Warren Buffett’s Early Letters: 1965 and 1966

Buffett noted that working capital on a per share basis had grown to $22.76 from $14.41 six years prior. Whether or not you buy The Berkshire Hathaway Annual Letters to Shareholders, you can always access the most recent ones on BerkshireHathaway.com But this book is the only way you can get the complete Berkshire story, from start to presence. The downside is that it takes about 700 pages to summarize and analyze all of Berkshires behavior throughout that time frame.

His father, the son of a federal judge, had earned a law degree at Harvard University before returning to Omaha, where his clients included the Omaha World-Herald newspaper. Though Munger aligned with the US Republican Party, and Buffett sided with Democrats, the two often found common ground on issues like the desirability of universal health care and the need for government oversight of the financial system. At Berkshire’s 2002 meeting, Buffett offered a three-minute answer to the question of whether the company might buy a cable company. Charles Munger, the alter ego, sidekick and foil to Warren Buffett for almost 60 years as they transformed Berkshire Hathaway Inc. from a failing textile maker into an empire, has died. Munger also served on the boards of Good Samaritan Hospital and the private Harvard-Westlake School in Los Angeles.

  • Buffett credited Munger with broadening his approach to investing beyond mentor Benjamin Graham’s insistence on buying stocks at a fraction of the value of their underlying assets.
  • “Charlie has always emphasized, ‘Let’s buy truly wonderful businesses,’” Buffett told the Omaha World-Herald in 1999.
  • It was a value investment for Buffett which would later become his holding company.
  • I read it and it was entertaining, but there was no real original material other than the contribution of organizing the quoted portions into themes like “Managing With Style” or “Market Forces”.

Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. The Motley Fool has positions in and recommends Berkshire Hathaway and Markel Group. I have always thought for a very long time [that] Progressive has been very well run.

Keep abreast of significant corporate, financial and political developments around the world. Stay informed and spot emerging risks and opportunities with independent global reporting, expert commentary and analysis you can trust. “Charlie has always emphasized, ‘Let’s buy truly wonderful businesses,’” berkshire hathaway letters to shareholders Buffett told the Omaha World-Herald in 1999. Then he went on to earn a law degree from Harvard University in 1948 even though he hadn’t finished an undergraduate degree. He co-founded a law firm in Los Angeles that still bears his name, but decided before long that he preferred investing.

Along the way, Buffett shares with his stockholders great insight into the reasoning behind every acquisition and major investment made and provides a highly detailed historical account of Berkshire Hathaway’s growth. More importantly, from time to time Buffett will share his views on a number of different topics ranging from market fluctuations to accounting for intangible assets. These Berkshire Hathaway letters present an impressive and insightful case study on investing success. Buffett shares the logic, reason and analysis behind all of his major capital allocation decisions. Warren Buffett’s Berkshire Hathaway Letters to Shareholders is exactly what it sounds like – a book compiled of all the shareholder letters Warren Buffet has written, since he took the helm at Berkshire Hathaway (then a small textile company) in 1965. You can analyze Progressive’s disciplined underwriting by looking at its loss ratio.

Stock Ideas Disclaimer

“Charlie has taught me a lot about valuing businesses and about human nature,” Buffett said in 2008. OMAHA, Neb. (AP) — Charlie Munger, who helped Warren Buffett build Berkshire Hathaway into an investment powerhouse, has died at a California hospital. It was, in fact, Munger’s investing blueprint that has helped Berkshire Hathaway. Buffett was already an investor at that point, but Munger’s focus was his own legal career in California. By the early 1960s, however, Buffett had convinced him to give up being a lawyer and focus on finance.

Munger preferred to stay in the background and let Buffett be the face of Berkshire, and he often downplayed his contributions to the company’s remarkable success. Munger had been using a wheelchair to get around for several years but he had remained mentally sharp. That was on display while he fielded hours of questions at the annual meetings of Berkshire and the Daily Journal Corp. earlier this year, and in recent interviews on an investing podcast and also with The Wall Street Journal and CNBC. Berkshire Hathaway said in a statement that Munger’s family told the company that he died Tuesday morning at the hospital just over a month before his 100th birthday. While Munger was a successful business leader in his own right, it was his longstanding partnership with Buffett that brought him into the public eye.

Berkshire Hathaway’s Mystery Stock: Have Buffett and Munger Finally Bought the Stock They Can’t Stop Praising?

Munger’s fortune was small compared to Buffett’s, but he was still a billionaire twice over. He was a major benefactor of the University of Michigan, giving more than $23 million over the course of his life, as well as 10 Class A shares of Berkshire Hathaway, worth more than $4 million more. In his mind, the best directors are those who have their interests best aligned with shareholders. In fact, being a major, long-term shareholder is one of the primary qualities that Buffett takes into account when searching for directors. In this case, the corporation has a controlling owner not involved in management.

Stock Ideas

I’m a value investor but, I use swing trading techniques to manage my position sizes and risk. It’s possible that Berkshire Hathaway sees Progressive’s ongoing outperformance and decided to add shares to its $354 billion portfolio. Progressive’s long history of collecting driver data is one part of its stellar underwriting performance, and maybe Buffett and his team caved and wanted a piece of the action. When it comes to pricing models, more data helps Progressive make more informed decisions, manage its risk well, and keep loss ratios low. In 2019, Jain said that GEICO is working on its telematics program and hoped to catch up to Progressive over time.

Berkshire Hathaway Letters to Shareholders 1965 to 2018

Britt always taught us Titans that Wisdom is Cheap, and principal can find treasure troves of the good stuff in books. We hope only will also express their thanks to the Titans if the book review brought wisdom into their lives. In this situation, there is little that a director can do to affect change besides persuading the owner/manager towards his/her point of view. If a manager is incompetent or greedy, there is little that a director can do to quell the issue.

A billionaire himself, he was the witty vice chairman of Mr. Buffett’s powerhouse investment firm Berkshire Hathaway. Jain appreciates Progressive’s underwriting performance and has credited its outperformance to several factors, including its use of telematics. Telematics uses driver data like mileage driven, speed, and braking time and personalizes rates for drivers based on this information. When it went public in 1971, the company prioritized achieving a combined ratio of 96, meaning it would earn $0.04 of profit for every dollar of premium earned. This philosophy has been core to Progressive’s disciplined underwriting and is a big reason for the insurer’s massive success.

Each letter typically begins with the change in book value over the course of the year. Berkshire has averaged a book value growth rate of 19.7% compounded annually from $19 per share in 1965 to $114,214 per share in 2012. Following these results is usually a discussion of how the change in intrinsic value is the metric that counts, but that book value is a conservative substitute that approximately tracks intrinsic value.

By viewing market prices as quotes from a manic-depressive business partner, the investor is now put in a position of power over market prices rather than enslaved by them (a far-too-common occurrence). Following this discussion, Buffett spends the majority of each letter detailing the operations of Berkshire’s subsidiary companies as well as the results of its major non-controlling investments. Occasionally, Buffett will choose to include special topics in his letters on whatever topic he feels that his shareholders should be aware.