HomeFinance NewsFinanceBuffett's Warning: Berkshire Faces Growth Limits, Average Returns Ahead

Buffett’s Warning: Berkshire Faces Growth Limits, Average Returns Ahead


Warren Buffett says Berkshire may only do slightly better than the average company due to its sheer size


Warren Buffett, the CEO of Berkshire Hathaway, expressed his perspective on the conglomerate’s future growth prospects in his annual letter released recently.

He acknowledged the challenges faced by Berkshire due to its immense size and the limitations in finding suitable investment opportunities that can significantly impact the company’s performance.

Buffett highlighted that Berkshire’s efforts to acquire substantial businesses in the United States have been limited due to the exhaustive analysis conducted by himself and others.

The lack of overseas investment options further constrains the company’s growth potential.

Berkshire’s recent acquisitions, including insurer Alleghany and a stake in energy giant Occidental Petroleum, are noteworthy, but they do not meet Buffett’s expectations for a transformative “elephant-sized” acquisition.

To mitigate the limited investment opportunities, Berkshire held a record $167.6 billion in cash in the fourth quarter, indicating the company’s strong financial position.

Buffett expressed minimal enthusiasm for eye-popping investment performance, as he believes Berkshire’s group of diversified businesses will likely provide slightly better returns than the average U.S. corporation, minimizing permanent capital loss risks.

Despite the challenges, Berkshire’s stock performance has been impressive, recently hitting record highs and outperforming the S&P 500.

This signifies investor confidence in the company’s long-term prospects and Buffett’s investment acumen.

  • Overall sentiment: negative
  • Positive

    “Berkshire did build a 9% stake in five Japanese trading companies — Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo, which Buffett intends to own long term.”

    “Anything beyond ‘slightly better,’ though, is wishful thinking.”


    “All in all, we have no possibility of eye-popping performance,”

    “There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others”

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