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Originally published Friday, March 1, 2013 at 10:00 PM

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Buffett mocks ‘uncertainty’ as a reason not to invest

Billionaire investor Warren Buffett released his annual letter Friday, which notably addressed the tendency among executives to use “uncertainty” as an excuse not to invest despite “record levels of both earnings and cash.”

Bloomberg News

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Warren Buffett mocked executives who held back investments because of “uncertainty” in the economy and said he will probably accelerate capital expenditure at his Berkshire Hathaway this year.

“There was a lot of hand-wringing last year among CEOs who cried ‘uncertainty’ when faced with capital-allocation decisions despite many of their businesses having enjoyed record levels of both earnings and cash,” Buffett wrote in an annual letter to shareholders of Berkshire posted online Friday. “We will keep our foot to the floor and will almost certainly set still another record for capital expenditures in 2013. Opportunities abound in America.”

Buffett, the chief executive officer for more than four decades, said his Omaha, Neb.-based company spent $9.8 billion last year on plant and equipment as he bolstered railroad and utility units. That’s an increase of about 19 percent from the previous year, he wrote.

Lawmakers in Washington, D.C., have been divided over how to shrink the U.S. budget deficit, frustrating corporate executives, including Buffett. Still, he said, managers may be blundering if they withhold investing, since the future in the U.S. has been unknown since 1776.

“If you are a CEO who has some large, profitable project you are shelving because of short-term worries, call Berkshire,” he wrote. “Let us unburden you.”

Buffett, 82, apologized to shareholders for his “subpar” performance in 2012. The growth in Berkshire’s per-share book value, a measure of assets minus liabilities, trailed the Standard & Poor’s 500 Index including dividends by 1.6 percentage points last year. The billionaire has failed to measure up to that yardstick only nine times since he took control of the company in 1965.

He also said he was disappointed for failing to make a major acquisition even though he had pursued a few large potential deals last year. Last month, he ended his drought by joining Jorge Paulo Lemann’s 3G Capital in announcing a $23 billion deal to take ketchup maker HJ Heinz Co. private.

“Our total investment of about $12 billion soaks up much of what Berkshire earned last year,” Buffett wrote. “But we still have plenty of cash and are generating more at a good clip.”

Buffett transformed Berkshire from a maker of textiles into a $253 billion company that sells insurance, hauls freight, generates electricity and operates dozens of manufacturing and retail businesses. His track record of profitable stock picks and takeovers paired with his homespun wisdom about corporate governance and investing have made his letters a must-read on Wall Street.

Buffett thinks about his sisters when writing the letters, because both are smart people with a lot of their money in the company, and neither works in finance, Buffett told PBS’s Charlie Rose in November. He sets about explaining important developments at Berkshire, then may include an essay on a broader investment topic, he told Rose.

“I want to tell them what I think is important to them, what I would want them to tell me if our positions were reversed,” Buffett told Rose.

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