Warren Buffett Lauds Berkshire Stock. It Has Little Chance of ‘Devastating Disaster.’

Warren Buffett, CEO of Berkshire Hathaway. (JOHANNES EISELE/AFP via Getty Images)

Key Points

• Warren Buffett emphasized Berkshire Hathaway’s defensive qualities and above-average business prospects in his Thanksgiving letter.
• Buffett stated Berkshire has a low chance of devastating disaster and a shareholder-conscious management and board.
• Buffett noted Berkshire’s stock price can fall significantly, as it has three times in 60 years under current management.

Warren Buffett highlighted Berkshire Hathaway’s defensive characteristics and its above-average business prospects in his Thanksgiving letter to shareholders released on Monday.

“In aggregate, Berkshire’s businesses have moderately better-than-average prospects, led by a few non-correlated and sizable gems. However, a decade or two from now, there will be many companies that have done better than Berkshire; our size takes its toll,” Buffett wrote in the letter in which he revealed that he would increase giving to four family foundations.

“Berkshire has less chance of a devastating disaster than any business I know. And, Berkshire has a more shareholder-conscious management and board than almost any company with which I am familiar (and I’ve seen a lot),” Buffett wrote.

“Finally, Berkshire will always be managed in a manner that will make its existence an asset to the United States and eschew activities that would lead it to become a supplicant. Over time, our managers should grow quite wealthy – they have important responsibilities – but do not have the desire for dynastic or look-at-me wealth.”

“Our stock price will move capriciously, occasionally falling 50% or so as has happened three times in 60 years under present management. Don’t despair; America will come back and so will Berkshire shares.”

Write to Andrew Bary at andrew.bary@barrons.com