investment guru Warren Buffett weighed in on several matters, mainly concerning Berkshire Hathaway Inc.‘S BRKA BRKB investments and their future prospects in its annual letter to shareholders, which is published together with the Fourth Quarter Results.

Business pickers, not stock pickers: When explaining the two ownership styles of Berkshire, Buffett noted that the company takes controlling stakes in companies, typically buying 100% of each. The second category of ownership is buying publicly traded stock and passively owning a company, he added.

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The fifth-richest person in the world said Berkshire’s goal is to make meaningful investments in companies with durable economic characteristics and trusted managers through both forms of ownership.

Buffett said he and the vice chairman of Berkshire Charlie Munger decide to own publicly traded stocks based on expectations of their long-term business performance and do not view the companies as vehicles for “smart buying and selling”.

“Charlie and I are not stock pickers; We’re business pickers,” said the billionaire.

Advantage of the public portfolio: Buffett said that with public companies, it becomes easy to buy parts of wonderful companies at wonderful prices. He noted that stocks often trade at really stupid prices, both high and low.

“Efficient markets only exist in textbooks,” Buffett said, adding that the reality is that marketable stocks and bonds are amazing, and their behavior is usually understood only in hindsight.

In contrast, controlled companies are a “different breed,” he said. Sometimes these companies charge “ridiculously higher prices” than they warrant, but are never available at bargain prices, he added.

“Except under duress, the owner of a controlled company will not think of selling at a panic-like valuation,” Buffett said.

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