Buffett takes aim at investment fees and earnings 'baloney'

Billionaire investor Warren Buffett devoted a substantial portion of his annual letter to deepen his long-running critique of investment fees, as his Berkshire Hathaway reported a higher quarterly profit though operating income fell.

Berkshire's Apple position is now at 133 million shares, more than twice the 61.24 million shares disclosed in Buffett's annual shareholder letter released Saturday.

That's because boss Warren Buffett said one employee could win $1 million a year for life if they correctly pick the teams that make it to the Sweet 16. He said they've already paid a "significant" deposit.

Berkshire Hathaway chief, on his investments, said that while he doesn't personally own an iPhone but he more than doubled his holdings in Apple in January.

Vahan Janjigian, CIO of Greenwich Wealth Management, chimed in during Miles' "Power Lunch" interview, saying Buffett probably views Apple as more of a "consumer products company".

"The bottom line: When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients", Mr Buffett wrote.

Buffett reiterated his long-term outlook for a prosperous America, but he mostly steered clear of politics this year.

From an investment perspective, it is wrong to think of Apple as a technology company. His purchases of airline stocks in Q3 and Q4, after years of avoiding the sector, sparked speculation that Berkshire might even buy and airline outright.

That means $US1 million invested in the index fund - the Vanguard 500 Index Fund Admiral Shares would have gained $US854,000 so far versus just $US220,000 for the hedge funds.

While Buffett said Apple's iPhones are great, he still carries a basic flip phone.

Buffett said fans can follow the contest to see how employees are doing once the tournament begins by visiting the Berkshire website.

As of Friday's close, BAC stock has improved by about 10% year-to-date, fueling most of a 16% run over the past three months.

Overall, Buffett told the television network, Berkshire has spent about $20 billion on stocks since just before the US election in November, adding that he thinks the USA market is cheap with interest rates at current levels.

However, according to reports, it was a presentation from American Airlines CEO Doug Parker that had a lot to do with Buffett's change of heart.

  • Carolyn Briggs