(Recasts, adds details on discussion of economy, Berkshire book
value, 3G dealmaking)
By Jonathan Stempel and Jennifer Ablan
Feb 27 (Reuters) - Warren Buffett on Saturday used his
annual letter to Berkshire Hathaway (N:BRKa) Inc BRKa.N shareholders to
launch vigorous defenses of an aggressive private equity partner
and a maligned mobile home unit, as his conglomerate recorded
robust profits.
The world's third-richest person and a revered investor,
Buffett also injected himself into the contentious 2016 U.S.
presidential campaign, lambasting candidates who talk down the
nation's economic future as "dead wrong" - an apparent jab at
Republicans and frontrunner Donald Trump.
Buffett, who is backing Democratic candidate Hillary
Clinton, also raised a political issue dear to Democrats in his
widely-read letter by calling climate change a "major problem
for the planet," although not one for Berkshire's future.
Buffett, 85, also made no mention of who might succeed him
at Berkshire, which he has run for a half-century, and in
passing said he expects to be around at age 100.
The Omaha, Nebraska-based company reported a record
full-year profit of $24.08 billion, up 21 percent, while
operating profit rose 5 percent to a record $17.36 billion.
Fourth quarter profit was up 32 percent, and operating
profit rose a larger-than-expected 18 percent.
Berkshire owns roughly 90 businesses in areas as insurance,
railroads, energy, food, apparel and real estate. Buffett
himself is worth $62.1 billion, Forbes magazine reported.
3G, CLAYTON
But he has critics, and spent about 10 percent of his
roughly 18,000-word letter defending 3G Capital, a Brazilian
firm in which Berkshire owns 51 percent of Kraft Heinz Co
KHC.O , and Berkshire's Clayton Homes mobile home unit.
Many shareholders questioned Buffett's compatibility with
3G, an aggressive cost cutter led by Brazilian billionaire Jorge
Paulo Lemann.
Berkshire and 3G teamed up in 2013 to buy H.J. Heinz and
last year merged it with Kraft Foods. Buffett also helped
finance 3G's merger of Burger King with Canadian donut chain Tim
Hortons, creating Restaurant Brands International Inc QSR.TO .
Following these mergers, 3G slashed thousands of jobs.
Buffett acknowledged that while he and 3G "follow different
paths" in running businesses, 3G has been "extraordinarily
successful," and more ventures are possible.
"Jorge Paulo and his associates could not be better
partners," Buffett wrote.
Clayton has been faulted in articles in the Seattle Times
for predatory lending and discrimination against blacks and
Latinos, which the large mobile home builder denies.
But Buffett called Clayton a careful lender, and said it has
escaped major regulatory fines despite 65 state and federal
reviews in the last two years.
Management delivers "industry-leading performance," Buffett
said.
POLITICIANS, CLIMATE CHANGE
Buffett praised Berkshire's earnings power, saying that only
a catastrophic cyber, biological, nuclear or chemical attack on
the United States posed a "clear, present and enduring danger"
to the company.
Buffett also rejected the dour economic outlooks polluting
the presidential campaign.
Trump has repeatedly said the U.S. economy is in a "bubble"
that he hopes will pop before he takes office. "I don't want to
inherit all this stuff," he has said.
Buffett said such concerns are overblown.
"For 240 years it's been a terrible mistake to bet against
America, and now is no time to start," Buffett said. "The babies
being born in America today are the luckiest crop in history."
Buffett urged shareholders to reject a proxy proposal that
would require greater disclosures about how climate change might
affect Berkshire's insurance businesses.
"It seems highly likely to me that climate change poses a
major problem for the planet," Buffett wrote. "But when you are
thinking only as a shareholder of a major insurer, climate
change should not be on your list of worries."
NOT SELLING IBM (N:IBM)
Buffett touted the BNSF railroad and its leaders Matt Rose
and Carl Ice, calling their $5.8 billion of capital spending to
improve customer service after a poor 2014 "money well spent."
Though Buffett did not mention falling oil prices in his
letter, Berkshire's annual report said low oil prices may reduce
BNSF's profit in 2016 as industrial freight volumes decline.
The report also noted Buffett's $2.6 billion loss as of Dec.
31 in his investment in IBM Corp IBM.N , but said Berkshire has
no intention of selling the stock.
Buffett also lauded the work of top insurance executives
Ajit Jain and Tad Montross, and called the hiring of Todd Combs
and Ted Weschler, who each handle $9 billion of investments,
"one of my best moves."
Combs was a driver of Berkshire's $32 billion purchase last
month of industrial parts maker Precision Castparts Corp (N:PCP).
As to succession, Buffett noted his advancing age and that
of vice chairman Charlie Munger, 92.
But Buffett also said he plans to be around on Aug. 30,
2030, his 100th birthday, to announce that Berkshire's Geico
unit has passed State Farm as the biggest U.S. auto insurer.
"Mark your calendar," he wrote.
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Warren Buffett's Berkshire Hathaway Q4 profit rises 32 pct
Buffett rails against presidential candidates who talk down
economy
Inside Warren Buffett's portfolio - CNBC
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