Warren Buffett in Switzerland: A Few Lessons on Value Investing

 

Rare footage of Berkshire Hathaway’s CEO sharing his investment and business wisdom in a Q&A session in Switzerland.

Berkshire Margin of Safety is not on price, but qualitative factors

Ben Graham

Price

Long term investing

Durable competitive advantage

Products

Nestle

Management qualitative factors “Management you’re gonna love 20 years from now.”

Passion

Predictably 

Future profits

Evaluation of a business

Software products

Tech / computer/ IT industry (Microsoft, Google)

Change

Being chief risk officer as CEO

Control / decentralised management of acquisitions and holdings

Values / ethics and behaviour

Charity is up to shareholders to allocate, not up to us to allocate their funds

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

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