The Latest: Buffett defends Berkshire Hathaway's practices

OMAHA, Neb. – The Latest on Warren Buffett’s annual letter to Berkshire Hathaway shareholders that was released Saturday (all times local):

5 p.m.

Billionaire Warren Buffett says executives at the conglomerate he leads are always working to make sure their businesses compete well in a changing world.

But he cautioned that Berkshire — and every other company — has no way to prepare for the threat presented by a major cyber, biological, nuclear or chemical attack.

Buffett released his annual letter to shareholders on Saturday. In it, he says the probability of an attack causing mass destruction remains small in the short term, but that the odds increase over the long run.

Buffet says “we can thank our government — and luck” for the fact that catastrophic destruction has been avoided since the first atomic bomb was dropped in World War II.


2 p.m.

Berkshire Hathaway shareholders will be asked to vote this year on a proposal requiring the company to prepare a report on the threat climate chance poses for its insurance companies.

Berkshire’s Chief Executive Warren Buffett said it’s reasonable to worry about climate change’s effect on the planet. But he says it shouldn’t hurt insurance companies at all because policy prices are set annually based on that year’s risks.

Buffett says homeowners might not want to live in a low-lying area, but shareholders of insurance companies don’t need to worry about climate change hurting their investment.


11 a.m.

Investor Warren Buffett is defending Berkshire Hathaway’s association with cost-cutting investors and the lending practices at its mobile home unit.

Edward Jones analyst Jim Shanahan says the fact that Buffett devoted space in his shareholder letter to those topics suggests he is still hearing criticism of 3G Capital and Clayton Homes.

Buffett said Berkshire has always craved efficiency, just like 3G. Berkshire just tends to buy companies that already are lean while 3G looks for investments that need costs reduced. The two firms teamed up to buy Kraft Foods and Heinz and promptly announced layoffs at both firms.

Clayton’s lending practices have been questioned over the past year in stories by The Seattle Times and The Center for Public Integrity. Buffett defended Clayton at last year’s annual meeting.

Buffett says Clayton follows state and federal regulation and retains ownership of every mortgage it finances.


9:15 a.m.

Berkshire Hathaway investors looking for clues about who might eventually replace 85-year-old Warren Buffett as chairman and CEO one day didn’t find many in his annual letter.

The investor says he plans to spend his 100th birthday in 2030 celebrating that one of Berkshire’s key insurance companies, Geico, will have overtaken State Farm to become the No. 1 auto insurer — or so he hopes.

Buffett has long said that Berkshire has a plan to replace him when the need arises, but didn’t mention it in the letter.

To replace Buffett, Berkshire plans to split his job into three parts — chief executive officer, chairman and several investment managers. The next CEO will be picked from a short list of Berkshire managers. Buffett has already hired two investment managers who help run Berkshire’s portfolio, and he has said his oldest son would make a good chairman.

Buffett has said he has no plans to retire, and he says he loves his work and remains in good health.


8:45 a.m.

Investor Warren Buffett says the secret to success is continuing to improve productivity and eliminate inefficiencies.

That might mean layoffs and other cost-cutting at times, such as when Buffett’s company partnered with 3G Capital to acquire Heinz and then Kraft Foods.

But Buffett says what the country needs is to make sure it has a solid safety net to help people who lose jobs, not prohibit efforts to improve productivity.

For example, Buffett says it wouldn’t make much sense to require that 11 million people keep working in farming as they did in 1900 before tractors and countless other innovations.


7:35 a.m.

Investor Warren Buffett says the United States’ economy is in better shape than the presidential candidates make it seem.

Buffett said Saturday in his annual letter to Berkshire Hathaway shareholders that any baby born in the country today will live better than their parents, even with the current slow economic growth.

He notes that there will still be economic disruption and pain along the way as business evolves, but that the country needs to make sure it has a solid safety net to help people who lose jobs.

Buffett pointed out that change also creates challenges for Berkshire’s businesses. For instance, its BNSF railroad is certain to haul less coal in the future and Geico insurance could be hurt by driverless cars.

He assured shareholders that Berkshire’s businesses will adapt.