Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK-A) has released his annual letter to shareholders. Investors will want to review the book value metric before anything else. That was $114,214 per A-share versus the year-end closing price of $134,060 per share, which generates an above market premium of about 17.4% as of the end of the year.

While Mr. Buffett talked of performance being subpar in 2012, his holdings and share price have risen handily since the end of the year. Some may even argue that the share price has risen too much as shares are up 13.9% so far in 2013. If Team Buffett’s book value per share has not risen in tandem, then Berkshire Hathaway’s stock may be at an even higher premium as of now.

Berkshire’s year-end employment totaled a record 288,462, up 17,604 from the year ago report. Buffett also said that his headcount at the headquarters remained static at 24 with a joke of “No sense in going crazy.”

After looking at the annual letter, Berkshire Hathaway’s book value grew by 14.4% in 2012 versus 16% for the S&P 500 Index with its dividends. As Buffett said himself about the gain in book value being subpar, “I could never have dreamed that a year in which we had a gain of $24.1 billion would be subpar… For the ninth time in 48 years, Berkshire’s percentage increase in book value was less than the S&P’s percentage gain.” What is interesting is that Buffett also said 8 of those nine years were when the S&P rose more than 15%.

Read Also: Buffett’s Top Dividend Stocks

Buffett said that on the elephant hunting acquisition path, “The second disappointment in 2012 was my inability to make a major acquisition. I pursued a couple of elephants, but came up empty-handed.” In February Berkshire Hathaway bought 50% of the holding company which will own all of the H. J. Heinz Co. (NYSE: HNZ) buyout. The conglomerate also spent about $2.3 billion for 26 companies that were melded into its existing businesses as bolt-on buyouts.

BNSF, Iscar, Lubrizol, Marmon Group and MidAmerican Energy are the five most profitable non-insurance companies there and they delivered upon Buffett’s goal of making $10 billion in combined pre-tax profits in 2012.

Buffett touted his insurance operations by saying, “Our insurance operations shot the lights out last year. While giving Berkshire $73 billion of free money to invest, they also delivered a $1.6 billion underwriting gain, the tenth consecutive year of profitable underwriting.” GEICO has grown from 2,5% market share when Buffett acquired it in 1995 to 9.7% marketshare now and Buffett expects it to grow more ahead.

Buffett had high praise for his new portfolio managers by saying. “Todd Combs and Ted Weschler, our new investment managers, have proved to be smart, models of integrity, helpful to Berkshire in many ways beyond portfolio management, and a perfect cultural fit. We hit the jackpot with these two. In 2012 each outperformed the S&P 500 by double-digit margins. They left me in the dust as well.”

Buffett also showed that his holdings in his four largest holdings grew in each as well. These include American Express Co. (NYSE: AXP), The Coca-Cola Cola Company (NYSE: KO), International Business Machines Corp. (NYSE: IBM) and Wells Fargo & Co. (NYSE: WFC). Buffett hinted at those positions growing further as well by saying, “Berkshire’s ownership interest in all four companies is likely to increase in the future.” The cost basis of all of Buffett’s stock holdings is listed as being $49.796 billion versus a year-end market value of $87.662 billion.

Read Also: Berkshire Hathaway’s Full 2013 Stock Holdings

Buffett said that Berkshire Hathaway will continue buying newspapers if they are the sole paper in a region because they dominate the local news. He said:

Charlie and I, however, still operate under economic principle 11 and will not continue the operation of any business doomed to unending losses. One daily paper that we acquired in a bulk purchase from Media General was significantly unprofitable under that company’s ownership. After analyzing the paper’s results, we saw no remedy for the losses and reluctantly shut it down. All of our remaining dailies, however, should be profitable for a long time to come.

Do not expect a dividend from Berkshire Hathaway Inc. common stock dividend any time soon. Buffet spent three pages writing on and on about it. He even said he loves dividends and increased dividends but that they would rather utilize the capital to buy back shares under the 120% of book value rule. He said, “At Berkshire, however, we have consistently followed a different approach that we know has been sensible and that we hope has been made understandable by the paragraphs you have just read. We will stick with this policy as long as we believe our assumptions about the book-value buildup and the market-price premium seem reasonable.

BUFFETT’S FULL ANNUAL REPORT IS HERE.

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