Buffett Hints at More Heinz-Like Deals in Annual Letter

The challenge looming over Warren E. Buffett is whether Berkshire Hathaway, the vast business empire he has built over five decades, can continue to make the sort of large acquisitions that will help the company grow at a pace that will sustain Mr. Buffett’s reputation as the nation’s shrewdest investor.

But Mr. Buffett, in Berkshire’s annual report released on Saturday, highlighted the large deals that his company did last year, including the acquisition of H.J. Heinz â€" and strongly hinted at how future big purchases might take place.

“With the Heinz purchase, moreover, we created a partnership template that may be used by Berkshire in future acquisitions of size,” Mr. Buffett said. Last year, Berkshire’s energy subsidiary, MidAmerican Energy, bought NV Energy for $5.6 billion. “NV Energy will not be MidAmerican’s last major acquisition,” he said.

Jeff Matthews, a hedge fund manager who has written books on Berkshire, said that he detected a strong desire to do more acquisitions.

“I think it’s way more than a hint,” Mr. Matthews said in an email. “He clearly sees more deals at MidAmerican.”

Every year, Berkshire’s annual reports are devoured as avidly as top-selling novels. The main attraction is Mr. Buffett’s letter to shareholders, in which he often extols America as a breeding ground for rags to riches success and details how he came to make certain investment decisions, using plain English and the odd dash of geezer humor along the way. This year’s report was no different.

“Mrs. B was 89 at the time and worked until 103 â€" definitely my kind of woman,” Mr. Buffett wrote, describing the now deceased Rose Blumkin, whose family owned Nebraska Furniture Mart, a retailer that Berkshire purchased.

The praise for working to a late age suggests that Mr. Buffett, 83, is not retiring any time soon. Still, that will not have stopped Berkshire’s shareholders, and many others, from scouring the report for clues about who Mr. Buffett has picked as his successor to run Berkshire’s operations.

As he has done in past years, he heaped praise on Ajit Jain, the head of Berkshire’s reinsurance group and the man many have speculated will take up the top post. “His operation combines capacity, speed, decisiveness and, most important, brains in a manner unique in the insurance business,” Mr. Buffett said of Mr. Jain.

A rising stock market and strong earnings from its companies helped Berkshire report record profits in 2013 of $19.5 billion, a 32 percent rise from $14.8 billion in 2012. Mr. Buffett has long used book value per share - a measure of Berkshire’s net worth belonging to shareholders - to assess the company’s performance. That rose 18.2 percent in 2013, much less than the 32.4 percent rise in the Standard & Poor’s  500 stock index.

“As I’ve long told you, Berkshire’s intrinsic value far exceeds its book value,” Mr. Buffett said.