Warren Buffett says he wants to spend Berkshire Hathaway Inc.’s growing pile of cash on a giant acquisition, but he doesn’t see that happening anytime soon.

“Prices are sky-high for businesses possessing decent long-term prospects,” Buffett wrote in his annual letter to investors, adding that will lead to buying more public stocks in 2019. “We continue, nevertheless, to hope for an elephant-sized acquisition.”

Berkshire’s cash pile rose to US$112 billion, showing how hard it’s been for Buffett to put money to work as fast as Berkshire accumulates it. The legendary investor made his name by consistently outpacing the broader market, but that’s become harder as Berkshire has grown. While the company’s book value has increased at almost twice the rate of the S&P during his career, it has actually trailed the index over the last decade.

Key Insights

• An eye-popping US$25 billion net loss in the quarter was driven by US$27.6 billion in unrealized losses from the investment portfolio.
• Buffett has warned investors to look more at underlying operating figures, as accounting rules now incorporate unrealized gains and losses from stocks into net income. He said the volatile fourth quarter featured several days where Berkshire’s stock portfolio swung more than US$4 billion.
• Berkshire felt the ripple effects from Kraft Heinz Co.’s US$15.4 billion writedown in the fourth quarter. As its biggest shareholder, Buffett’s company took a US$2.7 billion markdown to its stake.
• Berkshire benefited from its railroad and energy businesses, which along with tax cuts helped boost overall operating results to US$24.8 billion in 2018.
• The company’s insurance businesses posted an underwriting profit of uS$1.57 billion last year, rebounding from a US$2.2 billion loss in 2017, the first in 15 years. That boosted overall operating earnings at the conglomerate 71 per cent from a year earlier.