OMAHA, Neb. (AP) — Most companies would undoubtedly be thrilled with the results Warren Buffett called "subpar" at Berkshire Hathaway because his company's value trailed the overall market.
But the fact that Buffett wasn't satisfied with the 45 percent jump in profit his company reported Friday is part of why he's built such a remarkable record.
Buffett sounded optimistic about both the economy and his company in an annual letter to shareholders that was released Friday. Buffett urged other businesses to either invest in the future or sell their profitable ventures to Berkshire.
"Charlie and I love investing large sums in worthwhile projects, whatever the pundits are saying," Buffett said in reference to Berkshire Vice Chairman Charlie Munger.
So it didn't really matter much that 2012 was only the ninth time in the past 48 years that Berkshire's book value per share failed to outpace the S&P 500's 16 percent growth. Berkshire's value — calculated by subtracting liabilities from assets — still grew by 14.4 percent.
The legendary investor also confessed that the two investment managers he hired over the last few years left Buffett in their dust largely, because he didn't make a big acquisition last year.
Berkshire's chairman and CEO had considerably more good news than bad to offer, and Buffett offered more explanation about the company's recent newspaper purchases and its opposition to paying derivatives.
Berkshire's net income soared in 2012 to $14.8 billion, up from $10.3 billion the previous year, but most of the increase came from paper gains on its investments and derivative contracts.
Without those gains, Berkshire's operating earnings advanced 17 percent to $12.6 billion, up from the previous year's $10.8 billion. Nearly all of its major business groups performed well in 2012, with the insurance units that include Geico and General Reinsurance leading the way because of significantly fewer natural disasters in the year.
"Berkshire really did pretty well," said Jeff Matthews, who wrote "Warren Buffett's Successor: Who It Is and Why It Matters."
Buffett said Berkshire's acquisition luck turned last month when he agreed to work with the 3G Capital investment fund to buy the H.J. Heinz Co. for $23.3 billion.
Berkshire will own half the company, receive 9 percent dividends on $8 billion, and get warrants to buy another 5 percent of Heinz. But Buffett and Munger won't be satisfied by the ketchup deal.
"We still have plenty of cash and are generating more at a good clip," Buffett wrote. "So it's back to work; Charlie and I have again donned our safari outfits and resumed our search for elephants."
Andy Kilpatrick, who wrote "Of Permanent Value: The Story of Warren Buffett," said the warrants make it likely that Heinz will one day be entirely owned by Berkshire.
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