NEW YORK (TheStreet) -- Berkshire Hathaway (BRK.A - Get Report) Chairman Warren Buffett called 2014 "a good year for Berkshire on all major fronts except one" and repeated his mantra to investors that a "motherlode of opportunities runs through America."
In his annual letter to Berkshire shareholders -- which is widely followed by the investing community -- Buffett said the only setback was the performance of Berkshire's BNSF Railways, the second-largest freight railway network in North America.
He also indicated that his eventual successor has been chosen, although he did not identify the person.
"Both the board and I believe we now have the right person to succeed me as CEO -- a successor ready to assume the job the day after I die or step down," Buffett said.
This is the 50th edition of his annual shareholder letter. Here's one snippet, where Buffett repeated his previous view that the best place to invest is still the U.S.:
"Our subsidiaries spent a record $15 billion on plant and equipment during 2014, well over twice their depreciation charges. About 90% of that money was spent in the United States. Though we will always invest abroad as well, the mother lode of opportunities runs through America. The treasures that have been uncovered up to now are dwarfed by those still untapped. Through dumb luck, Charlie and I were born in the United States, and we are forever grateful for the staggering advantages this accident of birth has given us."
Investors regularly look to Buffett's letter for humorous reflections on life and investing, and Buffett did not disappoint his fans, even if he had to borrow from another writer to do it.
Discussing the importance of learning through experience, Buffett cited a Peter Arno cartoon in the Fred Schwed book, Where Are the Customers' Yachts? Buffett describes "a puzzled Adam looking at an eager Eve, while a caption says, 'There are certain things that cannot be adequately explained to a virgin either by words or pictures.'"
In his letter Buffett, recalled his description of the BNSF acquisition, made "late in 2009, amidst the gloom of the Great Recession," as an "all-in wager on the economic future of the United States." The billionaire made it clear he continues to like that bet.
"A century hence, BNSF and Berkshire Hathaway Energy will still be playing vital roles in our economy. Homes and autos will remain central to the lives of most families. Insurance will continue to be essential for both businesses and individuals," Buffett wrote, adding though "we will regularly grumble about our government, America's best days lie ahead."
In a separate letter to shareholders, 91 year-old Berkshire vice chairman Charlie Munger, a kind of Buffett alter-ego, added fuel to the longstanding speculation about who might succeed Buffett as Berkshire CEO
Provided that most of the Berkshire system remains in place, the combined momentum and opportunity now present is so great that Berkshire would almost surely remain a better-than-normal company for a very long time even if (1) Buffett left tomorrow, (2) his successors were persons of only moderate ability, and (3) Berkshire never again purchased a large business. But, under this Buffett-soon-leaves assumption, his successors would not be "of only moderate ability." For instance, Ajit Jain and Greg Abel are proven performers who would probably be under-described as "world-class." "World-leading" would be the description I would choose. In some important ways, each is a better business executive than Buffett. And I believe neither Jain nor Abel would (1) leave Berkshire, no matter what someone else offered or (2) desire much change in the Berkshire system.
Jain, 63, heads several Berkshire reinsurance businesses. Abel, 52, runs Berkshire Hathaway Energy. Both have previously been mentioned in the press as possible successors.
Meanwhile, Berkshire earnings declined in the fourth quarter versus a year ago but matched analyst estimates.The conglomerate earned $4.16 billion in the fourth quarter, a decline from $5 billion in the fourth quarter of 2013.
Analysts were looking for earnings of $4.1 billion on sales of $48.9 billion, according to data compiled by Bloomberg.
Earnings for all of 2014 were $19.9 billion, up from $19.5 billion in 2013.
"Berkshire's gain in net worth during 2014 was $18.3 billion, which increased the per-share book value of both our Class A and Class B stock by 8.3%," chairman Warren Buffett wrote in his annual shareholder letter. "Over the last 50 years (that is, since present management took over), per-share book value has grown from $19 to $146,186, a rate of 19.4% compounded annually."
BNSF's poor performance, he wrote, was "unrelated to earnings."
"During the year, BNSF disappointed many of its customers," Buffett said. "These shippers depend on us, and service failures can badly hurt their businesses. BNSF is, by far, Berkshire's most important non-insurance subsidiary and, to improve its performance, we will spend $6 billion on plant and equipment in 2015. That sum is nearly 50% more than any other railroad has spent in a single year and is a truly extraordinary amount, whether compared to revenues, earnings or depreciation charges."