led me to this idea in the end.”

    She prefers emerging economies that prioritize freedom.
    “Without that, the economy is going to be constrained,” she added.

    Arrows pointing outwards

    ETF investor Tom Lydon, who is the former VettaFi head, also sees China as a risky investment.
     “If you look at emerging markets… by not being in China from a performance standpoint, it’s provided less volatility and better performance,” Lydon said.

    Disclaimer More

  • in

    Warren Buffett amasses more cash and sells more stock, but doesn’t explain why in annual letter

    Warren Buffett walks the floor and meets with Berkshire Hathaway shareholders ahead of their annual meeting in Omaha, Nebraska on May 3rd, 2024.
    David A. Grogen | CNBC

    The mystery over Warren Buffett’s surprisingly defensive stance deepened over the weekend.
    The 94-year-old CEO of Berkshire Hathaway sold more stocks in the latest quarter and grew a record cash pile even larger to $334 billion, but failed to explain in his highly anticipated annual letter why the investor known for his astute equity purchases over time was seemingly battening down the hatches.

    Instead Buffett said that this posture in no way represented a move away from his love for stocks.
    “Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett wrote in the 2024 annual letter released Saturday. “That preference won’t change.”
    Berkshire’s monstrous ownership of cash has raised questions among shareholders and observers especially as interest rates are expected to fall from their multi-year highs. The Berkshire CEO and chairman in recent years has expressed frustration about an expensive market and few buying opportunities. Some investors and analysts have grown impatient with the lack of action and have sought an explanation why.
    Despite his repeated selling of stock, Buffett said Berkshire will continue to prefer equities to cash.
    “Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance,” Buffett wrote. “Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”

    Shareholders will have to wait a little longer it seems as the Omaha-based conglomerate net sold equities for a ninth consecutive quarter in the final period of last year, according to the company’s annual report, which was also released on Saturday.
    All told, Berkshire sold more than $134 billion worth of stocks in 2024. This is mainly due to the shrinking of Berkshire’s two largest equity holdings — Apple and Bank of America.
    Meanwhile, it appears Buffett is not finding his own stock attractive either. Berkshire continued its buyback halt, repurchasing no shares in the fourth quarter or in the first quarter through Feb. 10.
    This is despite a massive increase in operating earnings reported by the conglomerate on Saturday.

    ‘Often, nothing looks compelling’

    Buffett’s sitting on his hands amid a raging bull market that’s seen the S&P 500 gain more than 20% for two years in a row and move into the green again so far this year. Some cracks have begun to develop in the past week, however, with some concerns growing about a slowing economy, volatility from rapid policy changes from new President Donald Trump and overall stock valuations.
    Berkshire shares were up 25% and 16% respectively the last two years and are up 5% so far this year.
    Buffett did offer perhaps a small hint about stock valuations being a concern in the letter.
    “We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family’s) savings,” wrote Buffett. “Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities.”
    In this year’s letter, Buffett did endorse designated successor Greg Abel in his ability to pick equity opportunities, even comparing him to the late Charlie Munger.
    “Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times as did Charlie,” Buffett said.At last year’s annual meeting, Buffett surprised many by announcing that Abel, vice-chairman of non-insurance operations, will have the final say on all Berkshire’s investing decisions, including overseeing the public stock portfolio.
    Some investors and analysts have speculated Buffett’s conservative moves in the last year are not a market call, but him preparing the company for Abel by paring outsized positions and building up cash for him to deploy one day.
    Buffett did signal he would be deploying capital in one area: the five Japanese trading houses he began buying nearly six years go.
    “Over time, you will likely see Berkshire’s ownership of all five increase somewhat,” he wrote. More

  • in

    Berkshire operating earnings surge 71% in fourth quarter, cash hoard balloons to record $334 billion

    The Warren Buffett-led conglomerate said its operating profit — which encompasses earnings from the company’s wholly owned businesses — skyrocketed to $14.527 billion during the final three months of 2024.
    That was led by by a whopping 302% jump in insurance underwriting from the year-earlier period to $3.409 billion.

    Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024. 
    David A. Grogen | CNBC

    Berkshire Hathaway on Saturday reported a massive surge in fourth-quarter earnings from its operating businesses, driven in large part by insurance, while its cash holdings swelled to record levels.
    The Warren Buffett-led conglomerate said its operating profit — which encompasses earnings from the company’s wholly owned businesses — skyrocketed 71% to $14.527 billion during the final three months of 2024. That was led by by a whopping 302% jump in insurance underwriting from the year-earlier period to $3.409 billion. Insurance investment income also ballooned by nearly 50% to $4.088 billion.

    Operating earnings also popped 27% for the full year, coming in at $47.437 billion.
    “In 2024, Berkshire did better than I expected though 53% of our 189 operating businesses reported a decline in earnings. We were aided by a predictable large gain in investment income as Treasury Bill yields improved and we substantially increased our holdings of these highly-liquid short-term securities,” Buffett, chairman and CEO of Berkshire, said in his annual letter to shareholders. “Our insurance business also delivered a major increase in earnings, led by the performance of GEICO.”
    To be sure, Berkshire warned that the wildfires that broke out in Southern California will lead to an estimated pre-tax loss of about $1.3 billion for its insurance business.

    Cash holdings top $330 billion

    Berkshire Hathaway ended 2024 with $334.2 billion in cash, up from $325.2 billion at the end of the third quarter. This fortress comes as Buffett struggles to find his next big investment target.
    In his annual letter, Buffett defended the large cash holdings.

    “Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change. While our ownership in marketable equities moved downward last year from $354 billion to $272 billion, the value of our non-quoted controlled equities increased somewhat and remains far greater than the value of the marketable portfolio,” he said, adding that “Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities.”

    Stock chart icon

    Berkshire Hathaway 1-year chart

    Investment gains slowed sharply in the fourth quarter to $5.167 billion from $29.093 billion in the year-earlier. Indeed, Berkshire pared stock investments during the year. Notably, it sold a chunk of its Apple stake through 2024.
    To be sure, Berkshire always notes in its earnings releases that: “The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules.”
    Berkshire’s total earnings for the quarter came in at $19.694 billion, a 47% decrease from the year-earlier period of $37.574 billion. For the full year, the company’s bottom line came in at $88.995 billion, down 7.5% from $96.223 billion in 2023. More

  • in

    Walmart’s worst week since 2022: Retailer’s former U.S. CEO Bill Simon thinks Wall Street is getting earnings, tariff risks wrong

    Register now for the exclusive Fast Money Live Event on February 27th

    Fast Money Podcast
    Full Episodes

    Walmart stock may be a steal.
    Former Walmart U.S. CEO Bill Simon contends the retailer’s stock sell-off tied to a slowing profit growth forecast and tariff fears is creating a major opportunity for investors.

    “I absolutely thought their guidance was pretty strong given the fact that… nobody knows what’s going to happen with tariffs,” he told CNBC’s “Fast Money” on Thursday, the day Walmart reported fiscal fourth-quarter results.
    But even if U.S. tariffs against Canada and Mexico move forward, Simon predicts “nothing” should happen to Walmart.
    “Ultimately, the consumer decides whether there’s a tariff or not,” said Simon. “There’s a tariff on avocados from Mexico. Do you have guacamole with your chips or do you have salsa and queso where there is no tariff?”
    Plus, Simon, who’s now on the Darden Restaurants board and is the chairman at Hanesbrands, sees Walmart as a nimble retailer.
    “The big guys, Walmart, Costco, Target, Amazon… have the supply and the sourcing capability to mitigate tariffs by redirecting the product – bringing it in from different places [and] developing their own private labels,” said Simon. “Those guys will figure out tariffs.”

    Walmart shares just saw their worst weekly performance since May 2022 — tumbling almost 9%. The stock price fell more than 6% on its earnings day alone. It was the stock’s worst daily performance since November 2023.
    Simon thinks the sell-off is bizarre.
    “I thought if you hit your numbers and did well and beat your earnings, things would usually go well for you in the market. But little do we know. You got to have some magic dust,” he said. “I don’t know how you could have done much better for the quarter.”
    It’s a departure from his stance last May on “Fast Money” when he warned affluent consumers were creating a “bubble” at Walmart. It came with Walmart shares hitting record highs. He noted historical trends pointed to an eventual shift back to service from convenience and price.
    But now Simon thinks the economic and geopolitical backdrop is so unprecedented, higher-income consumers may shop at Walmart permanently.
    “If you liked that story yesterday before the earnings release, you should love it today because it’s… cheaper,” said Simon.
    Walmart stock is now down 10% from its all-time high hit on Feb. 14. However, it’s still up about 64% over the past 52 weeks.

    Sign up for the Spotlight newsletter, a hand curated collection of video clips selected by CNBC’s top editors and producers. Your daily recap of top business highlights and leading stories.

    Disclaimer More

  • in

    Shortage of Novo Nordisk’s Wegovy and Ozempic drugs is resolved, FDA says

    The long-running U.S. shortage of Novo Nordisk’s blockbuster weight loss injection Wegovy and diabetes treatment Ozempic is resolved after more than two years, the U.S. Food and Drug Administration said.
    The FDA’s decision will threaten the ability of compounding pharmacies to make far cheaper, unbranded versions of the injections over the next few months, which caused shares of Hims & Hers Health to plunge.
    The FDA determined that Novo Nordisk’s supply and manufacturing capacity for semaglutide injections can now meet the current and projected demand in the U.S.

    Boxes of Ozempic and Wegovy made by Novo Nordisk are seen at a pharmacy.
    Hollie Adams | Reuters

    The long-running U.S. shortage of Novo Nordisk’s blockbuster weight loss injection Wegovy and diabetes treatment Ozempic is resolved after more than two years, the U.S. Food and Drug Administration said Friday. 
    The FDA’s decision will threaten the ability of compounding pharmacies to make far cheaper, unbranded versions of the injections over the next few months. Many patients relied on unapproved versions of Wegovy and Ozempic since compounding pharmacies are allowed to make versions of branded medications in short supply. 

    Novo Nordisk’s stock closed about 5% higher on Friday. Meanwhile, shares of Hims & Hers, a telehealth company offering compounded Wegovy and Ozempic, fell more than 25%.
    The active ingredient in both of Novo Nordisk’s injectable drugs, semaglutide, has been in shortage in the U.S. since 2022 after demand skyrocketed. That has forced Novo Nordisk and its rival Eli Lilly to invest heavily to expand their manufacturing footprints for their respective weight loss and diabetes drugs — and it may be paying off. 
    The FDA determined that Novo Nordisk’s supply and manufacturing capacity for semaglutide injections can now meet the current and projected demand in the U.S. Still, the agency noted that patients and prescribers may still see “intermittent and limited localized supply disruptions” as products move through the supply chain to pharmacies. 
    “We are pleased the FDA has declared that supply of the only real, FDA-approved semaglutide medicines is resolved,” Dave Moore, Novo Nordisk’s executive vice president of U.S. operations and global business development, said in a statement.
    He added that “no one should have to compromise their health due to misinformation and reach for fake or illegitimate knockoff drugs that pose significant safety risks to patients.”

    The FDA’s announcement comes just months after the agency declared the shortage of tirzepatide — the active ingredient in Eli Lilly’s weight loss injection Zepbound and diabetes counterpart Mounjaro — was over. 
    The FDA’s decision on Friday could better position Novo Nordisk to compete with Eli Lilly in the booming weight loss drug market, which some analysts say could be worth more than $150 billion annually after 2030. 

    Threat to compounded medications

    The agency’s decision, based on a comprehensive analysis, essentially marks the end of a period where compounding pharmacies could make, distribute or dispense unapproved versions of semaglutide without facing repercussions for violations related to the treatment’s shortage status.
    Compounding pharmacies must stop making compounded versions of semaglutide in the next 60 to 90 days, depending on the type of facility, the agency said. That transition period will likely give patients time to switch to the branded versions of the medications. 
    But, in compliance with FDA rules, compounders can still make alternative versions of the drugs if they modify doses, add other ingredients or change the method of giving the treatment to meet a specific patient’s needs. 
    Some patients rely on compounded versions because they do not have insurance coverage for Novo Nordisk’s drugs and cannot afford their hefty price tags of roughly $1,000 a month. While Ozempic is covered by most health plans, weight loss drugs such as Wegovy are not currently covered by Medicare and other insurance.

    Don’t miss these insights from CNBC PRO More

  • in

    UnitedHealth’s rough stretch continues, with buyouts, a reported DOJ probe and a 23% drop in three months

    UnitedHealthcare is in hot water again as the insurance giant grapples with a reported government investigation of its Medicare billing practices, pursues employee buyouts and potential layoffs and faces sharp criticism from billionaire Bill Ackman.
    It extends a tumultuous period for its parent company, UnitedHealth Group, marked by the killing of a top executive, a costly cyberattack against its subsidiary and high medical costs.
    UnitedHealth Group is the biggest health-care conglomerate in the U.S., and UnitedHealthcare is the nation’s largest private insurer. 

    FILE PHOTO: The logo of Down Jones Industrial Average stock market index listed company UnitedHealthcare is shown in Cypress, California April 13, 2016. 
    Mike Blake | Reuters

    UnitedHealthcare is in hot water again as the insurance giant grapples with a reported government investigation of its Medicare billing practices, pursues employee buyouts and potential layoffs, and clashes publicly with billionaire Bill Ackman.
    Those developments in recent days extend a tumultuous past year for its parent company, UnitedHealth Group, marked by the killing of a top executive, a costly cyberattack against its subsidiary and high medical costs in its insurance arm. UnitedHealth Group is the biggest health-care conglomerate in the U.S. based on revenue and its more than $420 billion market cap, and UnitedHealthcare is the nation’s largest private insurer. 

    Shares of UnitedHealth Group have tumbled more than 20% over the last three months.
    The stock also closed 7% lower on Friday following a report about the probe, which was first reported by The Wall Street Journal. The Department of Justice has launched a civil fraud investigation in recent months into UnitedHealth’s billing practices for its Medicare Advantage plans, according to the newspaper.
    The probe specifically examines whether diagnoses were routinely made to trigger extra payments in those plans, including at physician groups the insurer owns, the Journal said. It comes after a series of articles from the newspaper last year, which reported that Medicare paid UnitedHealth billions of dollars for questionable diagnoses. 
    Medicare Advantage plans are offered by private insurers who are paid a set rate by the government to manage health care for seniors looking for extra benefits not covered in traditional Medicare. Those plans have been a source of high medical costs across the broader insurance industry over the last year.  
    In a statement, UnitedHealth called the Journal’s reporting “misinformation” and said the company consistently performs at the industry’s “highest levels” when it comes to government compliance reviews of Medicare Advantage plans

    “Any suggestion that our practices are fraudulent is outrageous and false,” the company said.
    In a research note Friday, RBC Capital Markets analyst Ben Hendrix called the reported investigation an “incremental overhang” but emphasized it will likely be a “lengthy process and unlikely in our view to result in material financial headwinds in the near term.” He pointed to a probe the DOJ launched last year into the company’s subsidiary Optum Rx for potential antitrust violations, which will similarly have an extended timeline before any resolution. 
    Reports about the probe came two days after CNBC first reported that UnitedHealthcare is offering buyouts to employees and could pursue layoffs if resignation quotas aren’t met. The move comes as the company tries to cut costs through efforts like leveraging digital technology. 

    More CNBC health coverage

    And earlier this month, Ackman, one of the world’s most prominent investors, publicly pledged to cover the legal fees for a Texas doctor in a dispute with UnitedHealth Group over her claims that the company pulled her out of an operation to justify a patient’s care.
    Ackman, who is CEO of Pershing Square Capital Management, later took down a post on X that was critical of the insurer after lawyers for UnitedHealth told him that the doctor’s claims that he had amplified on social media were untrue. Ackman said he has no position in UnitedHealth. 
    One of his earlier posts on the dispute called on the U.S. Securities and Exchange Commission to investigate the company and suggested that the insurer’s “profitability is massively overstated due to its denial of medically necessary procedures.”
    That’s similar to the public blowback the company faced after the killing of UnitedHealthcare CEO Brian Thompson in December. It unleashed a wave of pent-up anger and resentment toward the insurance industry and renewed calls for reform to prevent denials of care.
    UnitedHealth is also still grappling with the fallout from a cyberattack on its subsidiary Change Healthcare, which processes medical claims. The cyberattack compromised the protected health information of around 190 million people, and UnitedHealth has paid out more than $3 billion to providers affected.
    UnitedHealth has said it became aware of the cyberattack a year ago to the day Friday.

    Don’t miss these insights from CNBC PRO More

  • in

    Steve Cohen says tariffs and DOGE’s cuts are negative for economy, market correction could be soon

    The chairman and CEO of hedge fund Point72 said he turned bearish for the first time in a while after President Donald Trump’s aggressive trade policy made him worry about inflationary pressures and lower consumer spending.
    “Tariffs cannot be positive, okay? I mean, it’s a tax,” Cohen said Friday at the FII Priority Summit in Miami Beach, Florida.

    Steve Cohen, chairman and CEO of Point72, speaking to CNBC on April 3, 2024.

    Billionaire investor Steve Cohen doubled down on his negative view of the U.S. economy due to a backdrop of punitive tariffs, immigration crackdown and federal spending cuts spearheaded by the so-called Department of Government Efficiency.
    The chairman and CEO of hedge fund Point72 said he turned bearish for the first time in a while after President Donald Trump’s aggressive trade policy made him worry about inflationary pressures and lower consumer spending. Meanwhile, his tough stance on immigration could mean a constrained supply of labor, he said.

    “Tariffs cannot be positive, okay? I mean, it’s a tax,” Cohen said Friday at the FII Priority Summit in Miami Beach, Florida. “On top of that, we have slowing immigration, which means the labor force will not grow as rapidly as … the last five years and so.”
    The prominent hedge fund investor took a stab at DOGE’s cost-cutting moves led by Elon Musk, saying they could only hurt the economy more. Musk has said his goal is to cut federal spending by $2 trillion.
    “When that money has been coursing through the economy over many years, and now, potentially it will be reduced or stopped in many ways, has got to be negative for the economy,” Cohen said.
    Cohen believes a pullback in the stock market could be likely given the uncertain macroeconomic environment. He sees the U.S. economy’s growth slowing down to 1.5% from 2.5% in the second half of the year. 
    “I think we’re seeing the regime shift a little bit. It may only last a year or so, but it’s definitely a period where I think the best gains have been had and wouldn’t surprise me to see a significant correction,” Cohen said. “I don’t think it’s going to be a disaster.”

    Don’t miss these insights from CNBC PRO More