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Sunday, June 18, 2017

Saturday, June 17, 2017

1978 Berkshire Hathaway Letter to Shareholders

Link:

Key Points:


  • Accounting issues of consolidating results between wholly owned and partially owned companies
  • Optimism about long term equity holdings 
  • Inability to predict short term equity prices
  • Discussion concerning textile business being a commodity business with no differentiation between competitors
  • Expresses Sentimental attachment to textile business, management,and workers
  • Insurance business produces excellent results
  • Difficult to "buy good insurance businesses"
  • Stock selection criteria; businesses we can understand, with favorable long term prospects, operated by honest and competent people, priced attractively
  • Buys stocks at perceived low valuations in large concentrations
  • Prepared to wait for market to re-value share holdings higher
  • Discussion of disposition retained earnings of companies in portfolio

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1977 Berkshire Hathaway Letter to Shareholders

Link to Letter

Key Points:

  • Measure of management performance should be return on equity capital.
  • Continued struggles in the textile business; some related to industry and some self inflicted.
  • Shareholder questions about staying in textile business.
  • Buffets sentimental comments about management and workforce.
  • Discusses the successes and mistakes of Berkshires's Insurance business.
  • Emphasizes the non-proprietary nature of Insurance business and the importance of managers.
  • Emphasis on long term holding of investments and description of stocks as "small pieces of a company"
  • Selection criteria for stocks