A Closer Look At Buffett’s Letter To Berkshire Hathaway Shareholders

Well, we saw the rest of the world do it in even more extreme fashion, but nobody… Paul Samuelson, brilliant man, nobody, nobody thought he could do this. And we don’t really know what the consequences are, but we know there are consequences, obviously. It reduces the value of float by a substantial amount. And we have a flexibility with our float that virtually no one has, and I’ve written about this in the annual letter. But the value of float has gone down dramatically because everything is off of interest rates. And when you get to negative interest rates, if a country can borrow at negative interest rates, you get into something, that’s kind of akin to the St. Petersburg Paradox.

Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is widely considered the most successful investor of the 20th century. Buffett is the primary shareholder, chairman, and CEO of Berkshire Hathaway and consistently Berkshire Hathaway: Letters to Shareholders Review ranked among the world’s wealthiest people. He was ranked as the world’s wealthiest person in 2008 and as the third wealthiest person in 2011. In 2012, American magazine Time named Buffett one of the most influential people in the world.

Buffett And Munger Never Had An Argument Over The Past 62 Years

While imprecise, uncertain and sensitive to future conditions (e.g. interest rates), Buffett believes that intrinsic value is the only logical concept for evaluating the relative attractiveness of businesses and investments. Company size is not a measure of value creation or economic significance. It’s the growth in intrinsic business value per share that should matter most to owner-oriented managers and shareholders.

It seems to be a much greater turnover in the equity portfolio Retail foreign exchange trading lately. But we’re not trying to make money trading stocks.

Berkshire Hathaway: Letters to Shareholders Review

Well, we don’t discuss that as a specific, but the board is very, very, very familiar with what Berkshire does, why they do it. How we think in deploying capital, but… Everybody knows that if you change the antitrust laws, it can change things for Berkshire. If you change the tax laws, it can change things for Berkshire. There’s a lot of things and we could spend hours discussing them, but in the end, is it a 22.3% risk that something changes? It’s a good way to fill the time at board meetings and if you’re getting 3 or $400,000 a year as a board director, you might want to spend your time doing that. We’ve gone to Texas with what we believe is a good solution. We spent a lot of time pulling it together, understanding the fundamental issues around it.

His letters to shareholders are unwavering consistent, unfailingly loyal to principles and standards, and kind to all readers and interested persons. Warren Buffett has not just a gift for capital allocation, but down-to-earth demeanor, attractive sense of humor, and uncanny ability to read people. This is an amazing resource and a value beyond calculation. Another investment area Buffett addresses is share buybacks.

The Warren Buffett Ceo By Robert P Miles

Mark Donegan, PCC’s CEO, is a passionate manager who consistently pours the same energy into the business that he did before we purchased it. I believe I was right in concluding that PCC would, over time, earn good returns on the net tangible assets deployed in its operations. I was wrong, however, in judging the average amount of future earnings and, consequently, wrong in my calculation of the proper price to pay for the business. Buffett reiterated his longstanding suggestion that the average investor is best served by investing in an S&P 500 index fund, and not by trying to pick stocks. By way of illustration, he presented lists of the top 20 largest companies in the world by market capitalization, both in 1989 and today. He pointed out that none of the top 20 in 1989 remain in the top 20 today. Moreover, the largest such company today, Apple Inc. , with a market cap of over $2 trillion, is more than 20 times more valuable than the largest company in 1989.

So we will have the slowest aging manage, percentage wise, by far that any American company has. Oh, actually, if you look at the first quarter figures, you’ll see that the Berkshire Hathaway/Union Pacific comparisons has gotten quite better. Katie forex analytics Farmer’s doing an incredible job at BNSF, and it’d be an interesting question whether five years from now or 10 years from now, BNSF or Union Pacific has the higher earnings. We’ve had higher earnings in the past, Union Pacific passed us.

Berkshire Hathaway: Letters to Shareholders Review

The stock closed on Friday at 412,000 per A share, meaning the stock today is trading at a 13% discount to intrinsic value. Now, given the stock is up almost 20% this year, intrinsic value is up about 10% this year. So, I love the stock and I’m delighted that Buffett’s continuing to buy it back, because when you’re buying back below intrinsic value, that increases the intrinsic value for the remaining shareholders. The big companies that Warren features in his letter each year, energy company and insurance businesses and so on. And we have every reason to believe that that climb is going to continue. Now, by and large, insurance throughout the pandemic period has done very, very well, and so did the energy business and BNSF, they held up very well.

Buffett Says He Has No Issue Owning Chevron, Other Fossil Fuel Companies

My own view it that though Buffett may have proven flexible on some points, we are unlikely to see a Berkshire dividend on his watch. Over and over again in this year’s letter, he reiterates the critical importance of maintaining minimum liquidity of at least $20 billion, and he details the importance of retained earnings. For example, he emphasizes how MidAmerica’s ability to retain earnings has allowed the company to make industry-leading investments in alternative energy.

I mean, See’s candy just doesn’t require that much capital. It has, obviously, a couple of manufacturing plants. They call them kitchens, but it doesn’t have forex analytics big inventories, except seasonally for a short period. Those are the kinds of businesses, they’re the best businesses, but they command the best prices, too.

  • Buffett reiterated his longstanding suggestion that the average investor is best served by investing in an S&P 500 index fund, and not by trying to pick stocks.
  • So there was some reaction and response to the zingers that Buffet and particularly Charlie Munger delivered to the crowd.
  • Brown Girls Do Invest is a nonprofit organization, and we teach African-American women how to invest in the stock market, how to invest in real estate, as well as acquire multiple strains of income.
  • And so I don’t think they’ve read our annual reports, and I don’t think they read the reports of Berkshire Hathaway Energy.
  • It’ll be also interesting to see how he’s viewing the market conditions right now.
  • I don’t like to speak on behalf of, when I’m sitting at a Berkshire Hathaway annual meeting, presumably speaking for Berkshire.

Whether we should have bought something else at the same time’s another question. …amount of money they lost, perspective earning power. Right now, international travel’s not a come back, but I would say overall to them, the economic recovery has gone far better than you could say with any assurance. So we didn’t like having as much money as we had in banks at that time. So I got back some of the bank investment, but basically our net sales were about 1%, or one and a half percent. And looking back now, a little bit better be buying, but I did not consider it. I do not consider it a great moment in Berkshire’s history, but also, we’ve got more net worth than any company in the United States, under accounting principles.

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Imagine your wages going from $15 an hour to 20 cents an hour, so it’s been a sea change. I could only do so many things that I can get away with a Charlie, and I kind of used them up between Costco and Apple. And he very likely it was right, in both circumstances. It’s an extraordinary business, but I do want to emphasize that in his own way, it’s a different way, but Tim Cook is… we see a lot of managers of a lot of businesses, and you’re looking at two great ones on both ends here. He’s handled that business so well, he couldn’t do what Steve Jobs, obviously, could do in terms of creation, but Steve Jobs couldn’t, really, I don’t think do, but Tim Cook has done in many respects.

Berkshire Hathaway: Letters to Shareholders Review

And they are basically … To be a successful investor, you have to be very arrogant to believe you can outwit all the other investors out there, but you also have to have a tremendous humility. And they sort of just outlined this incredible puzzle. Welcome back to Yahoo Finance’s live coverage of Berkshire Hathaway’s Annual Shareholders meeting. But one of the interesting points here made by Warren Buffett today, sort of giving advice to those investors who are just kind of dipping their toes into the market. He made an interesting comparison between what he sees today versus what he saw back in 1989, take a listen to what he had to say. And Whitney, Apple, one of those names that came up in one question where they asked specifically Warren Buffett, whether in fact it was a mistake to sell some shares last year, when we’ve seen that stock go up since then.

Invisible long term problems lead to non-sustainable business practice. When doing long term insurance Warren Buffett expects volatility and long-term returns to be better to seek out than pursuing predictability. On this podcast, Mike Dever talks about volatility and how creating predictability is important. This also makes me think of what Nicholas Nassim Taleb says about betting against things that are resistant to volatility.

Buffett said about 2,000 companies entered the auto business in the 1900s because investors and entrepreneurs expected the industry to have an amazing future. In 2009, there were three automakers left and two went into bankruptcy proceedings, he noted. “Investing illusions can continue for a surprisingly long time.

Warren Buffett Berkshire Hathaway Annual Meeting Transcript 2021

And we’ve heard Warren Buffett tout this elephant size acquisition he’s been looking for for some time. Last year at the meeting we heard him say he just hasn’t done anything yet because he hasn’t found anything that is that attractive. I’d be curious to see if he’s got his eye on something now, if his thoughts have changed on that front. It’ll be also interesting to see how he’s viewing the market conditions right now. Remember a year ago he made some headlines when he exited those big positions in airlines, United Delta, Southwest American.

Several of us thought it’s an event that will happen at most, once in a hundred years, and even then those odds are pretty high. And a majority of the Berkshire shareholders, a great majority we had to vote on dividends one time, we’ve got savers. Now that’s partly because we’ve advertised ourselves as being that sort of a vehicle. We look at Apple as a business that we own five point three percent.

Fortunately, Berkshire has access to two sources of low-cost ‘leverage’. The first is the tax deferred liability that stems from a low portfolio turnover rate. The second is Berkshire’s access to insurance float – their insurance premium liability prior to future payment.

First, as noted above, Berkshire instituted a share buy back program, which although seemingly sound, also seems inconsistent with long-standing Buffett principles about putting cash to work. Buffett is perhaps best known as a buy and hold investor, a person with a few simple investment principles that he follows rigorously. He cultivates and communicates an air of conservative consistency. The basic message from Buffett for years has been that with him, and with Berkshire, you know what are going to get. For that reason, a couple of developments during 2011 seem particularly noteworthy to me, both of which are things that I suspect many long-standing observers thought they would never see.