Warren Buffett's big annual letter is coming -- here are the most important things to look out for

  • Warren Buffett’s annual letter to shareholders will be published around 7:45 a.m. ET on Saturday.
  • Analysts at Morgan Stanley are paying attention to Buffett’s thoughts on succession and tax reform, among other topics.
  • Follow Business Insider’s coverage of the letter on Saturday here.

Warren Buffett‘s letter to shareholders will be released on Saturday.

It’s a highly anticipated document that analysts, shareholders, and fans of the Oracle of Omaha have studied every year since 1978. And once again, the Berkshire Hathaway CEO will share extensive thoughts on his company’s business, America, financial markets, and perhaps a wildcard or two.

In a note on Friday, analysts at Morgan Stanley led by Kai Pan listed four things they will be reading for.

First is Buffett’s succession plan. In January, Buffett promoted two senior executives – Greg Abel and Ajit Jain – to Berkshire’s board of directors.

Abel was appointed as Berkshire’s vice chairman for non-insurance business operations, and Jain as vice chairman, insurance operations. Buffett described the appointments as “part of a movement toward succession,” providing the clearest hint of the pool of candidates he’s considering.

The person Buffett chooses would undoubtedly have huge shoes to fill. Buffett’s successor would need to quickly convince shareholders that Berkshire Hathaway will continue creating the kind of value they’re accustomed to.

The second key thing to read Buffett’s letter for is the impact of tax reform on Berkshire. Analysts at Barclays have estimated that the company’s book value could rise by about $US37 billion.

Specifically, Pan is curious about how much of the company’s tax benefits would be reinvested in the business and how much could be lost to regulations. Outside of Berkshire’s business, Pan will be reading for any comments on the long-term impact of tax reform on inflation and the deficit.

Third, Pan is interested to learn about how Berkshire plans to spend its cash pile, worth over $US100 billion. “Capital deployment is crucial to BRK’s future earning growth,” he said. “Unfortunately, rising equity valuations and strong competitions from PE funds make it a less ideal environment for potential acquisitions for BRK.”

Lastly, Buffett may talk about the recently announced plans by Berkshire, JPMorgan, and Amazon to try and make healthcare more affordable for their employees.

JPMorgan CEO Jamie Dimon told Business Insider in a recent interview: “In conversation with Warren, and someone who works for him called Todd Combs, who’s one of my board members, who’s exceptional, and Jeff Bezos, we said we know we can do more. We know we can do more just thinking through every single part of it.”

As usual, Business Insider will be covering the letter on Saturday. You can recap the highlights of last year’s letter here, and follow our coverage on Saturday here.

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