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Warren Buffett says 2012 was ‘subpar’ for Berkshire

OMAHA — Warren Buffett said last year was ‘‘subpar’’ for his company because Berkshire Hathaway’s value trailed the overall market, but shareholders will likely be pleased with the 45 percent increase in profit Buffett delivered.

Buffett sounded optimistic in his annual letter, which was released Friday, even though 2012 was only the ninth time in the past 48 years that Berkshire’s book value per share failed to outpace the S&P 500.

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He also confessed that the two investment managers he hired over the last few years left Buffett in their dust largely, because he didn’t make a big acquisition last year.

Berkshire’s chairman and chief executive had considerably more good news than bad to offer, and Buffett offered more explanation about the company’s recent newspaper purchases and its opposition to paying derivatives.

Berkshire’s net income soared in 2012 to $14.8 billion, up from $10.3 billion the previous year, but most of the increase came from paper gains on its investments and derivative contracts.

Without those gains, Berkshire’s operating earnings advanced 17 percent to $12.6 billion, up from the previous year’s $10.8 billion. Nearly all of its major business groups performed well in 2012, with the insurance units that include Geico and General Reinsurance leading the way because of significantly fewer natural disasters in the year.

Buffett said Berkshire’s acquisition luck turned last month when he agreed to work with the 3G Capital investment fund to buy the H.J. Heinz Co. for $23.3 billion.

Berkshire will own half the company and get warrants to buy another 5 percent of Heinz. But Buffett and his business partner Charlie Munger won’t be satisfied by the ketchup deal.

‘‘We still have plenty of cash and are generating more at a good clip,’’ Buffett wrote. ‘‘So it’s back to work; Charlie and I have again donned our safari outfits and resumed our search for elephants.’’

And Buffett said Berkshire finished 2012 with nearly $47 billion on hand, so he has plenty to work with even if he keeps about $20 billion around in case of emergencies.

Buffett did not offer any new details in the letter on the plan to eventually replace him. He has said Berkshire’s board plans to split his job into three roles: CEO, chairman, and investment management. The board knows who it would choose immediately to succeed him as CEO.

The investment piece seems set with the recent hiring of hedge fund managers, Todd Combs and Ted Weschler.

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