FILE – Berkshire Hathaway Chairman and CEO Warren Buffett speaks in an interview in Omaha, Nebraska, U.S., May 7, 2022. Buffett called anyone critical of stock buybacks “illiterate economic or subtle demagogue”. in its annual letter to Berkshire Hathaway shareholders on Saturday, February 25, 2023. (AP Photo/Nati Harnik, File)

OMAHA, Nebraska (AP) — Billionaire Warren Buffett says critics of stock buybacks are either “economic illiterate or subtle demagogue” or both, and that all investors benefit if followed. He makes them at fair prices. Buffett dedicated part of his annual letter to Berkshire Hathaway shareholders, published on Saturday.

Buffett pointed to the benefits of buyouts, which are among the favorite targets of fiery Wall Street critics like the senses. Elizabeth Warren and Bernie Sanders, and many of their fellow Democrats. The federal government recently imposed a 1% tax on redemptions when they totaled around $1 trillion in 2022.

“When told that all buyouts are bad for shareholders or the country, or especially good for CEOs, the speaker is either an economic idiot or a subtle demagogue (non-mutually exclusive characters)” wrote Buffett, a longtime Democrat.

Investor Cole Smead said Washington should pay attention to what Buffett said about buyouts.

“Any politician, regardless of party, should listen very carefully to a statement like this,” said Smead, of Seattle-based financial firm Smead Capital Management.

In his usual self-deprecating style, Buffett said Berkshire’s remarkable run, which has doubled its earnings in the S&P 500 over the past 58 years with him at the helm, is the result of barely “a dozen very good decisions, which is to say one every five years”.

He recalled some of those decisions in his letter – one of the most eagerly awaited documents in the business world – which this year was remarkably terse: just eight pages.

Buffett noted how Berkshire benefits from the dividends it receives from its large portfolio investments like Coca-Cola and American Express, even though it refuses to pay dividends on the conglomerate it runs because it believes ‘it can generate a higher return for shareholders by investing this cash.

Coca-Cola paid Berkshire $704 million in dividends last year and American Express added $302 million, and those payments helped boost the value of those holdings to $25 billion for Coca-Cola and $22 billion for American Express. Berkshire paid $1.3 billion for each of these investments in the 1990s.

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