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Warren Buffett discusses various themes in Berkshire annual letter

26 February 2017

Billionaire Warren Buffett, whose stock picks over several decades have turned Berkshire Hathaway Inc into one of the most successful conglomerates, delivered another black eye to the investment management industry on Saturday, saying investors should "stick with low-priced index funds".

This year's letter and Berkshire's annual report gave no clues about who will succeed Buffett as chief executive officer, a question shareholders and Wall Street have speculated about increasingly in recent years.

For all of 2016, Clayton's pretax profit rose 5 percent to $744 million, mainly from its $13.3 billion mortgage portfolio.

Berkshire generated $58.3 billion revenue in the quarter, up from $51.7 billion a year earlier.

The mobile home unit, which Berkshire bought for $1.7 billion in 2003, came under fire in reports two years ago in the Seattle Times accusing Clayton of driving black, Latino and Native American borrowers into unaffordable subprime loans, and promoting a racist corporate culture.

"When a company grows and outstanding shares shrink, good things happen for shareholders", Buffett said.

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"This letter was more about Warren and Charlie's epitaph even more so than prior letters", said Smead, who is with Seattle-based Smead Capital Management.

In addition, the 86-year-old Mr. Buffett, whose shrewd investments have earned him the nickname "the Oracle of Omaha", still has plenty of cash on hand for future acquisitions as a way to drive profit.

"A little more visibility on succession might have been helpful", Shanahan said.

Berkshire already owns more than 90 subsidiaries, including Geico insurance, Berkshire Hathaway Energy, BNSF railroad, clothing, furniture and jewelry companies.

Buffett had previously said Berkshire would probably only exercise the warrants just before expiration. Year-to-date, BRK.B has gained 4.44%, versus a 5.91% rise in the benchmark S&P 500 index during the same period. Its insurance and utility businesses typically account for more than half of the company's net income.