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Buffett rejects presidential candidates’ message of US decline

In his annual letter the billionaire investor dismissed the view that children in the US would not live as well as their parents

Berkshire Hathaway chief executive Warren Buffett walks with Kevin T. Clayton, CEO of Berkshire Hathaway subsidiary Clayton Home. Warren Buffett said he had “no apologies whatsoever” for the lending practices of the company’s Clayton Homes mobile home unit, which had been accused in a published report of predatory lending.

Sun Feb 28 2016 - 16:22

Warren E. Buffett took aim Saturday at the “negative drumbeat” of this year’s US presidential campaign, saying that the view that children today would not live as well as their parents was “dead wrong.”

In his annual letter to shareholders, the billionaire investor - who has endorsed Hillary Clinton for president - wrote that "the babies being born in America today are the luckiest crop in history." Employing his typical folksy humour and optimism, Buffett's letter discussed such themes as income inequality, climate change, efficiency and prosperity, as well as investments like BNSF Railway and Kraft Heinz.

“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start,” he wrote. “America’s golden goose of commerce and innovation will continue to lay more and larger eggs.”

Buffett cautioned, though, that while the “pie to be shared by the next generation will be far larger than today’s,” the way it is divided will “remain fiercely contentious.” Many of the negative effects of innovation and greater efficiency tend to harm the worker, he said.

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Earnings rise

The letter to shareholders was released along with the fourth-quarter and annual results for Berkshire Hathaway. Berkshire's earnings rose to $24.08 billion last year from $19.87 billion in 2014, while annual revenue increased by $16 billion, to $210.8 billion.

In his letter, Buffett contrasted Berkshire's pursuit of efficiency with that of 3G Capital, the Brazilian investment firm that he partnered with to acquire Heinz, which was later combined with Kraft last year. While praising 3G's method as "extraordinarily successful," Buffett said it encompassed buying companies with the intent to immediately cut costs. Berkshire, he said, also "craves efficiency," but looks for companies that are avoiding bloat, ones that are already run by efficient managers.

His example was Precision Castparts, which was purchased a month ago for $32 billion - the company's largest acquisition to date. Much smaller acquisitions were also a focus last year, when Berkshire's subsidiaries made 29 "bolt-on" acquisitions, costing $634 million. Buffett said that the company would make dozens more such acquisitions in future years.

- The New York Times News Service

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