巴菲特给股东的信 英文版
1975巴菲特致股东的信(英文)
巴菲特致股东的信1975To the Stockholders of Berkshire Hathaway Inc.:Last year,when discussing the prospects for1975,we stated“the outlook for1975is not encouraging.”This forecast proved to be distressingly accurate.Our operating earnings for1975 were$6,713,592,or$6.85per share,producing a return on beginning shareholders’equity of7.6%. This is the lowest return on equity experienced since1967.Furthermore,as explained later in this letter,a large segment of these earnings resulted from Federal income tax refunds which will not be available to assist performance in1976.On balance,however,current trends indicate a somewhat brighter1976.Operations and prospects will be discussed in greater detail below,under specific industry titles.Our expectation is that significantly better results in textiles,earnings added from recent acquisitions,an increase in equity in earnings of Blue Chip Stamps resulting from an enlarged ownership interest,and at least a moderate improvement in insurance underwriting results will more than offset other possible negatives to produce greater earnings in1976.The major variable—and by far the most difficult to predict with any feeling of confidence—is the insurance underwriting result.Present very tentative indications are that underwriting improvement is in prospect.If such improvement is moderate, our overall gain in earnings in1976likewise will prove moderate.More significant underwriting improvement could give us a major gain in earnings.Textile OperationsDuring the first half of1975sales of textile products were extremely depressed,resulting in major production curtailments.Operations ran at a significant loss,with employment down as much as 53%from a year earlier.In contrast with previous cyclical slumps,however,most textile producers quickly reduced production to match incoming orders,thus preventing massive industry-wide accumulation of inventories.Such cutbacks caused quite prompt reflection at the mill operating level when demand revived at retail.As a result,beginning about midyear business rebounded at a fairly rapid rate. This“V”shaped textile depression,while one of the sharpest on record,also became one of the shortest ones in our experience.The fourth quarter produced an excellent profit for our textile division,bringing results for the year into the black.On April28,1975we acquired Waumbec Mills Incorporated and Waumbec Dyeing and Finishing Co.,Inc.located in Manchester,New Hampshire.These companies have long sold woven goods into the drapery and apparel trade.Such drapery materials complement and extend the line already marketed through the Home Fabrics Division of Berkshire Hathaway.In the period prior to our acquisition,the company had run at a very substantial loss,with only about55%of looms in operation and the finishing plant operating at about50%of capacity.Losses continued on a reduced basis for a few months after acquisition.Outstanding efforts by our manufacturing, administrative and sales people now have produced major improvements,which,coupled with thegeneral revival in textiles,have moved Waumbec into a significant profit position.We expect a good level of profits from textiles in1976.Continued progress is being made in the movement of Waumbec goods into areas of traditional marketing strength of Berkshire Hathaway, productivity should improve in both the weaving and finishing areas at Manchester,and textile demand continues to firm at decent prices.We have great confidence in the ability of Ken Chace and his team to maximize our strengths in textiles.Therefore,we continue to look for ways to increase further our scale of operations while avoiding major capital investment in new fixed assets which we consider unwise,considering the relatively low returns historically earned on large scale investment in new textile equipment.Insurance UnderwritingThe property and casualty insurance industry had its worst year in history during1975.We did our share—unfortunately,even somewhat more.Really disastrous results were concentrated in auto and long-tail(contracts where settlement of loss usually occurs long after the loss event)lines.Economic inflation,with the increase in cost of repairing humans and property far outstripping the general rate of inflation,produced ultimate loss costs which soared beyond premium levels established in a different cost environment.“Social”inflation caused the liability concept to be expanded continuously,far beyond limits contemplated when rates were established—in effect, adding coverage beyond what was paid for.Such social inflation increased significantly both the propensity to sue and the possibility of collecting mammoth jury awards for events not previously considered statistically significant in the establishment of rates.Furthermore,losses to policyholders which otherwise would result from mushrooming insolvencies of companies inadequately reacting to these problems are divided through Guaranty Funds among remaining solvent insurers.These trends will continue,and should moderate any optimism which otherwise might be justified by the sharply increased rates now taking effect.Berkshire Hathaway’s insurance subsidiaries have a disproportionate concentration of business in precisely the lines which produced the worst underwriting results in1975.Such lines produce unusually high investment income and,therefore,have been particularly attractive to us under previous underwriting conditions.However,our“mix”has been very disadvantageous during the past two years and it well may be that we will remain positioned in the more difficult part of the insurance spectrum during the inflationary years ahead.The only segment to show improved results for us during1975was the“home state”operation, which has made continuous progress under the leadership of John Ringwalt.Although still operating at a significant underwriting loss,the combined ratio improved from1974.Adjusted for excess costs attributable to operations still in the start-up phase,underwriting results are satisfactory.Texas United Insurance Company,a major problem a few years ago,has made outstanding progress since George Billing has assumed command.With an almost totally new agency force,Texas United was the winner of the“Chairman’s Cup”for achievement of thelowest loss ratio among the home state companies.Cornhusker Casualty Company,oldest and largest of the home state companies,continues its outstanding operation with major gains in premium volume and a combined ratio slightly under100.Substantial premium growth is expected at the home state operation during1976;the measurement of success,however,will continue to be the achievement of a low combined ratio.Our traditional business at National Indemnity Company,representing well over half of our insurance volume,had an extraordinarily bad underwriting year in1975.Although rates were increased frequently and significantly,they continually lagged loss experience throughout the year. Several special programs instituted in the early1970s have caused significant losses,as well as a heavy drain on managerial time and energies.Present indications are that premium volume will show a major increase in1976,and we hope that underwriting results will improve.Reinsurance suffered the same problems as our direct business during1975.The same remedial efforts were attempted.Because reinsurance contract settlements lag those of direct business,it well may be that any upturn in results from our direct insurance business will precede those of the reinsurance segment.At our Home and Automobile Insurance Company subsidiary,now writing auto business only in the Cook County area of Illinois,experience continued very bad in1975resulting in a management change in October.John Seward was made President at that time,and has energetically and imaginatively implemented a completely revamped underwriting approach. Overall,our insurance operation will produce a substantial gain in premium volume during1976. Much of this will reflect increased rates rather than more policies.Under normal circumstances such a gain in volume would be welcome,but our emotions are mixed at present.Underwriting experience should improve—and we expect it to—but our confidence level is not high.While our efforts will be devoted to obtaining a combined ratio below100,it is unlikely to be attained during 1976.Insurance InvestmentsGains in investment income were moderate during1975because premium volume remained flat and underwriting losses reduced funds available for investment.Invested assets,measured at cost at yearend,were close to identical with the level at the beginning of the year.At the end of1974the net unrealized loss in the stock section of our portfolio amounted to about $17million,but we expressed the opinion,nevertheless,that this portfolio overall represented good value at its carrying value of cost.During1975a net capital loss of$2,888,000before tax credits was realized,but our present expectation is that1976will be a year of realized capital gain. On March31,1976our net unrealized gains applicable to equities amounted to about$15million. Our equity investments are heavily concentrated in a few companies which are selected based on favorable economic characteristics,competent and honest management,and a purchase price attractive when measured against the yardstick of value to a private owner.When such criteria are maintained,our intention is to hold for a long time;indeed,our largest equity investment is467,150shares of Washington Post“B”stock with a cost of$10.6million, which we expect to hold permanently.With this approach,stock market fluctuations are of little importance to us—except as they may provide buying opportunities—but business performance is of major importance.On this score we have been delighted with progress made by practically all of the companies in which we now have significant investments.We have continued to maintain a strong liquid position in our insurance companies.In last year’s annual report we explained how variations of1/10of1%in interest rates result in million dollar swings in market value of our bonds.We consider such market fluctuation of minor importance as our liquidity and general financial strength make it highly improbable that bonds will have to be sold at times other than those of our choice.BankingIt is difficult to find adjectives to describe the performance of Eugene Abegg,Chief Executive of Illinois National Bank and Trust of Rockford,Illinois,our banking subsidiary.In a year when many banking operations experienced major troubles,Illinois National continued its outstanding record.Against average loans of about$65million,net loan losses were$24,000, or.04%.Unusually high liquidity is maintained with obligations of the ernment and its agencies,all due within one year,at yearend amounting to about75%of demand deposits.Maximum rates of interest are paid on all consumer savings instruments which make up more than $2million,it consistently has generated favorable earnings.Positioned as we now are with respect to income taxes,the addition of a solid source of taxable income is particularly welcome.General ReviewYour present management assumed responsibility at Berkshire Hathaway in May,1965.At the end of the prior fiscal year(September,1964)the net worth of the Company was$22.1million,and 1,137,778common shares were outstanding,with a resulting book value of$19.46per share.Ten years earlier,Berkshire Hathaway’s net worth had been$53.4million.Dividends and stock repurchases accounted for over$21million of the decline in company net worth,but aggregate net losses of$9.8million had been incurred on sales of$595million during the decade.In1965,two New England textile mills were the company’s only sources of earning power and, before Ken Chace assumed responsibility for the operation,textile earnings had been erratic and, cumulatively,something less than zero subsequent to the merger of Berkshire Fine Spinning and Hathaway Manufacturing.Since1964,net worth has been built to$92.9million,or$94.92per share.We have acquired total,or virtually total ownership of six businesses through negotiated purchases for cash(or cash and notes)from private owners,started four others,purchased a31.5%interest in a large affiliate enterprise and reduced the number of outstanding shares of Berkshire Hathaway to979,569.Overall,equity per share has compounded at an annual rate of slightly over 15%.While1975was a major disappointment,efforts will continue to develop growing and diversified sources of earnings.Our objective is a conservatively financed and highly liquid business—possessing extra margins of balance sheet strength consistent with the fiduciary obligations inherent in the banking and insurance industries—which will produce a long term rate of return on equity capital exceeding that of American industry as a whole.Warren E.Buffett,Chairman。
某年巴菲特给股东的信英文原版
某年巴菲特给股东的信英文原版Dear Shareholders,The year 2020 was a challenging one for all of us. Along with the rest of the world, we faced an unprecedented crisis brought on by the COVID-19 pandemic. Against this backdrop, I am pleased to report that Berkshire Hathaway performed reasonably well in an extremely difficult environment.Our operating businesses demonstrated resilience and continued to deliver solid results. Our insurance operations reported underwriting gains, though these were offset by lower investment income in a low interest rate environment. We continued to invest in our various subsidiaries, and our manufacturing and service businesses continued to grow.In addition, we made several strategic investments during the year, including our purchase of a large stake in the natural gas pipeline company Dominion Energy, which we believe will create significant value for our shareholders over the long term. We also invested in various pharmaceutical companies, as we believe that this sector will continue to experience growth in the years to come.Overall, we believe that our diversification and long-term focus have helped us weather this challenging year. While thepandemic will undoubtedly have an ongoing impact on our businesses, we remain confident in our ability to navigate these obstacles and continue creating value for our shareholders over the long term.Of course, none of this would be possible without the hard work and dedication of our employees, who have shown tremendous commitment and adaptability during this challenging time. On behalf of the entire Berkshire Hathaway team, I thank them for their efforts.Looking ahead, we remain focused on seeking out attractive investment opportunities, maintaining our strong financial position, and delivering value for our shareholders. While the future is always uncertain, we remain confident in the resilience of our business model and the ability of our team to navigate whatever challenges lie ahead.Thank you for your continued support of Berkshire Hathaway.Sincerely,Warren E. Buffett。
2024年巴菲特致股东的信英文版
2024年巴菲特致股东的信英文版Dear Shareholders, I am pleased to report that Berkshire Hathaway had another successful year in 2024. Despite facing some challenges and uncertainties in the global economy, we were able to navigate through them and achieve strong results for our investors.Our operating businesses continue to perform well and generate significant cash flow. We have made severalstrategic acquisitions in various industries, bolstering our competitive position and expanding our portfolio of companies. Our investments in Apple, Amazon, and other technology companies have also continued to provide solid returns.One of the key highlights of the year was our commitmentto sustainability and environmental stewardship. We havetaken significant steps to reduce our carbon footprint andinvest in renewable energy, demonstrating our dedication to being a responsible corporate citizen.Looking ahead, we remain cautiously optimistic about the future. While there are always risks and uncertainties in the market, we believe that our diversified portfolio and strong capital position will enable us to weather any storm and continue delivering value to our shareholders.I would like to take this opportunity to thank our incredible team of employees, whose hard work and dedication have been instrumental to our success. I would also like to express my gratitude to our loyal shareholders for their continued support and trust in Berkshire Hathaway.In conclusion, I am confident that Berkshire Hathaway is well-positioned for long-term success and will continue to create value for our shareholders for many years to come.。
巴菲特致股东的信2024英文
巴菲特致股东的信2024英文Dear Shareholders, I am pleased to report that our company has continued to perform well in 2024, despite facing some challenges in the global market. Our diversified portfolio of businesses has allowed us to weather economic uncertainties and emerge stronger.One of the key highlights of the year was our successful acquisition of a leading technology company, which has expanded our presence in the digital space. This strategic move has positioned us for future growth opportunities and enhanced our capabilities in addressing the evolving needs of consumers.I am also pleased to announce that our core businesses have maintained their competitive edge in their respective industries. Our insurance and energy sectors have delivered solid financial results, while our consumer goods divisionhas seen strong demand for our products in both domestic and international markets.Looking ahead, we remain focused on optimizing our operations and driving innovation across all our businesses. We are committed to delivering long-term value to our shareholders and ensuring sustainable growth for our company.I would like to take this opportunity to thank our dedicated employees for their hard work and commitment to excellence. Their contributions have been instrumental in our success and I am confident that they will continue to drive our company forward.In closing, I want to express my gratitude to our shareholders for their continued support and confidence in our company. We are optimistic about the future and look forward to achieving greater success together.。
巴菲特致股东信2024英文
巴菲特致股东信2024英文Here is the English essay on the topic "Warren Buffett's Letter to Shareholders 2024":In the ever-evolving landscape of the global economy, one name stands tall as a beacon of financial wisdom and strategic foresight –Warren Buffett. As the revered chairman and CEO of Berkshire Hathaway, Buffett's annual letter to shareholders has become a much-anticipated event, offering a glimpse into the inner workings of his investment philosophy and the performance of the conglomerate he has so meticulously built.The year 2024 has been a remarkable one for Berkshire Hathaway, marked by a diverse array of achievements and strategic decisions that have solidified the company's position as a powerhouse in the financial world. Buffett's unwavering commitment to long-term value creation, coupled with his ability to navigate the ebbs and flows of the market, has once again proven to be a key driver of the company's success.One of the standout accomplishments of the past year has been Berkshire's continued expansion into the renewable energy sector.Recognizing the growing global demand for sustainable energy solutions, Buffett has spearheaded a series of strategic investments that have positioned the conglomerate as a major player in this rapidly evolving landscape. From the acquisition of cutting-edge solar and wind power generation facilities to the development of innovative energy storage technologies, Berkshire's foray into the renewable energy space has not only demonstrated the company's foresight but also its ability to capitalize on emerging trends.Alongside the company's renewable energy initiatives, Buffett has also been vigilant in his efforts to streamline and optimize Berkshire's vast portfolio of businesses. Through a series of strategic divestitures and acquisitions, the legendary investor has further strengthened the conglomerate's competitive edge, ensuring that each of its subsidiaries is well-positioned to thrive in their respective industries. This unwavering focus on operational efficiency and portfolio optimization has been a hallmark of Buffett's leadership, and it has continued to pay dividends for Berkshire's shareholders.One area that has garnered significant attention in Buffett's 2024 letter is the company's commitment to fostering a culture of innovation and entrepreneurship. Recognizing the importance of nurturing new ideas and disruptive technologies, Berkshire has established a dedicated venture capital arm that has invested in a diverse array of promising startups. From cutting-edge fintechsolutions to groundbreaking advancements in the field of biotechnology, these strategic investments have not only diversified Berkshire's portfolio but have also positioned the conglomerate at the forefront of the next wave of innovation.Moreover, Buffett's letter has highlighted the company's continued emphasis on responsible corporate governance and sustainable business practices. Recognizing the growing importance of environmental, social, and governance (ESG) factors in the investment landscape, Berkshire has implemented a comprehensive framework to ensure that its operations and decision-making processes are aligned with the principles of sustainability and social responsibility. This commitment to ESG has not only strengthened the company's brand reputation but has also resonated with a growing number of socially conscious investors.Perhaps one of the most remarkable aspects of Buffett's 2024 letter is his unwavering commitment to the long-term success of Berkshire Hathaway. In an era marked by short-term thinking and volatile market fluctuations, Buffett has steadfastly maintained his focus on building a resilient and enduring business that can weather the storms of economic uncertainty. Through his careful allocation of capital, his strategic partnerships, and his unwavering dedication to the principles of value investing, Buffett has continued to deliver exceptional returns for Berkshire's shareholders, solidifying theconglomerate's position as a true bastion of financial stability and growth.As the world grapples with the ongoing challenges of the post-pandemic era, Buffett's 2024 letter to shareholders serves as a testament to the enduring power of disciplined, long-term investing. With his keen insights, his unwavering commitment to excellence, and his unparalleled ability to navigate the complexities of the global economy, Buffett has once again demonstrated why he is regarded as one of the most influential and respected figures in the world of finance. As Berkshire Hathaway continues to evolve and adapt to the changing tides of the market, investors around the world will undoubtedly look to Buffett's wisdom and guidance as they chart their own paths to success.。
巴菲特致股东信2024年 英文原文
巴菲特致股东信2024年英文原文(中英文实用版)Title: Buffett's Letter to Shareholders 2024Dear Shareholders,As we step into another year of Berkshire Hathaway's journey, I am delighted to report our continued progress and achievements. The past year has been filled with challenges and opportunities, and I believe our company has navigated them effectively. In this letter, I would like to share my thoughts on our performance, the state of our businesses, and the outlook for the future.尊敬的股东们，随着伯克希尔·哈撒韦公司迈进新的一年，我很高兴地向大家报告我们持续的发展和取得的成果。
过去的一年充满了挑战和机遇，我相信我们的公司在应对这些挑战方面表现得相当出色。
在这封信中，我想谈谈我们的业绩、业务状况以及未来的展望。
Looking back, Berkshire's performance in 2024 has been satisfactory. Our revenue and earnings have shown steady growth, reflecting the strength of our diverse portfolio of businesses. I am particularly pleased with the progress made by our subsidiaries, which continue to be the driving force behind our success.回顾过去，伯克希尔在2024年的表现令人满意。
1975年巴菲特致股东的信（附英文版全文）
1975年巴菲特致股东的信（附英文版全文）致伯克希尔·哈撒韦全体股东：去年讨论公司1975年的前景时，我们预测今年的前景不是那么令人满意。
不幸的是，这个预言成真了。
1975年我们的营业利润为6,713,592美元，也就是每股收益6.85美元，初始股东权益回报率为7.6%。
这是自1967年以来最低的回报率。
然而，正如这封信后面分析的那样，营业利润中相当大的一部分来自联邦所得税退税，这并不能使1976年的业绩有所改善。
但是，权衡比较之下，目前的局势表明1976年有些事情会有所好转。
下面几个具体的行业中会有关于运营和前景的进一步分析讨论。
我们的预计是：纺织业的业绩会有明显改善，近期的收购会使得收益增加，蓝筹股的权益回报率会因所有权的扩大而提高，并且保险承保利润的增加至少可以抵消其他的不利影响，使1976年产生可观的利润。
目前最善变并且完全没有把握、难以预测的是保险承保业绩。
现在初步迹象表明，承保的前景会有所改善。
如果这方面的改善是缓慢的，那我们整体盈利的增加也会很缓慢。
保险承保业务如果可以大幅提高，那么我们的营业利润也会大量增加。
•纺织业务1975年上半年纺织品的销售下降，导致主要产品的生产缩减了。
经营损失显著，资产使用率比去年同期下降了53%。
然而，与以往的周期性衰退相比，多数纺织品生产商根据订单迅速减少了产量，因此，防止了全行业的大规模存货累积。
当零售恢复正常需求时，这种消减对工厂经营水平的影响也就显而易见了。
结果是，年中业务开始以以较快的速度回升。
这“V”字形的纺织业的衰退，是记录中最明显的一次，同时也是持续时间最短的一次。
第四季度我们的纺织部门获得了极好的利润，使全年业绩扭亏为盈。
1975 年4 月28 日，我们收购了位于新罕布什尔州曼彻斯特的Waumbec Mills Incorporated公司和Waumbec Dyeing and Finishing Co.公司。
这些公司由销售编织品发展到衣饰和服装贸易。
巴菲特2023给股东的信 英文版
巴菲特2023给股东的信英文版Warren Buffett's Letter to Shareholders 2023Dear Shareholders,I am pleased to report to you on the performance of Berkshire Hathaway in 2023. It has been another eventful and successful year for our company, and I am proud to share with you our achievements and challenges.Financial PerformanceDespite the challenging economic conditions, Berkshire Hathaway has continued to perform well in 2023. Our net income for the year was $35 billion, a 10% increase from the previous year. Our investments in various sectors such as insurance, utilities, and manufacturing have continued to yield strong returns, and we remain confident in the long-term prospects of our diversified portfolio.Investment StrategyAs you know, our investment strategy is focused on finding high-quality companies with strong fundamentals and long-term growth potential. This year, we have made significant investments in various industries, including technology,healthcare, and consumer goods. We believe that these investments will generate sustainable returns for our shareholders over the coming years.Corporate GovernanceAt Berkshire Hathaway, we believe that good corporate governance is essential to the long-term success of our company. We are committed to transparency, accountability, and ethical business practices in all aspects of our operations. Our board of directors is comprised of experienced and independent individuals who provide strategic guidance and oversight to our management team.Environmental, Social, and Governance (ESG) InitiativesIn recent years, there has been a growing awareness of the importance of ESG factors in investment decision-making. At Berkshire Hathaway, we are committed to integrating ESG considerations into our investment strategy and corporate operations. We are actively working to reduce our carbon footprint, promote diversity and inclusion in our workforce, and enhance our corporate governance practices.Outlook for the FutureLooking ahead, we remain optimistic about the future prospects of Berkshire Hathaway. We believe that our diversified business model, strong balance sheet, and long-term investment approach will continue to drive sustainable growth for our company and deliver value to our shareholders. As always, we are focused on creating long-term value for our shareholders and stakeholders, and we are confident that Berkshire Hathaway will continue to prosper in the years to come.In conclusion, I would like to thank you, our shareholders, for your continued support and trust in Berkshire Hathaway. Your investment in our company enables us to pursue our mission of creating long-term value for all our stakeholders. I look forward to another successful year ahead.Sincerely,Warren E. BuffettChairman and CEOBerkshire Hathaway。
2015年巴菲特致股东的信【双语版】
2015年伯克希尔·哈撒韦致股东的信编译排版：李季峰翻译：李季峰、可可老鼠CONTENT目录Berkshire’s Performance vs. the S&P 500 (1)伯克希尔与标普500指数对比表 (1)BERKSHIRE HATHAW AY INC (3)伯克希尔.哈撒韦公司 (3)To the Shareholders of Berkshire Hathaway Inc.: (3)致伯克希尔•哈撒韦公司的股东： (3)The Year at Berkshire (4)伯克希尔过去一年表现 (4)Intrinsic Business Value (12)企业内在价值 (12)Insurance (13)保险业 (13)Regulated, Capital-Intensive Businesses (20)受监管的资产密集型业务 (20)Manufacturing, Service and Retailing Operations (24)制造业，服务业和零售业情况 (24)Finance and Financial Products (27)金融和金融产品 (27)Investments (29)投资业 (29)The Annual Meeting (33)股东大会 (33)BERKSHIRE HATHAW AY INC. ACQUISITION CRITERIA (39)伯克希尔•哈撒韦收购标准 (39)Berkshire－Past, Present and Future (41)伯克希尔：过去、现在和未来 (41)In the Beginning (41)一切的开始 (41)Charlie Straightens Me Out (45)查理理顺了我的思路 (45)Berkshire Today (51)伯克希尔的今天 (51)The Next 50 Years at Berkshire (62)伯克希尔未来50年 (62)Vice Chairman’s Thoughts – Past and Future (73)副董事长的想法:过去和未来 (73)Berkshire’s Performance vs. the S&P 500伯克希尔与标普500指数对比表年份伯克希尔每股账面百分比变动伯克希尔每股市价百分比变动标普500指数百分比变动相对变动(2)-(4)1965 23.8 49.5 10.0 13.8 1966 20.3 (3.4) (11.7) 32.0 1967 11.0 13.3 30.9 (19.9) 1968 19.0 77.8 11.0 8.0 1969 16.2 19.4 (8.4) 24.6 1970 12.0 (4.6) 3.9 8.1 1971 16.4 80.5 14.6 1.8 1972 21.7 8.1 18.9 2.8 1973 4.7 (2.5) (14.8) 19.5 1974 5.5 (48.5) (26.4) 31.9 1975 21.9 2.5 37.2 (15.3) 1976 59.3 129.3 23.6 35.7 1977 31.9 46.8 (7.4) 39.3 1978 24.0 14.5 6.4 17.6 1979 35.7 102.5 18.2 17.5 1980 19.3 32.8 32.3 (13.0) 1981 31.4 31.8 (5.0) 36.4 1982 40.0 38.4 21.4 18.6 1983 32.3 69.0 22.4 9.9 1984 13.6 (2.7) 6.1 7.5 1985 48.2 93.7 31.6 16.6 1986 26.1 14.2 18.6 7.5 1987 19.5 4.6 5.1 14.4 1988 20.1 59.3 16.6 3.5 1989 44.4 84.6 31.7 12.7 1990 7.4 (23.1) (3.1) 10.5 1991 39.6 35.6 30.5 9.1 1992 20.3 29.8 7.6 12.7 1993 14.3 38.9 10.1 4.2 1994 13.9 25.0 1.3 12.6 1995 43.1 57.4 37.6 5.5 1996 31.8 6.2 23.0 8.8 1997 34.1 34.9 33.4 0.7 1998 48.3 52.2 28.6 19.7 1999 0.5 (19.9) 21.0 (20.5) 2000 6.5 26.6 (9.1) 15.6 2001 (6.2) 6.5 (11.9) 5.7 2002 10.0 (3.8) (22.1) 32.12003 21.0 15.8 28.7 (7.7)2004 10.5 4.3 10.9 (0.4)2005 6.4 0.8 4.9 1.52006 18.4 24.1 15.8 2.62007 11.0 28.7 5.5 5.52008 (9.6) (31.8) (37.0) 27.42009 19.8 2.7 26.5 (6.7)2010 13.0 21.4 15.1 (2.1)2011 4.6 (4.7) 2.1 2.52012 14.4 16.8 16.0 (1.6)2013 18.2 32.7 32.4 (14.2)2014 8.3 27.0 13.7 (5.3)19.4% 21.6% 9.9%复合增长率1965-2014751,113% 1826163% 11,196%总汇报1964-2014说明：1965年和1966年的财年截止日期为9月30日，1967年有15个月，截止至12月31日，其他年份财年与日历年相同。
1971巴菲特致股东的信(英文)
巴菲特致股东的信1971To the Stockholders of Berkshire Hathaway Inc.:It is a pleasure to report that operating earnings in1971,excluding capital gains,amounted to more than14%of beginning shareholders'equity.This result--considerably above the average of American industry--was achieved in the face of inadequate earnings in our textile operation, making clear the benefits of redeployment of capital inaugurated five years ago.It will continue to be the objective of management to improve return on total capitalization(long term debt plus equity),as well as the return on equity capital.However,it should be realized that merely maintaining the present relatively high rate of return may well prove more difficult than was improvement from the very low levels of return which prevailed throughout most of the1960's.Textile OperationsWe,in common with most of the textile industry,continued to struggle throughout1971with inadequate gross margins.Strong efforts to hammer down costs and a continuous search for less price-sensitive fabrics produced only marginal profits.However,without these efforts we would have operated substantially in the red.Employment was more stable throughout the year as our program to improve control of inventories achieved reasonable success.As mentioned last year,Ken Chace and his management group have been swimming against a strong industry tide.This negative environment has only caused them to intensify their efforts. Currently we are witnessing a mild industry pickup which we intend to maximize with our greatly strengthened sales force.With the improvement now seen in volume and mix of business,we would expect better profitability--although not of a dramatic nature--from our textile operation in 1972.Insurance OperationsAn unusual combination of factors--reduced auto accident frequency,sharply higher effective rates in large volume lines,and the absence of major catastrophes--produced an extraordinarily good year for the property and casualty insurance industry.We shared in these benefits,although they are not without their negative connotations.Our traditional business--and still our largest segment--is in the specialized policy or non-standard insured.When standard markets become tight because of unprofitable industry underwriting,we experience substantial volume increases as producers look to us.This was the condition several years ago,and largely accounts for the surge of direct volume experienced in1970and1971.Now that underwriting has turned very profitable on an industry-wide basis,more companies are seeking the insureds they were rejecting a short while back and rates are being cut in some areas.We continue to have underwriting profitability as our primary goal and this may well mean a substantial decrease in National Indemnity's direct volume during1972.Jack Ringwalt and Phil Liesche continue to guide this operation in a manner matched by very few in the business.Our reinsurance business,which has been developed to a substantial operation in just two years by the outstanding efforts of George Young,faces much the same situation.We entered the reinsurance business late in1969at a time when rates had risen substantially and capacity was tight.The reinsurance industry was exceptionally profitable in1971,and we are now seeing rate-cutting as well as the formation of well-capitalized aggressive new competitors.These lower rates are frequently accompanied by greater exposure.Against this background we expect to see our business curtailed somewhat in1972.We set no volume goals in our insurance business generally--and certainly not in reinsurance--as virtually any volume can be achieved if profitability standards are ignored.When catastrophes occur and underwriting experience sours, we plan to have the resources available to handle the increasing volume which we will then expect to be available at proper prices.We inaugurated our"home-state"insurance operation in1970by the formation of Cornhusker Casualty Company.To date,this has worked well from both a marketing and an underwriting standpoint.We have therefore further developed this approach by the formation of Lakeland Fire &Casualty Company in Minnesota during1971,and Texas United Insurance in1972.Each of these companies will devote its entire efforts to a single state seeking to bring the agents and insureds of its area a combination of large company capability and small company accessibility and sensitivity.John Ringwalt has been in overall charge of this operation since inception. Combining hard work with imagination and intelligence,he has transformed an idea into a well organized business.The"home-state"companies are still very small,accounting for a little over $1.5million in premium volume during1971.It looks as though this volume will more than double in1972and we will develop a more creditable base upon which to evaluate underwriting performance.A highlight of1971was the acquisition of Home&Automobile Insurance Company,located in Chicago.This company was built by Victor Raab from a small initial investment into a major auto insurer in Cook County,writing about$7.5million in premium volume during1971.Vic is cut from the same cloth as Jack Ringwalt and Gene Abegg,with a talent for operating profitably accompanied by enthusiasm for his business.These three men have built their companies from scratch and,after selling their ownership position for cash,retain every bit of the proprietary interest and pride that they have always had.While Vic has multiplied the original equity of Home&Auto many times since its founding,his ideas and talents have always been circumscribed by his capital base.We have added capital funds to the company,which will enable it to establish branch operations extending its highly-concentrated and on-the-spot marketing and claims approach to other densely populated areas.All in all,it is questionable whether volume added by Home&Auto,plus the"home-state" business in1972,will offset possible declines in direct and reinsurance business of National Indemnity Company.However,our large volume gains in1970and1971brought in additionalfunds for investment at a time of high interest rates,which will be of continuing benefit in future years.Thus,despite the unimpressive prospects regarding premium volume,the outlook for investment income and overall earnings from insurance in1972is reasonably good.Banking OperationsOur banking subsidiary,The Illinois National Bank&Trust Company,continued to lead its industry as measured by earnings as a percentage of deposits.In1971,Illinois National earned well over2%after tax on average deposits while(1)not using borrowed funds except for very occasional reserve balancing transactions;(2)maintaining a liquidity position far above average;(3)recording loan losses far below average;and(4)utilizing a mix of over50%time deposits with all consumer savings accounts receiving maximum permitted interest rates throughout the year. This reflects a superb management job by Gene Abegg and Bob Kline.Interest rates received on loans and investments were down substantially throughout the banking industry during1971.In the last few years,Illinois National's mix of deposits has moved considerably more than the industry average away from demand money to much more expensive time money.For example,interest paid on deposits has gone from under$1.7million in1969to over$2.7million in1971.Nevertheless,the unusual profitability of the Bank has been maintained.Marketing efforts were intensified during the year,with excellent results.With interest rates even lower now than in1971,the banking industry is going to have trouble achieving gains in earnings during1972.Our deposit gains at Illinois National continue to come in the time money area,which produces only very marginal incremental income at present.It will take very close cost control to enable Illinois National to maintain its1971level of earnings during1972.FinancialBecause of the volume gains being experienced by our insurance subsidiaries early in1971,we re-cast Berkshire Hathaway's bank loan so as to provide those companies with additional capital funds.This financing turned out to be particularly propitious when the opportunity to purchase Home&Auto occurred later in the year.Our insurance and banking subsidiaries possess a fiduciary relationship with the public.We retain a fundamental belief in operating from a very strongly financed position so as to be in a position to unquestionably fulfill our responsibilities. Thus,we will continue to map our financial future for maximum financial strength in our subsidiaries as well as at the parent company level.Warren E.BuffettChairman of the BoardMarch13,1972。
1976巴菲特致股东的信(英文)
巴菲特致股东的信1976To the Stockholders of Berkshire Hathaway Inc,After two dismal years,operating results in1976improved st year we said the degree of progress in insurance underwriting would determine whether our gain in earnings would be"moderate"or"major."As it turned out,earnings exceeded even the high end of our expectations.In large part,this was due to the outstanding efforts of Phil Liesche's managerial group at National Indemnity Company.In dollar terms,operating earnings came to$16,073,000,or$16.47per share.While this is a record figure,we consider return on shareholders'equity to be a much more significant yardstick of economic performance.Here our result was17.3%,moderately above our long-term average and even further above the average of American industry, but well below our record level of19.8%achieved in1972.Our present estimate,subject to all the caveats implicit in forecasting,is that dollar operating earnings are likely to improve somewhat in1977,but that return on equity may decline a bit from the1976figure.Textile OperationsOur textile division was a significant disappointment during1976.Earnings,measured either by return on sales or by return on capital employed,were inadequate.In part,this was due to industry conditions which did not measure up to expectations of a year ago. But equally important were our own shortcomings.Marketing efforts and mill capabilities were not properly matched in our new Waumbec operation.Unfavorable manufacturing cost variances were produced by improper evaluation of machinery and personnel capabilities.Ken Chace,as always,has been candid in reporting problems and has worked diligently to correct them.He is a pleasure to work with—even under difficult operating conditions.While the first quarter outlook is for red ink,our quite tentative belief is that textile earnings in1977will equal,or exceed modestly,those of1976.Despite disappointing current results,we continue to look for ways to build our textile operation and presently have one moderate-size acquisition under consideration.It should be recognized that the textile business does not offer the expectation of high returns on investment.Nevertheless,we maintain a commitment to this division—a very important source of employment in New Bedford and Manchester—and believe reasonable returns on average are possible. Insurance UnderwritingCasualty insurers enjoyed some rebound from the disaster levels of1975as rate increases finally outstripped relentless cost increases.Preliminary figures indicate that the stockholder owned portion of the property and casualty industry had a combined ratio of 103.0in1976,compared to108.3in1975.(100represents a break-even position onunderwriting—and higher figures represent underwriting losses.)We are unusually concentrated in auto lines where stock companies had an improvement from113.5to 107.4.Our own overall improvement was even more dramatic,from115.4to98.7.Our major insurance sector in insurance,the traditional auto and general liability business of National Indemnity Company,had an outstanding year,achieving profit levels significantly better than the industry generally.Credit for this performance must be given to Phil Liesche,aided particularly by Roland Miller in Underwriting and Bill Lyons in Claims.Volume at National Indemnity Company grew rapidly during1976as competitors finally reacted to the inadequacy of past rates.But,as mentioned in last year's annual report,we are concentrated heavily in lines that are particularly susceptible to both economic and social inflation.Thus present rates,which are adequate for today,will not be adequate tomorrow.Our opinion is that before long,perhaps in1978,the industry will fall behind on rates as temporary prosperity produces unwise competition.If this happens,we must be prepared to meet the next wave of inadequate pricing by a significant reduction in volume. Reinsurance underwriting has lagged the improvement in direct business.When mistakes are made in the pricing of reinsurance,the effects continue for even longer than when similar mistakes are made in direct underwriting.George Young,an outstanding manager, has worked tirelessly to achieve his goal of profitable underwriting,and has cancelled a great many contracts where appropriate rate adjustments were not obtainable.Here,as in the direct business,we have had a concentration in casualty lines which have been particularly hard hit by inflationary conditions.The near term outlook still is not good for our reinsurance business.Our"home state"operation continues to make substantial progress under the management of John Ringwalt.The combined ratio improved from108.4in1975to102.7 in1976.There still are some excess costs reflected in the combined ratio which result from the small size of several operations.Cornhusker Casualty Company,oldest and largest of the home state companies,was the winner of the Chairman's Cup in1976for achievement of the lowest loss ratio among the home state companies.Cornhusker also achieved the lowest combined ratio in its history at94.4,marking the fifth time in its six full years of existence that a ratio below100has been recorded.Premium growth was78%at the home state companies in1976,as market position improved significantly.We presently plan a new home state operation later this year.Our Home and Automobile Insurance Company subsidiary,writing primarily automobile business in the Cook County area of Illinois,experienced a strong recovery in1976.This is directly attributable to John Seward who,in his first full year,has revamped significantly both rating methods and marketing.The auto business has been shifted to a six month direct bill policy,which permits a faster reaction time to underwriting trends.Our general liability business at Home and Automobile has been expanded significantly with good results.While it remains to be proven that we can achieve sustained underwritingprofitability at Home and Auto,we are delighted with the progress John Seward has achieved.Overall,we expect a good year in insurance in1977.Volume is high and present rate levels should allow profitable underwriting.Longer term,however,there are significant negatives in the insurance picture.Auto lines,in particular,seem highly vulnerable to pricing and regulatory problems produced by political and social factors beyond the control of individual companies.Insurance InvestmentsPre-tax investment income in1976improved to$10,820,000from$8,918,000as invested assets built up substantially,both from better levels of profitability and from gains in premium volume.In recent reports we have noted the unrealized depreciation in our bond account,but stated that we considered such market fluctuations of minor importance as our liquidity and general financial strength made it improbable that bonds would have to be sold at times other than those of our choice.The bond market rallied substantially in 1976,giving us moderate net unrealized gains at yearend in the bond portfolios of both our bank and insurance companies.This,too,is of minor importance since our intention is to hold a large portion of our bonds to maturity.The corollary to higher bond prices is that lower earnings are produced by the new funds generated for investment.On balance,we prefer a situation where our bond portfolio has a current market value less than carrying value,but more attractive rates are available on issues purchased with newly-generated funds.Last year we stated that we expected1976to be a year of realized capital gains and, indeed,gains of$9,962,000before tax,primarily from stocks,were realized during the year.It presently appears that1977also will be a year of net realized capital gains.We now have a substantial unrealized gain in our stock portfolio as compared to a substantial unrealized loss several years ago.Here again we consider such market fluctuations from year to year relatively unimportant;unrealized appreciation in our equity holdings,which amounted to$45.7million at yearend,has declined by about$5million as this is written on March21st.However,we consider the yearly business progress of the companies in which we own stocks to be very important.And here,we have been delighted by the1976business performance achieved by most of our portfolio companies.If the business results continue excellent over a period of years,we are certain eventually to achieve good financial results from our stock holdings,regardless of wide year-to-year fluctuations in market values.Our equity holdings with a market value of over$3million on December31,1976were as follows:You will notice that our major equity holdings are relatively few.We select suchinvestments on a long-term basis,weighing the same factors as would be involved in the purchase of100%of an operating business:(1)favorable long-term economic characteristics;(2)competent and honest management;(3)purchase price attractive when measured against the yardstick of value to a private owner;and(4)an industry with which we are familiar and whose long-term business characteristics we feel competent to judge.It is difficult to find investments meeting such a test,and that is one reason for our concentration of holdings.We simply can't find one hundred different securities that conform to our investment requirements.However,we feel quite comfortable concentrating our holdings in the much smaller number that we do identify as attractive. Our intention usually is to maintain equity positions for a long time,but sometimes we will make a purchase with a shorter expected time horizon such as Kaiser Industries.Here a distribution of securities and cash from the parent company is expected to be initiated in 1977.Purchases were made in1976after the announcement of the distribution plan by Kaiser management.BankingEugene Abegg,Chief Executive of Illinois National Bank and Trust Company of Rockford, Illinois,our banking subsidiary,continues to lead the parade among bankers—just as he has even since he opened the bank in1931.Recently,National City Corp.of Cleveland,truly an outstandingly well-managed bank,ran an ad stating"the ratio of earnings to average assets was1.34%in1976which we believe to be the best percentage for any major banking company."Among the really large banks this was the best earnings achievement but,at the Illinois National Bank,earnings were close to50%better than those of National City,or approximately2%of average assets. This outstanding earnings record again was achieved while:(1)paying maximum rates of interest on all consumer savings instruments(time deposits now make up well over two-thirds of the deposit base at the Illinois National Bank),(2) maintaining an outstanding liquidity position(Federal Funds sold plus ernment and Agency issues of under six months'duration presently are approximately equal to demand deposits),and(3)avoiding high-yield but second-class loans(net loan losses in 1976came to about$12,000,or.02%of outstanding loans,a very tiny fraction of the ratio prevailing in1976in the banking industry).Cost control is an important factor in the bank's success.Employment is still at about the level existing at the time of purchase in1969despite growth in consumer time deposits from$30million to$90million and considerable expansion in other activities such as trust, travel and data processing.Blue Chip StampsDuring1976we increased our interest in Blue Chip Stamps,and by yearend we held about33%of that company's outstanding shares.Our interest in Blue Chip Stamps is of growing importance to us.Summary financial reports of Blue Chip Stamps are containedin the footnotes to our attached financial statements.Moreover,shareholders of Berkshire Hathaway Inc.are urged to obtain the current and subsequent annual reports of Blue Chip Stamps by requesting them from Mr.Robert H.Bird,Secretary,Blue Chip Stamps,5801 South Eastern Avenue,Los Angeles,California90040.MiscellaneousK&W Products has performed well in its first year as a subsidiary of Berkshire Hathaway Inc.Both sales and earnings were up moderately over1975.We have less than four years remaining to comply with requirement that our bank be divested by December31,1980.We intend to accomplish such a divestiture in a manner that minimizes disruption to the bank and produces good results for our shareholders. Most probably this will involve a spin-off of bank shares in1980.We also hope at some point to merge with Diversified Retailing Company,Inc.Both corporate simplification and enhanced ownership position in Blue Chip Stamps would be benefits of such a merger.However,it is unlikely that anything will be proposed in this regard during1977.Warren E.Buffett,ChairmanMarch21,1977。
1977年巴菲特致股东的信（附英文版全文）
1977年巴菲特致股东的信（附英文版全文）致伯克希尔·哈撒韦公司的全体股东：1977年本公司的营业净利为2,190万美元，每股约当22.54美元，表现较年前的预期稍微好一点，在这些盈余中，每股有1.43美元的盈余，系蓝筹印花大量实现的资本利得，本公司依照投资比例认列投资收益所贡献，至于伯克希尔本身及其保险子公司已实现的资本利得或损失，则不列入营业利益计算，建议大家不必太在意单一期间的盈余数字，因为长期累积的资本利得或损失才是真正的重点所在。
纺织事业的表现远低于预估，至于伊利诺国家银行的成绩以及蓝筹邮票贡献给我们的投资利益则大致如预期，另外，由PhilLiesche领导的国家产险保险业务的表现甚至比我们当初最乐观的期望还要好。
通常公司会宣称每股盈余又创下历史新高，然而由于公司的资本会随着盈余的累积扩增，所以我们并不认为这样的经营表现有什么大不了的，比如说每年股本扩充10%或是每股盈余成长5%等等，毕竟就算是静止不动的定存帐户，由于复利的关系每年都可稳定地产生同样的效果。
除非是特殊的情况(比如说负债比例特别高或是帐上持有重大资产未予重估)，否则我们认为“股东权益报酬率”应该是衡量管理当局表现比较合理的指针，1997年我们期初股东权益的报酬率约为19%，这比去年同期稍微好一点，但远高于本身过去长期以及当年美国企业整体的平均数，所以虽然我们每股的盈余成长了37%，但由于期初的资本也增加了34%，这使得我们实际的表现并没有想象中那么好。
我们预期未来年度将很难再达到1977年这样的报酬率水准，一方面是因为期初资本又增加了23%，一方面我们预期保险核保利润率会在年底以前开始反转，尽管如此，大家还是可以期待丰收的一年，而我们现在的估计是，虽然预测有其先天上的限制，我认为每股营业利益在1978年应该还有些许成长的空间。
纺织事业1977年纺织事业的表现依旧低迷不振，过去两年我们乐观的预期纷纷落空，这或许也说明了我们预测能力的薄弱，或是纺织产业的本质，尽管一再地努力与挣扎，行销与制造的问题依旧存在，虽然市场上面临的困境与产业情势相关，但也有不少问题是我们自己造成。
1979年巴菲特致股东的信（附英文版全文）
1979年巴菲特致股东的信（附英文版全文）致伯克希尔·哈撒韦公司的全体股东：首先，还是会计相关的议题，从去年年报开始，会计原则要求保险公司持有的股票投资在资产负债表日的评价方式，从原先的成本与市价孰低法，改按公平市价法列示，由于我们帐上的股票投资拥有大量的未实现利益，因此即便我们已提列了资本利得实现时应该支付的估计所得税负债，我们1978年及1979年的净值依然大幅增加。
大家都知道，我们持股60%的蓝筹邮票业已并入伯克希尔的合并报表之中，然而依照现行会计原则规定，蓝筹邮票的股票投资仍必须按照旧制-也就是成本与市价孰低法列示，换句话说，以同一种价格买进同一种股票，不同公司的会计评价方法竟不一样，(这是不是让你毛骨悚然)，蓝筹邮票持股的市值请参阅18 页的附注三。
1979 年营运成果就短期间而言，我们一向认为营业利益(不含出售证券损益)除以股东权益(所有股票投资按原始成本计算)所得出的比率，为衡量单一年度经营成果的最佳方式。
之所以不按市价计算的原因，是因为如此做将使得分母每年大幅波动而失去比较意义，举例来说，股票价格大幅下跌造成股东权益跟着下滑，其结果将使得原本平常的营业利益看起来反而不错，同样的，股价表现越好，股东权益分母跟着变大的结果，将使得营业利益率变得失色，所以我们仍将按期初的股东权益(股票投资以原始成本计)为基准来衡量经营绩效。
在这样的基础下，1979年我们获得了不错的经营成果，营业利益达到期初净值的18.6%，略逊于1978年的数字，当然每股盈余成长了不少(约20%)，但我们不认为应该对每股盈余过于关注，因为虽然1979年我们可运用的资金又增加了不少，但运用的绩效却反而不如前一年度，因为即便是利率固定的定存帐户，只要摆着不动，将领取的利息滚入本金，每年的盈余还是能达到稳定成长的效果，一个静止不动的时钟，只要不注意，看起来也像是运作正常的时钟。
所以我们判断一家公司经营好坏的主要依据，取决于其股东权益报酬率(排除不当的财务杠杆或会计作帐)，而非每股盈余的成长与否，我们认为如果管理当局及证券分析师能修正其对每股盈余的关注，则股东及一般投资大众将会对这些公司的营运情况有更深入的了解。
巴菲特致股东的信英文版
巴菲特致股东的信英文版以下是巴菲特致股东的信的英文版："Dear Shareholders,I hope this letter finds you in good health and high spirits. It is my pleasure to once again provide you with an update on the performance and activities of Berkshire Hathaway.First and foremost, I want to express my gratitude for your continued support and confidence in our company. Despite the challenges posed by the global economic landscape, Berkshire Hathaway has remained resilient and delivered solid results.In terms of financial performance, our operating earnings for the year were strong, reaching new highs. Our diverse portfolio of businesses, ranging from insurance to manufacturing to energy, has allowed us to navigate through various market conditions. We continue to focus on long-term value creation and sustainable growth.Additionally, our investments have also performed well. While short-term market fluctuations are inevitable, we believe in the importance of a long-term investment horizon. Our commitment to buying quality companies at attractive prices remains unwavering.I would also like to highlight our commitment to corporate governance and ethical practices. We strive to maintain the highest standards of integrity and transparency in all our operations. Our board of directors, management team,and employees are dedicated to upholding these principles.Looking ahead, we remain cautiously optimistic about the future. While uncertainties persist, we believe in the resilience of the American economy and the potential for long-term growth. We will continue to seek out opportunities that align with our investment philosophy and create value for our shareholders. In closing, I want to thank you for your unwavering support and trust in Berkshire Hathaway. As always, we remain committed to delivering long-term value and maintaining the trust you have placed in us.Yours sincerely,Warren BuffettChairman and CEO, Berkshire Hathaway"。
BERKSHIRE HATHAWAY INC.巴菲特给股东的信
BERKSHIRE HATHAWAY INC.To the Shareholders of Berkshire Hathaway Inc.:Our gain in net worth during 1986 was $492.5 million, or 26.1%. Over the last 22 years (that is, since present management took over), our per-share book value has grown from $19.46 to $2,073.06, or 23.3% compounded annually. Both the numerator and denominator are important in the per-share book value calculation: during the 22-year period our corporate net worth has increased 10,600% while shares outstanding have increased less than 1%.In past reports I have noted that book value at most companies differs widely from intrinsic business value - the number that really counts for owners. In our own case, however, book value has served for more than a decade as a reasonable if somewhat conservative proxy for business value. That is, our business value has moderately exceeded our book value, with the ratio between the two remaining fairly steady.The good news is that in 1986 our percentage gain in business value probably exceeded the book value gain. I say "probably" because business value is a soft number: in our own case, two equally well-informed observers might make judgments more than 10% apart.A large measure of our improvement in business valuerelative to book value reflects the outstanding performance of key managers at our major operating businesses. These managers - the Blumkins, Mike Goldberg, the Heldmans, Chuck Huggins, Stan Lipsey, and Ralph Schey - have over the years improved the earnings of their businesses dramatically while, except in the case of insurance, utilizing little additional capital. This accomplishment builds economic value, or "Goodwill," that does not show up in the net worth figure on our balance sheet, nor in our per-share book value. In 1986 this unrecorded gain was substantial.So much for the good news. The bad news is that my performance did not match that of our managers. While they were doing a superb job in running our businesses, I was unable to skillfully deploy much of the capital they generated.Charlie Munger, our Vice Chairman, and I really have only two jobs. One is to attract and keep outstanding managers to run our various operations. This hasn’t been all that diff icult. Usually the managers came with the companies we bought, having demonstrated their talents throughout careers that spanned a wide variety of business circumstances. They were managerial stars long before they knew us, and our main contribution has been to not get in their way. This approach seems elementary: if my job were to manage a golf team - and if Jack Nicklaus or Arnold Palmer were willing to play for me - neither would get a lot of directives from me about how to swing.Some of our key managers are independently wealthy (we hope they all become so), but that poses no threat to their continued interest: they work because they love what they do and relish the thrill of outstanding performance. They unfailingly think like owners (the highest compliment we can pay a manager) and find all aspects of their business absorbing.(Our prototype for occupational fervor is the Catholictailor who used his small savings of many years to finance a pilgrimage to the Vatican. When he returned, his parish held a special meeting to get his first-hand account of the Pope. "Tell us," said the eager faithful, "just what sort of fellow is he?" Our hero wasted no words: "He’s a forty-four, medium.")Charlie and I know that the right players will make almost any team manager look good. We subscribe to the philosophy of Ogilvy & Mather’s founding genius, David Ogilvy: "If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants."A by-product of our managerial style is the ability it gives us to easily expand Berkshire’s activities. We’ve read management treatises that specify exactly how many people should report to any one executive, but they make little sense to us. When you have able managers of high character running businesses about which they are passionate, you can have a dozen or more reporting to you and still have time for an afternoon nap. Conversely, if you have even one person reporting to you who is deceitful, inept or uninterested, you will find yourself with more than you can handle. Charlie and I could work with double the number of managers we now have, so long as they had the rarequalities of the present ones.We intend to continue our practice of working only with people whom we like and admire. This policy not only maximizes our chances for good results, it also ensures us an extraordinarily good time. On the other hand, working with people who cause your stomach to churn seems much like marrying for money - probably a bad idea under any circumstances, but absolute madness if you are already rich.The second job Charlie and I must handle is the allocation of capital, which at Berkshire is a considerably more important challenge than at most companies. Three factors make that so: we earn more money than average; we retain all that we earn; and, we are fortunate to have operations that, for the most part, require little incremental capital to remain competitive and to grow. Obviously, the future results of a business earning 23% annually and retaining it all are far more affected by today’s capital allocations than are the results of a business earning 10% and distributing half of that to shareholders. If our retained earnings - and those of our major investees, GEICO and Capital Cities/ABC, Inc. - are employed in an unproductive manner, the economics of Berkshire will deteriorate very quickly. In a company adding only, say, 5% to net worth annually, capital- allocation decisions, though still important, will change the company’s economics far more slowly.Capital allocation at Berkshire was tough work in 1986. We did make one business acquisition - The Fechheimer Bros. Company, which we will discuss in a later section. Fechheimer is a company with excellent economics, run by exactly the kind of people with whom we enjoy being associated. But it is relatively smal l, utilizing only about 2% of Berkshire’s net worth.Meanwhile, we had no new ideas in the marketable equities field, an area in which once, only a few years ago, we could readily employ large sums in outstanding businesses at very reasonable prices. So our main capital allocation moves in 1986 were to pay off debt and stockpile funds. Neither is a fate worse than death, but they do not inspire us to do handsprings either. If Charlie and I were to draw blanks for a few years in our capital-a llocation endeavors, Berkshire’s rate of growth would slow significantly.We will continue to look for operating businesses that meet our tests and, with luck, will acquire such a business every couple of years. But an acquisition will have to be large if it is to help our performance materially. Under current stockmarket conditions, we have little hope of finding equities to buy for our insurance companies. Markets will change significantly - you can be sure of that and some day we will again get our turnat bat. However, we haven’t the faintest idea when that might happen.It can’t be said too often (although I’m sure you feel I’ve tried) that, even under favorable conditions, our returns are certain to drop substantially because of our enlarged size. We have told you that we hope to average a return of 15% on equity and we maintain that hope, despite some negative tax law changes described in a later section of this report. If we are toachieve this rate of return, our net worth must increase $7.2 billion in the next ten years. A gain of that magnitude will be possible only if, before too long, we come up with a few very big (and good) ideas. Charlie and I can’t promise results, but we do promise you that we will keep our efforts focused on our goals.Sources of Reported EarningsThe table on the next page shows the major sources of Berkshire’s reported earnings. This table differs in several ways from the one presented last year. We have added four new lines of business because of the Scott Fetzer and Fechheimer acquisitions. In the case of Scott Fetzer, the two major units acquired were World Book and Kirby, and each is presented separately. Fourteen other businesses of Scott Fetzer are aggregated in Scott Fetzer - Diversified Manufacturing. SF Financial Group, a credit company holding both World Book and Kirby receivables, is included in "Other." This year, because Berkshire is so much larger, we also have eliminated separate reporting for several of our smaller businesses.In the table, amortization of Goodwill is not chargedagainst the specific businesses but, for reasons outlined in the Appendix to my letter in the 1983 Annual Report, is aggregated as a separate item. (A Compendium of earlier letters, including the Goodwill discussion, is available upon request.) Both the Scott Fetzer and Fechheimer acquisitions created accounting Goodwill, which is why the amortization charge for Goodwill increased in1986.Additionally, the Scott Fetzer acquisition required othermajor purchase-price accounting adjustments, as prescribed by generally accepted accounting principles (GAAP). The GAAPfigures, of course, are the ones used in our consolidatedfinancial statements. But, in our view, the GAAP figures are not necessarily the most useful ones for investors or managers. Therefore, the figures shown for specific operating units are earnings before purchase-price adjustments are taken intoaccount. In effect, these are the earnings that would have been reported by the businesses if we had not purchased them.A discussion of our reasons for preferring this form of presentation is in the Appendix to this letter. This Appendixwill never substitute for a steamy novel and definitely is not required reading. However, I know that among our 6,000shareholders there are those who are thrilled by my essays on accounting - and I hope that both of you enjoy the Appendix.In the Business Segment Data on pages 41-43 and in the Management’s Discussion section on pages 45-49, you will findmuch additional information about our businesses. I urge you to read those sections, as well as Charlie Munger’s letter to Wesco shareholders, describing the various businesses of thatsubsidiary, which starts on page 50.(000s omitted)------------------------------------------Berkshire's Shareof Net Earnings(after taxes andPre-Tax Earnings minority interests)--------------------------------------1986 1985 1986 1985-------- -------- ----------------Operating Earnings:Insurance Group:Underwriting ............... $(55,844) $(44,230) $(29,864) $(23,569)Net Investment Income ...... 107,143 95,217 96,440 79,716Buffalo News ................. 34,736 29,921 16,918 14,580Fechheimer (Acquired 6/3/86) 8,400 --- 3,792 ---Kirby ........................ 20,218 --- 10,508 ---Nebraska Furniture Mart ...... 17,685 12,686 7,192 5,181Scott Fetzer - Diversified Mfg. 25,358 --- 13,354 ---See’s Candies ................ 30,347 28,989 15,176 14,558Wesco - other than insurance 5,542 16,018 5,550 9,684World Book ................... 21,978 --- 11,670 ---Amortization of Goodwill (2,555) (1,475) (2,555) (1,475)Other purchase-priceaccounting charges ........ (10,033) --- (11,031) ---Interest on Debt andPre-Payment penalty ....... (23,891) (14,415) (12,213) (7,288)Shareholder-DesignatedContributions ............. (3,997) (4,006) (2,158) (2,164)Other ........................ 20,770 6,744 8,685 3,725-------- -------- ----------------Operating Earnings ............. 195,857 125,449 131,464 92,948Special General FoodsDistribution ................ --- 4,127 --- 3,779Special Washington PostDistribution ................ --- 14,877 --- 13,851Sales of securities ............ 216,242 468,903 150,897 325,237-------- -------- ----------------Total Earnings - all entities .. $412,099 $613,356 $282,361 $435,815======== ======== ================As you can see, operating earnings substantially improvedduring 1986. Some of the improvement came from the insurance operation, whose results I will discuss in a later section. Fechheimer also will be discussed separately. Our other major businesses performed as follows:o Operating results at The Buffalo News continue to reflect atruly superb managerial job by Stan Lipsey. For the third yearin a row, man-hours worked fell significantly and other costswere closely controlled. Consequently, our operating marginsimproved materially in 1986, even though our advertising rateincreases were well below those of most major newspapers.Our cost-control efforts have in no way reduced ourcommitment to news. We continue to deliver a 50% "news hole"(the portion of the total space in the paper devoted to news), ahigher percentage, we believe, than exists at any dominantnewspaper in this country of our size or larger.The average news hole at papers comparable to the News isabout 40%. The difference between 40% and 50% is more importantthan it might first seem: a paper with 30 pages of ads and a 40%news hole delivers 20 pages of news a day, whereas our papermatches 30 pages of ads with 30 pages of news. Therefore, givenad pages equal in number, we end up delivering our readers noless than 50% more news.We believe this heavy commitment to news is one of thereasons The Buffalo News has the highest weekday penetration rate(the percentage of households in the paper’s primary marketingarea purchasing it each day) among any of the top 50 papers inthe country. Our Sunday penetration, where we are also numberone, is even more impressive. Ten years ago, the only Sundaypaper serving Buffalo (the Courier-Express) had circulation of 271,000 and a penetration ratio of about 63%. The Courier- Express had served the area for many decades and its penetration ratio - which was similar to those existing in many metropolitan markets - was thought to be a "natural" one, accuratelyreflecting the local citizenry’s appetite for a Sunday product.Our Sunday paper was started in late 1977. It now has a penetration ratio of 83% and sells about 100,000 copies more each Sunday than did the Courier-Express ten years ago - even though population in our market area has declined during the decade. In recent history, no other city that has long had a local Sunday paper has experienced a penetration gain anywhere close to Buffalo’s.Despite our exceptional market acceptance, our operating margins almost certainly have peaked. A major newsprint price increase took effect at the end of 1986, and our advertising rate increases in 1987 will again be moderate compared to those of the industry. However, even if margins should materially shrink, we would not reduce our news-hole ratio.As I write this, it has been exactly ten years since we purchased The News. The financial rewards it has brought us have far exceeded our expectations and so, too, have the non-financial rewards. Our respect for the News - high when we bought it - has grown consistently ever since the purchase, as has our respect and admiration for Murray Light, the editor who turns out the product that receives such extraordinary community acceptance. The efforts of Murray and Stan, which were crucial to the News during its dark days of financial reversals and litigation, have not in the least been lessened by prosperity. Charlie and I are grateful to them.o The amazing Blumkins continue to perform business miracles at Nebraska Furniture Mart. Competitors come and go (mostly go), but Mrs. B. and her progeny roll on. In 1986 net sales increased 10.2% to $132 million. Ten years ago sales were $44 million and, even then, NFM appeared to be doing just about all of the business available in the Greater Omaha Area. Given NFM’s remarkable dominance, Omaha’s slow growth in population and the modest inflation rates that have applied to the goods NFM sells, how can this operation continue to rack up such large sales gains? The only logical explanation is that the marketingterritory of NFM’s one-and-only store continues to widen because of its ever-growing reputation for rock-bottom everyday prices and the broadest of selections. In preparation for further gains, NFM is expanding the capacity of its warehouse, located a few hundred yards from the store, by about one-third.Mrs. B, Chairman of Nebraska Furniture Mart, continues at age 93 to outsell and out-hustle any manager I’ve ever seen. She’s at the store seven days a week, from opening to close. Competing with her represents a triumph of courage over judgment.It’s easy to overlook what I consider to be the critical lesson of the Mrs. B saga: at 93, Omaha based Board Chairmen have yet to reach their peak. Please file this fact away to consult before you mark your ballot at the 2024 annual meeting of Berkshire.o At See’s, sales tr ends improved somewhat from those of recent years. Total pounds sold rose about 2%. (For you chocaholics who like to fantasize, one statistic: we sell over 12,000 tons annually.) Same-store sales, measured in pounds, were virtually unchanged. In the previous six years, same store poundage fell, and we gained or maintained poundage volume only by adding stores. But a particularly strong Christmas season in 1986 stemmed the decline. By stabilizing same-store volume and making a major effort to con trol costs, See’s was able to maintain its excellent profit margin in 1986 though it put through only minimal price increases. We have Chuck Huggins, our long-time manager at See’s, to thank for this significant achievement.See’s has a one-of-a-kind product "personality" produced by a combination of its candy’s delicious taste and moderate price, the company’s total control of the distribution process, and the exceptional service provided by store employees. Chuckrightfully measures his success by the satisfaction of our customers, and his attitude permeates the organization. Few major retailing companies have been able to sustain such a customer-oriented spirit, and we owe Chuck a great deal for keeping it alive and well at See’s.See’s profits should stay at about their present level. We will continue to increase prices very modestly, merely matching prospective cost increases.o World Book is the largest of 17 Scott Fetzer operationsthat joined Berkshire at the beginning of 1986. Last year I reported to you enthusiastically about the businesses of Scott Fetzer and about Ralph Schey, its manager. A year’s experience has added to my enthusiasm for both. Ralph is a superb businessman and a straight shooter. He also brings exceptional versatility and energy to his job: despite the wide array of businesses that he manages, he is on top of the operations, opportunities and problems of each. And, like our other managers, Ralph is a real pleasure to work with. Our good fortune continues.World Book’s unit volume increased for the fourth consecutive year, with encyclopedia sales up 7% over 1985 and 45% over 1982. Childcraft’s unit sales also grew significantly.World Book continues to dominate the U.S. direct-sales encyclopedia market - and for good reasons. Extraordinarilywell-edited and priced at under 5 cents per page, these books are a bargain for youngster and adult alike. You may find oneediting technique interesting: World Book ranks over 44,000 words by difficulty. Longer entries in the encyclopedia include only the most easily comprehended words in the opening sections, with the difficulty of the material gradually escalating as the exposition proceeds. As a result, youngsters can easily and profitably read to the point at which subject matter gets too difficult, instead of immediately having to deal with a discussion that mixes up words requiring college-level comprehension with others of fourth-grade level.Selling World Book is a calling. Over one-half of ouractive salespeople are teachers or former teachers, and another 5% have had experience as librarians. They correctly think of themselves as educators, and they do a terrific job. If you don’t have a World Book set in your house, I recommend one.o Kirby likewise recorded its fourth straight year of unit volume gains. Worldwide, unit sales grew 4% from 1985 and 33% from 1982. While the Kirby product is more expensive than most cleaners, it performs in a manner that leaves cheaper units far behind ("in the dust," so to speak). Many 30- and 40-year-old Kirby cleaners are still in active duty. If you want the best, you buy a Kirby.Some companies that historically have had great success in direct sales have stumbled in recent years. Certainly the era of the working woman has created new challenges for direct sales organizations. So far, the record shows that both Kirby and World Book have responded most successfully.The businesses described above, along with the insurance operation and Fechheimer, constitute our major business units. The brevity of our descriptions is in no way meant to diminish the importance of these businesses to us. All have been discussed in past annual reports and, because of the tendency of Berkshire owners to stay in the fold (about 98% of the stock at the end of each year is owned by people who were owners at the start of the year), we want to avoid undue repetition of basic facts. You can be sure that we will immediately report to you in detail if the underlying economics or competitive position of any of these businesses should materially change. In general, the businesses described in this section can be characterized as having very strong market positions, very high returns on capital employed, and the best of operating managements.The Fechheimer Bros. Co.Every year in Berkshire’s annual report I include a description of the kind of business that we would like to buy. This "ad" paid off in 1986.On January 15th of last year I received a letter from Bob Heldman of Cincinnati, a shareholder for many years and also Chairman of Fechheimer Bros. Until I read the letter, however, I did not know of either Bob or Fechheimer. Bob wrote that he ran a company that met our tests and suggested that we get together, which we did in Omaha after their results for 1985 were compiled.He filled me in on a little history: Fechheimer, a uniform manufacturing and distribution business, began operations in 1842. Warren Heldman, Bob’s father, became involved in the business in 1941 and his sons, Bob and George (now President), along with their sons, subsequently joined the company. Under the Heldmans’ management, the business was highly successful.In 1981 Fechheimer was sold to a group of venturecapitalists in a leveraged buy out (an LBO), with managementretaining an equity interest. The new company, as is the case with all LBOS, started with an exceptionally high debt/equity ratio. After the buy out, however, operations continued to be very successful. So by the start of last year debt had been paid down substantially and the value of the equity had increased dramatically. For a variety of reasons, the venture capitalists wished to sell and Bob, having dutifully read Berkshire’s annual reports, thought of us.Fechheimer is exactly the sort of business we like to buy. Its economic record is superb; its managers are talented, high- grade, and love what they do; and the Heldman family wanted to continue its financial interest in partnership with us. Therefore, we quickly purchased about 84% of the stock for a price that was based upon a $55 million valuation for the entire business.The circumstances of this acquisition were similar to those prevailing in our purchase of Nebraska Furniture Mart: most of the shares were held by people who wished to employ funds elsewhere; family members who enjoyed running their business wanted to continue both as owners and managers; several generations of the family were active in the business, providing management for as far as the eye can see; and the managing family wanted a purchaser who would not re-sell, regardless of price, and who would let the business be run in the future as it had been in the past. Both Fechheimer and NFM were right for us, and we were right for them.You may be amused to know that neither Charlie nor I have been to Cincinnati, headquarters for Fechheimer, to see their operation. (And, incidentally, it works both ways: Chuck Huggins, who has been running See’s for 15 years, has never been to Omaha.) If our success were to depend upon insights we developed through plant inspections, Berkshire would be in big trouble. Rather, in considering an acquisition, we attempt to evaluate the economic characteristics of the business - its competitive strengths and weaknesses - and the quality of the people we will be joining. Fechheimer was a standout in both respects. In addition to Bob and George Heldman, who are in their mid-60s - spring chickens by our standards - there are three members of the next generation, Gary, Roger and Fred, to insure continuity.As a prototype for acquisitions, Fechheimer has only onedrawback: size. We hope our next acquisition is at least several times as large but a carbon copy in all other respects. Our threshold for minimum annual after-tax earnings of potential acquisitions has been moved up to $10 million from the $5 million level that prevailed when Bob wrote to me.Flushed with success, we repeat our ad. If you have a business that fits, call me or, preferably, write.Here’s what we’re looking for:(1) large purchases (at least $10 million of after-taxearnings),(2) demonstrated consistent earning power (futureprojections are of little interest to us, nor are"turn-around" situations),(3) businesses earning good returns on equity whileemploying little or no debt.(4) management in place (we can’t supply it),(5) simple businesses (if there’s lots of technology, wewon’t understand it),(6) an offering price (we don’t want to waste our timeor that of the seller by talking, even preliminarily,about a transaction when price is unknown).We will not engage in unfriendly takeovers. We can promise complete confidentiality and a very fast answer - customarily within five minutes - as to whether we’re interested. We prefer to buy for cash, but will consider issuing stock when we receive as much in intrinsic business value as we give. Indeed,following recent advances in the price of Berkshire stock, transactions involving stock issuance may be quite feasible. We invite potential sellers to check us out by contacting people with whom we have done business in the past. For the right business - and the right people - we can provide a good home.On the other hand, we frequently get approached about acquisitions that don’t come close to meeting our tests: new ventures, turnarounds, auction-like sales, and the ever-popular (among brokers) "I’m-sure-something-will-work-out-if-you-people- get-to-know-each-other." None of these attracts us in the least.* * *Besides being interested in the purchases of entirebusinesses as described above, we are also interested in the negotiated purchase of large, but not controlling, blocks ofstock, as in our Cap Cities purchase. Such purchases appeal tous only when we are very comfortable with both the economics ofthe business and the ability and integrity of the people runningthe operation. We prefer large transactions: in the unusual casewe might do something as small as $50 million (or even smaller),but our preference is for commitments many times that size.Insurance OperationsWe present our usual table of industry figures, expandedthis year to include data about incurred losses and the GNPinflation index. The contrast in 1986 between the growth in premiums and growth in incurred losses will show you why underwriting results for the year improved materially:StatutoryYearly Change Combined Ratio Yearly Change Inflation Ratein Premiums After Policyholder in Incurred Measured byWritten (%) Dividends Losses (%) GNP Deflator (%)------------- ------------------ -----------------------------1981 ..... 3.8 106.0 6.5 9.7 1982 ..... 4.4 109.8 8.4 6.4 1983 ..... 4.6 112.0 6.8 3.9 1984 ..... 9.2 117.9 16.9 3.8 1985 ..... 22.1 116.5 16.1 3.3 1986 (Est.) 22.6 108.5 15.5 2.6Source: Best’s Insurance Management ReportsThe combined ratio represents total insurance costs (losses incurred plus expenses) compared to revenue from premiums: aratio below 100 indicates an underwriting profit, and one above100 indicates a loss. When the investment income that an insurer earns from holding on to pol icyholders’ funds ("the float") istaken into account, a combined ratio in the 107-112 rangetypically produces an overall break-even result, exclusive of earnings on the funds provided by shareholders.。
1977年巴菲特给股东的信英文版
BERKSHIRE HATHAW AY INC. To the Stockholders of Berkshire Hathaway Inc.:Operating earnings in 1977 of $21,904,000, or $22.54 per share, were moderately better than anticipated a year ago. Of these earnings, $1.43 per share resulted from substantialrealized capital gains by Blue Chip Stamps which, to the extentof our proportional interest in that company, are included in our operating earnings figure. Capital gains or losses realized directly by Berkshire Hathaway Inc. or its insurance subsidiaries are not included in our calculation of operating earnings. While too much attention should not be paid to the figure for anysingle year, over the longer term the record regarding aggregate capital gains or losses obviously is of significance.Textile operations came in well below forecast, while the results of the Illinois National Bank as well as the operating earnings attributable to our equity interest in Blue Chip Stamps were about as anticipated. However, insurance operations, led again by the truly outstanding results of Phil Liesche謚ｯmanagerial group at National Indemnity Company, were even better than our optimistic expectations.Most companies define 謳粗cord?earnings as a new high inearnings per share. Since businesses customarily add from year to year to their equity base, we find nothing particularly noteworthy in a management performance combining, say, a 10% increase in equity capital and a 5% increase in earnings per share. After all, even a totally dormant savings account will produce steadily rising interest earnings each year because of compounding.Except for special cases (for example, companies with unusual debt-equity ratios or those with important assets carried at unrealistic balance sheet values), we believe a more appropriate measure of managerial economic performance to be return on equity capital. In 1977 our operating earnings on beginning equity capital amounted to 19%, slightly better than last year and above both our own long-term average and that of American industry in aggregate. But, while our operating earnings per share were up 37% from the year before, our beginning capital was up 24%, making the gain in earnings per share considerably less impressive than it might appear at first glance.We expect difficulty in matching our 1977 rate of return during the forthcoming year. Beginning equity capital is up 23% from a year ago, and we expect the trend of insuranceunderwriting profit margins to turn down well before the end ofthe year. Nevertheless, we expect a reasonably good year and our present estimate, subject to the usual caveats regarding the frailties of forecasts, is that operating earnings will improve somewhat on a per share basis during 1978.Textile OperationsThe textile business again had a very poor year in 1977. We have mistakenly predicted better results in each of the last two years. This may say something about our forecasting abilities, the nature of the textile industry, or both. Despite strenuous efforts, problems in marketing and manufacturing have persisted. Many difficulties experienced in the marketing area are due primarily to industry conditions, but some of the problems have been of our own making.A few shareholders have questioned the wisdom of remaining in the textile business which, over the longer term, is unlikelyto produce returns on capital comparable to those available in many other businesses. Our reasons are several: (1) Our mills in both New Bedford and Manchester are among the largest employers in each town, utilizing a labor force of high average age possessing relatively non-transferable skills. Our workers andunions have exhibited unusual understanding and effort in cooperating with management to achieve a cost structure and product mix which might allow us to maintain a viable operation. (2) Management also has been energetic and straightforward in its approach to our textile problems. In particular, Ken Chace謚ｯefforts after the change in corporate control took place in 1965 generated capital from the textile division needed to finance the acquisition and expansion of our profitable insurance operation. (3) With hard work and some imagination regarding manufacturing and marketing configurations, it seems reasonable that at least modest profits in the textile division can be achieved in the future.Insurance UnderwritingOur insurance operation continued to grow significantly in 1977. It was early in 1967 that we made our entry into this industry through the purchase of National Indemnity Company and National Fire and Marine Insurance Company (sister companies) for approximately $8.6 million. In that year their premium volume amounted to $22 million. In 1977 our aggregate insurance premium volume was $151 million. No additional shares of Berkshire Hathaway stock have been issued to achieve any of this growth.Rather, this almost 600% increase has been achieved through large gains in National Indemnity謚ｯtraditional liability areasplus the starting of new companies (Cornhusker Casualty Companyin 1970, Lakeland Fire and Casualty Company in 1971, Texas United Insurance Company in 1972, The Insurance Company of Iowa in 1973, and Kansas Fire and Casualty Company in late 1977), the purchasefor cash of other insurance companies (Home and Automobile Insurance Company in 1971, Kerkling Reinsurance Corporation, now named Central Fire and Casualty Company, in 1976, and Cypress Insurance Company at yearend 1977), and finally through the marketing of additional products, most significantly reinsurance, within the National Indemnity Company corporate structure.In aggregate, the insurance business has worked out very well. But it hasn謚ｰbeen a one-way street. Some major mistakes have been made during the decade, both in products and personnel. We experienced significant problems from (1) a surety operation initiated in 1969, (2) the 1973 expansion of Home andAutomobile謚ｯurban auto marketing into the Miami, Florida area, (3) a still unresolved aviation 謠ｻronting?arrangement, and (4)our Worker謚ｯCompensation operation in California, which we believe retains an interesting potential upon completion of a reorganization now in progress. It is comforting to be in a business where some mistakes can be made and yet a quitesatisfactory overall performance can be achieved. In a sense,this is the opposite case from our textile business where evenvery good management probably can average only modest results. One of the lessons your management has learned - and, unfortunately, sometimes re-learned - is the importance of beingin businesses where tailwinds prevail rather than headwinds.In 1977 the winds in insurance underwriting were squarely behind us. Very large rate increases were effected throughoutthe industry in 1976 to offset the disastrous underwritingresults of 1974 and 1975. But, because insurance policies typically are written for one-year periods, with pricing mistakes capable of correction only upon renewal, it was 1977 before thefull impact was felt upon earnings of those earlier rate increases.The pendulum now is beginning to swing the other way. We estimate that costs involved in the insurance areas in which we operate rise at close to 1% per month. This is due to continuous monetary inflation affecting the cost of repairing humans and property, as well as 謳弛cial inflation? a broadening definitionby society and juries of what is covered by insurance policies. Unless rates rise at a comparable 1% per month, underwriting profits must shrink. Recently the pace of rate increases hasslowed dramatically, and it is our expectation that underwriting margins generally will be declining by the second half of the year.We must again give credit to Phil Liesche, greatly assistedby Roland Miller in Underwriting and Bill Lyons in Claims, for an extraordinary underwriting achievement in National Indemnity謚ｯtraditional auto and general liability business during 1977.Large volume gains have been accompanied by excellent underwriting margins following contraction or withdrawal by many competitors in the wake of the 1974-75 crisis period. These conditions will reverse before long. In the meantime, National Indemnity謚ｯunderwriting profitability has increased dramatically and, in addition, large sums have been made available for investment. As markets loosen and rates become inadequate, we again will face the challenge of philosophically accepting reduced volume. Unusual managerial discipline will be required, as it runs counter to normal institutional behavior to let theother fellow take away business - even at foolish prices.Our reinsurance department, managed by George Young, improved its underwriting performance during 1977. Although the combined ratio (see definition on page 12) of 107.1 was unsatisfactory, its trend was downward throughout the year. Inaddition, reinsurance generates unusually high funds for investment as a percentage of premium volume.At Home and Auto, John Seward continued to make progress on all fronts. John was a battlefield promotion several years agowhen Home and Auto謚ｯunderwriting was awash in red ink and the company faced possible extinction. Under his management it currently is sound, profitable, and growing.John Ringwalt謚ｯhomestate operation now consists of five companies, with Kansas Fire and Casualty Company becoming operational late in 1977 under the direction of Floyd Taylor.The homestate companies had net premium volume of $23 million, up from $5.5 million just three years ago. All four companies that operated throughout the year achieved combined ratios below 100, with Cornhusker Casualty Company, at 93.8, the leader. In addition to actively supervising the other four homestate operations, John Ringwalt manages the operations of Cornhusker which has recorded combined ratios below 100 in six of its sevenfull years of existence and, from a standing start in 1970, hasgrown to be one of the leading insurance companies operating in Nebraska utilizing the conventional independent agency system. Lakeland Fire and Casualty Company, managed by Jim Stodolka, was the winner of the Chairman謚ｯCup in 1977 for achieving the lowestloss ratio among the homestate companies. All in all, the homestate operation continues to make excellent progress.The newest addition to our insurance group is Cypress Insurance Company of South Pasadena, California. This Worker謚ｯCompensation insurer was purchased for cash in the final days of 1977 and, therefore, its approximate $12.5 million of volume forthat year was not included in our results. Cypress and National Indemnity謚ｯpresent California Worker謚ｯCompensation operation will not be combined, but will operate independently utilizing somewhat different marketing strategies. Milt Thornton,President of Cypress since 1968, runs a first-class operation for policyholders, agents, employees and owners alike. We look forward to working with him.Insurance companies offer standardized policies which can be copied by anyone. Their only products are promises. It is not difficult to be licensed, and rates are an open book. There areno important advantages from trademarks, patents, location, corporate longevity, raw material sources, etc., and very little consumer differentiation to produce insulation from competition.It is commonplace, in corporate annual reports, to stress the difference that people make. Sometimes this is true andsometimes it isn謚ｰ. But there is no question that the nature ofthe insurance business magnifies the effect which individual managers have on company performance. We are very fortunate to have the group of managers that are associated with us.Insurance InvestmentsDuring the past two years insurance investments at cost (excluding the investment in our affiliate, Blue Chip Stamps)have grown from $134.6 million to $252.8 million. Growth in insurance reserves, produced by our large gain in premium volume, plus retained earnings, have accounted for this increase in marketable securities. In turn, net investment income of the Insurance Group has improved from $8.4 million pre-tax in 1975 to $12.3 million pre-tax in 1977.In addition to this income from dividends and interest, we realized capital gains of $6.9 million before tax, about one- quarter from bonds and the balance from stocks. Our unrealized gain in stocks at yearend 1977 was approximately $74 million but this figure, like any other figure of a single date (we had an unrealized loss of $17 million at the end of 1974), should not be taken too seriously. Most of our large stock positions are goingto be held for many years and the scorecard on our investment decisions will be provided by business results over that period,and not by prices on any given day. Just as it would be foolishto focus unduly on short-term prospects when acquiring an entire company, we think it equally unsound to become mesmerized by prospective near term earnings or recent trends in earnings when purchasing small pieces of a company; i.e., marketable common stocks.A little digression illustrating this point may beinteresting. Berkshire Fine Spinning Associates and Hathaway Manufacturing were merged in 1955 to form Berkshire Hathaway Inc. In 1948, on a pro forma combined basis, they had earnings aftertax of almost $18 million and employed 10,000 people at a dozen large mills throughout New England. In the business world ofthat period they were an economic powerhouse. For example, in that same year earnings of IBM were $28 million (now $2.7 billion), Safeway Stores, $10 million, Minnesota Mining, $13 million, and Time, Inc., $9 million. But, in the decadefollowing the 1955 merger aggregate sales of $595 million produced an aggregate loss for Berkshire Hathaway of $10 million. By 1964 the operation had been reduced to two mills and net worth had shrunk to $22 million, from $53 million at the time of the merger. So much for single year snapshots as adequate portrayalsof a business.Equity holdings of our insurance companies with a marketvalue of over $5 million on December 31, 1977 were as follows:No. of Shares Company Cost Market------------- ------- -------- --------(000謚ｯomitted) 220,000 Capital Cities Communications, Inc. ..... $ 10,909 $ 13,2281,986,953 Government Employees InsuranceCompany Convertible Preferred ........ 19,417 33,0331,294,308 Government Employees InsuranceCompany Common Stock ................. 4,116 10,516 592,650 The Interpublic Group of Companies, Inc. 4,531 17,187324,580 Kaiser Aluminum& Chemical Corporation ... 11,218 9,9811,305,800 Kaiser Industries, Inc. ................. 778 6,039226,900 Knight-Ridder Newspapers, Inc. .......... 7,534 8,736170,800 Ogilvy & Mather International, Inc. ..... 2,762 6,960934,300 The Washington Post Company Class B ..... 10,628 33,401-------- --------Total ................................... $ 71,893 $139,081All Other Holdings ...................... 34,996 41,992-------- --------Total Equities .......................... $106,889 $181,073======== ======== We select our marketable equity securities in much the sameway we would evaluate a business for acquisition in its entirety. We want the business to be (1) one that we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people, and (4) available at a very attractive price.We ordinarily make no attempt to buy equities for anticipated favorable stock price behavior in the short term. In fact, iftheir business experience continues to satisfy us, we welcome lower market prices of stocks we own as an opportunity to acquire even more of a good thing at a better price.Our experience has been that pro-rata portions of truly outstanding businesses sometimes sell in the securities marketsat very large discounts from the prices they would command in negotiated transactions involving entire companies. Consequently, bargains in business ownership, which simply are not available directly through corporate acquisition, can be obtained indirectly through stock ownership. When prices are appropriate, we are willing to take very large positions in selected companies, not with any intention of taking control and not foreseeing sell-out or merger, but with the expectation that excellent business results by corporations will translate overthe long term into correspondingly excellent market value and dividend results for owners, minority as well as majority.Such investments initially may have negligible impact on our operating earnings. For example, we invested $10.9 million in Capital Cities Communications during 1977. Earnings attributable to the shares we purchased totaled about $1.3 million last year.But only the cash dividend, which currently provides $40,000 annually, is reflected in our operating earnings figure.Capital Cities possesses both extraordinary properties and extraordinary management. And these management skills extend equally to operations and employment of corporate capital. To purchase, directly, properties such as Capital Cities owns would cost in the area of twice our cost of purchase via the stock market, and direct ownership would offer no important advantages to us. While control would give us the opportunity - and the responsibility - to manage operations and corporate resources, we would not be able to provide management in either of those respects equal to that now in place. In effect, we can obtain a better management result through non-control than control. This is an unorthodox view, but one we believe to be sound.BankingIn 1977 the Illinois National Bank continued to achieve a rate of earnings on assets about three times that of most largebanks. As usual, this record was achieved while the bank paid maximum rates to savers and maintained an asset position combining low risk and exceptional liquidity. Gene Abegg formed the bank in 1931 with $250,000. In its first full year of operation, earnings amounted to $8,782. Since that time, no new capital has been contributed to the bank; on the contrary, sinceour purchase in 1969, dividends of $20 million have been paid. Earnings in 1977 amounted to $3.6 million, more than achieved by many banks two or three times its size.Late last year Gene, now 80 and still running a banking operation without peer, asked that a successor be brought in. Accordingly, Peter Jeffrey, formerly President and Chief Executive Officer of American National Bank of Omaha, has joined the Illinois National Bank effective March 1st as President and Chief Executive Officer.Gene continues in good health as Chairman. We expect a continued successful operation at Rockford謚ｯleading bank.Blue Chip StampsWe again increased our equity interest in Blue Chip Stamps, and owned approximately 36 1/2% at the end of 1977. Blue Chiphad a fine year, earning approximately $12.9 million fromoperations and, in addition, had realized securities gains of$4.1 million.Both Wesco Financial Corp., an 80% owned subsidiary of Blue Chip Stamps, managed by Louis Vincenti, and See謚ｯCandies, a 99% owned subsidiary, managed by Chuck Huggins, made good progress in 1977. Since See謚ｯwas purchased by Blue Chip Stamps at the beginning of 1972, pre-tax operating earnings have grown from$4.2 million to $12.6 million with little additional capital investment. See謚ｯachieved this record while operating in an industry experiencing practically no unit growth. Shareholdersof Berkshire Hathaway Inc. may obtain the annual report of BlueChip Stamps by requesting it from Mr. Robert H. Bird, Blue Chip Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040.Warren E. Buffett, Chairman March 14,1978。
来自巴菲特的信：To the Shareholders of Berkshire Hathaway Inc
巴菲特2011年致股东的信(中英文）To the Shareholders of Berkshire Hathaway Inc.:The per-share book value of both our Class A and Class B stock increased by13%in2010. Over thelast46years(that is,since present management took over),book value has grown from $19to$95,453,a rate of20.2%compounded annually.*The highlight of2010was our acquisition of Burlington Northern Santa Fe,a purchase that’s workingout even better than I expected.It now appears that owning this railroad will increase Berkshire’s“normal”earning power by nearly40%pre-tax and by well over30%after-tax.Making this purchase increased our sharecount by6%and used$22billion of cash.Since we’ve quickly replenished the cash, the economics of thistransaction have turned out very well.A“normal year,”of course,is not something that either Charlie Munger,Vice Chairman of Berkshireand my partner,or I can define with anything like precision.But for the purpose of estimating our current earningpower,we are envisioning a year free of a mega-catastrophe in insurance and possessing a general businessclimate somewhat better than that of2010but weaker than that ing these assumptions,andseveral others that I will explain in the“Investment”section,I can estimate that the normal earning power of theassets we currently own is about$17billion pre-tax and$12billion after-tax, excluding any capital gains orlosses.Every day Charlie and I think about how we can build on this base.Both of us are enthusiastic about BNSF’s future because railroads have major cost and environmentaladvantages over trucking,their main st year BNSF moved each ton of freight it carried a record500miles on a single gallon of diesel fuel.That’s three times more fuel-efficient than trucking is,which meansour railroad owns an important advantage in operating costs.Concurrently,our country gains because of reducedgreenhouse emissions and a much smaller need for imported oil.When traffic travels by rail,society benefits.Over time,the movement of goods in the United States will increase,and BNSF should get its fullshare of the gain.The railroad will need to invest massively to bring about this growth, but no one is bettersituated than Berkshire to supply the funds required.However slow the economy,orchaotic the markets,ourchecks will clear.Last year–in the face of widespread pessimism about our economy–we demonstrated our enthusiasmfor capital investment at Berkshire by spending$6billion on property and equipment. Of this amount,$5.4billion–or90%of the total–was spent in the United States.Certainly our businesses will expand abroad inthe future,but an overwhelming part of their future investments will be at home.In 2011,we will set a newrecord for capital spending–$8billion–and spend all of the$2billion increase in the United States.Money will always flow toward opportunity,and there is an abundance of that in America. Commentators today often talk of“great uncertainty.”But think back,for example, to December6,1941,October18,1987and September10,2001.No matter how serene today may be, tomorrow is alwaysuncertain.*All per-share figures used in this report apply to Berkshire’s A shares.Figures for the B shares are1/1500th of those shown for A.3Don’t let that reality spook you.Throughout my lifetime,politicians and pundits have constantlymoaned about terrifying problems facing America.Yet our citizens now live an astonishing six times better thanwhen I was born.The prophets of doom have overlooked the all-important factor that is certain:Human potentialis far from exhausted,and the American system for unleashing that potential–a system that has worked wondersfor over two centuries despite frequent interruptions for recessions and even a Civil War–remains alive andeffective.We are not natively smarter than we were when our country was founded nor do we work harder.Butlook around you and see a world beyond the dreams of any colonial citizen.Now,as in 1776,1861,1932and1941,America’s best days lie ahead.PerformanceCharlie and I believe that those entrusted with handling the funds of others should establishperformance goals at the onset of their cking such standards, managements are tempted to shootthe arrow of performance and then paint the bull’s-eye around wherever it lands. In Berkshire’s case,we long ago told you that our job is to increase per-share intrinsic value at a rategreater than the increase(including dividends)of the S&P500.In some years we succeed;in others we fail.But,if we are unable over time to reach that goal,we have done nothing for our investors, who by themselves couldhave realized an equal or better result by owning an index fund.The challenge,of course,is the calculation of intrinsic value.Present that task to Charlie and meseparately,and you will get two different answers.Precision just isn’t possible. To eliminate subjectivity,we therefore use an understated proxy for intrinsic-value–book value–when measuring our performance.To be sure,some of our businesses are worth far more than their carryingvalue on our books.(Later in this report,we’ll present a case study.)But since that premium seldom swingswildly from year to year,book value can serve as a reasonable device for tracking how we are doing.The table on page2shows our46-year record against the S&P,a performance quite good in the earlieryears and now only satisfactory.The bountiful years,we want to emphasize,will never return.The huge sums ofcapital we currently manage eliminate any chance of exceptional performance.We will strive,however,forbetter-than-average results and feel it fair for you to hold us to that standard. Yearly figures,it should be noted,are neither to be ignored nor viewed as all-important. The pace ofthe earth’s movement around the sun is not synchronized with the time required for either investment ideas oroperating decisions to bear fruit.At GEICO,for example,we enthusiastically spent $900million last year onadvertising to obtain policyholders who deliver us no immediate profits.If we could spend twice that amountproductively,we would happily do so though short-term results would be further penalized.Many largeinvestments at our railroad and utility operations are also made with an eye to payoffs well down the road.To provide you a longer-term perspective on performance,we present on the facing page the yearlyfigures from page2recast into a series of five-year periods.Overall,there are42 of these periods,and they tellan interesting story.On a comparative basis,our best years ended in the early1980s. The market’s golden period,however,came in the17following years,with Berkshire achieving stellar absolute returns even as our relativeadvantage narrowed.After1999,the market stalled(or have you already noticed that?).Consequently,the satisfactoryperformance relative to the S&P that Berkshire has achieved since then has delivered only moderate absoluteresults.Looking forward,we hope to average several points better than the S&P–though that result is,ofcourse,far from a sure thing.If we succeed in that aim,we will almost certainly produce better relative results inbad years for the stock market and suffer poorer results in strong markets.4Berkshire’s Corporate Performance vs.the S&P500by Five-Year PeriodsAnnual Percentage ChangeFive-Year Periodin Per-ShareBook Value ofBerkshire(1)in S&P500with DividendsIncluded(2)RelativeResults(1)-(2)1965-1969..................................... ..........17.2 5.012.21966-1970..................................... ..........14.7 3.910.81967-1971..................................... ..........13.99.2 4.71968-1972..................................... ..........16.87.59.31969-1973..................................... ..........17.7 2.015.71970-1974..................................... ..........15.0(2.4)17.41971-1975..................................... ..........13.9 3.210.71972-1976..................................... ..........20.8 4.915.91973-1977..................................... ..........23.4(0.2)23.61974-1978..................................... ..........24.4 4.320.11975-1979..................................... ..........30.114.715.41976-1980..................................... ..........33.413.919.51977-1981..................................... ..........29.08.120.91978-1982..................................... ..........29.914.115.81979-1983..................................... ..........31.617.314.31980-1984..................................... ..........27.014.812.21981-1985..................................... ..........32.614.618.01982-1986..................................... ..........31.519.811.71983-1987..................................... ..........27.416.411.01984-1988..................................... ..........25.015.29.81985-1989..................................... ..........31.120.310.81986-1990..................................... ..........22.913.19.81987-1991..................................... ..........25.415.310.11988-1992..................................... ..........25.615.89.81989-1993..................................... ..........24.414.59.91990-1994..................................... ..........18.68.79.91991-1995..................................... ..........25.616.59.11992-1996..................................... ..........24.215.29.01993-1997..................................... ..........26.920.2 6.71994-1998..................................... ..........33.724.09.71995-1999..................................... ..........30.428.5 1.91996-2000..................................... ..........22.918.3 4.61997-2001..................................... ..........14.810.7 4.11998-2002..................................... ..........10.4(0.6)11.01999-2003..................................... .......... 6.0(0.6) 6.62000-2004..................................... ..........8.0(2.3)10.32001-2005...............................................8.00.67.42002-2006..................................... ..........13.1 6.2 6.92003-2007..................................... ..........13.312.80.52004-2008..................................... .......... 6.9(2.2)9.12005-2009..................................... ..........8.60.48.22006-2010..................................... ..........10.0 2.37.7Notes:The first two periods cover the five years beginning September30of the previous year.The third period covers63months beginning September30,1966to December31,1971.All other periods involve calendar years.The other notes on page2also apply to this table.5Intrinsic Value–Today and TomorrowThough Berkshire’s intrinsic value cannot be precisely calculated,two of its three key pillars can bemeasured.Charlie and I rely heavily on these measurements when we make our own estimates of Berkshire’svalue.The first component of value is our investments:stocks,bonds and cash equivalents. At yearend thesetotaled$158billion at market value.Insurance float–money we temporarily hold in our insurance operations that does not belong to us–funds$66billion of our investments.This float is“free”as long as insurance underwriting breaks even,meaningthat the premiums we receive equal the losses and expenses we incur.Of course, underwriting results are volatile,swinging erratically between profits and losses.Over our entire history,though, we’ve been significantlyprofitable,and I also expect us to average breakeven results or better in the future. If we do that,all of ourinvestments–those funded both by float and by retained earnings–can be viewed as an element of value forBerkshire shareholders.Berkshire’s second component of value is earnings that come from sources other than investments andinsurance underwriting.These earnings are delivered by our68non-insurance companies, itemized on page106.In Berkshire’s early years,we focused on the investment side.During the past two decades,however,we’veincreasingly emphasized the development of earnings from non-insurance businesses,a practice that willcontinue.The following tables illustrate this shift.In the first table,we present per-share investments at decadeintervals beginning in1970,three years after we entered the insurance business.We exclude those investmentsapplicable to minority interests.YearendPer-ShareInvestments PeriodCompounded Annual Increasein Per-Share Investments1970...................$66 1980...................7541970-198027.5% 1990...................7,7981980-199026.3% 2000...................50,2291990-200020.5% 2010...................94,7302000-2010 6.6%Though our compounded annual increase in per-share investments was a healthy19.9%over the40-year period,our rate of increase has slowed sharply as we have focused on using funds to buy operatingbusinesses.The payoff from this shift is shown in the following table,which illustrates how earnings of ournon-insurance businesses have increased,again on a per-share basis and after applicable minority interests.YearPer-SharePre-Tax Earnings PeriodCompounded Annual Increase inPer-Share Pre-Tax Earnings1970............$ 2.871980............19.011970-198020.8%1990............102.581980-199018.4%2000............918.661990-200024.5%2010............5,926.042000-201020.5%6For the forty years,our compounded annual gain in pre-tax,non-insurance earnings per share is21.0%.During the same period,Berkshire’s stock price increased at a rate of22.1%annually. Over time,you can expectour stock price to move in rough tandem with Berkshire’s investments and earnings. Market price and intrinsicvalue often follow very different paths–sometimes for extended periods–but eventually they meet.There is a third,more subjective,element to an intrinsic value calculation that can be either positive ornegative:the efficacy with which retained earnings will be deployed in the future.We,as well as many otherbusinesses,are likely to retain earnings over the next decade that will equal,or even exceed,the capital we presentlyemploy.Some companies will turn these retained dollars into fifty-cent pieces,others into two-dollar bills.This“what-will-they-do-with-the-money”factor must always be evaluated along with the“what-do-we-have-now”calculation in order for us,or anybody,to arrive at a sensible estimate of a company’sintrinsic value.That’s because an outside investor stands by helplessly as management reinvests his share of thecompany’s earnings.If a CEO can be expected to do this job well,the reinvestment prospects add to thecompany’s current value;if the CEO’s talents or motives are suspect,today’s value must be discounted.Thedifference in outcome can be huge.A dollar of then-value in the hands of Sears Roebuck’s or MontgomeryWard’s CEOs in the late1960s had a far different destiny than did a dollar entrusted to Sam Walton.************Charlie and I hope that the per-share earnings of our non-insurance businesses continue to increase at adecent rate.But the job gets tougher as the numbers get larger.We will need both good performance from ourcurrent businesses and more major acquisitions.We’re prepared.Our elephant gun has been reloaded,and mytrigger finger is itchy.Partially offsetting our anchor of size are several important advantages we have.First, we possess acadre of truly skilled managers who have an unusual commitment to their own operations and to Berkshire.Many of our CEOs are independently wealthy and work only because they love what they do.They arevolunteers,not mercenaries.Because no one can offer them a job they would enjoy more, they can’t be luredaway.At Berkshire,managers can focus on running their businesses:They are not subjected to meetings atheadquarters nor financing worries nor Wall Street harassment.They simply get a letter from me every two years(it’s reproduced on pages104-105)and call me when they wish.And their wishes do differ:There are managersto whom I have not talked in the last year,while there is one with whom I talk almost daily.Our trust is in peoplerather than process.A“hire well,manage little”code suits both them and me. Berkshire’s CEOs come in many forms.Some have MBAs;others never finished college. Some usebudgets and are by-the-book types;others operate by the seat of their pants.Our team resembles a baseball squadcomposed of all-stars having vastly different batting styles.Changes in our line-up are seldom required.Our second advantage relates to the allocation of the money our businesses earn.After meeting theneeds of those businesses,we have very substantial sums left over.Most companies limit themselves toreinvesting funds within the industry in which they have been operating.That often restricts them,however,to a“universe”for capital allocation that is both tiny and quite inferior to what is available in the wider world.Competition for the few opportunities that are available tends to become fierce.The seller has the upper hand,asa girl might if she were the only female at a party attended by many boys.That lopsided situation would be greatfor the girl,but terrible for the boys.At Berkshire we face no institutional restraints when we deploy capital.Charlie and I are limited onlyby our ability to understand the likely future of a possible acquisition.If we clear that hurdle–and frequently wecan’t–we are then able to compare any one opportunity against a host of others. 7When I took control of Berkshire in1965,I didn’t exploit this advantage.Berkshire was then only intextiles,where it had in the previous decade lost significant money.The dumbest thing I could have done was topursue“opportunities”to improve and expand the existing textile operation–so for years that’s exactly what Idid.And then,in a final burst of brilliance,I went out and bought another textile company.Aaaaaaargh!Eventually I came to my senses,heading first into insurance and then into other industries.There is even a supplement to this world-is-our-oyster advantage:In addition to evaluating theattractions of one business against a host of others,we also measure businesses against opportunities available inmarketable securities,a comparison most managements don’t make.Often,businesses are priced ridiculouslyhigh against what can likely be earned from investments in stocks or bonds.At such moments,we buy securitiesand bide our time.Our flexibility in respect to capital allocation has accounted for much of our progress to date.We havebeen able to take money we earn from,say,See’s Candies or Business Wire(two of our best-run businesses,butalso two offering limited reinvestment opportunities)and use it as part of the stakewe needed to buy BNSF.Our final advantage is the hard-to-duplicate culture that permeates Berkshire.And in businesses,culture counts.To start with,the directors who represent you think and act like owners.They receive tokencompensation:no options,no restricted stock and,for that matter,virtually no cash. We do not provide themdirectors and officers liability insurance,a given at almost every other large public company.If they mess upwith your money,they will lose their money as well.Leaving my holdings aside,directors and their families ownBerkshire shares worth more than$3billion.Our directors,therefore,monitor Berkshire’s actions and resultswith keen interest and an owner’s eye.You and I are lucky to have them as stewards. This same owner-orientation prevails among our managers.In many cases,these are people who havesought out Berkshire as an acquirer for a business that they and their families have long owned.They came to uswith an owner’s mindset,and we provide an environment that encourages them to retain it.Having managerswho love their businesses is no small advantage.Cultures self-propagate.Winston Churchill once said,“You shape your houses and then they shapeyou.”That wisdom applies to businesses as well.Bureaucratic procedures beget more bureaucracy,and imperialcorporate palaces induce imperious behavior.(As one wag put it,“You know you’re no longer CEO when youget in the back seat of your car and it doesn’t move.”)At Berkshire’s“World Headquarters”our annual rent is$270,212.Moreover,the home-office investment in furniture,art,Coke dispenser,lunch room,high-techequipment–you name it–totals$301,363.As long as Charlie and I treat your money as if it were our own,Berkshire’s managers are likely to be careful with it as well.Our compensation programs,our annual meeting and even our annual reports are all designed with aneye to reinforcing the Berkshire culture,and making it one that will repel and expel managers of a different bent.This culture grows stronger every year,and it will remain intact long after Charlie and I have left the scene.We will need all of the strengths I’ve just described to do reasonably well.Our managers will deliver;you can count on that.But whether Charlie and I can hold up our end in capital allocation depends in part on thecompetitive environment for acquisitions.You will get our best efforts.GEICONow let me tell you a story that will help you understand how the intrinsic value of a business can farexceed its book value.Relating this tale also gives me a chance to relive some great memories.Sixty years ago last month,GEICO entered my life,destined to shape it in a huge way.I was then a20-year-old graduate student at Columbia,having elected to go there because my hero, Ben Graham,taught aonce-a-week class at the school.8One day at the library,I checked out Ben’s entry in Who’s Who in America and found he waschairman of Government Employees Insurance Co.(now called GEICO).I knew nothing of insurance and hadnever heard of the company.The librarian,however,steered me to a large compendium of insurers and,afterreading the page on GEICO,I decided to visit the company.The following Saturday,I boarded an early train forWashington.Alas,when I arrived at the company’s headquarters,the building was closed.I then rather franticallystarted pounding on a door,until finally a janitor appeared.I asked him if there was anyone in the office I couldtalk to,and he steered me to the only person around,Lorimer Davidson.That was my lucky moment.During the next four hours,“Davy”gave me an education about bothinsurance and GEICO.It was the beginning of a wonderful friendship.Soon thereafter, I graduated fromColumbia and became a stock salesman in Omaha.GEICO,of course,was my prime recommendation,which gotme off to a great start with dozens of customers.GEICO also jump-started my net worth because,soon aftermeeting Davy,I made the stock75%of my$9,800investment portfolio.(Even so,I felt over-diversified.)Subsequently,Davy became CEO of GEICO,taking the company to undreamed-of heights before it gotinto trouble in the mid-1970s,a few years after his retirement.When that happened–with the stock falling bymore than95%–Berkshire bought about one-third of the company in the market,a position that over the yearsincreased to50%because of GEICO’s repurchases of its own shares.Berkshire’s cost for this half of the businesswas$46million.(Despite the size of our position,we exercised no control over operations.)We then purchased the remaining50%of GEICO at the beginning of1996,which spurred Davy,at95,to make a video tape saying how happy he was that his beloved GEICO would permanentlyreside withBerkshire.(He also playfully concluded with,“Next time,Warren,please make an appointment.”)A lot has happened at GEICO during the last60years,but its core goal–saving Americans substantialmoney on their purchase of auto insurance–remains unchanged.(Try us at 1-800-847-7536or.)In other words,get the policyholder’s business by deserving his business.Focusing on thisobjective,the company has grown to be America’s third-largest auto insurer,with a market share of8.8%.When Tony Nicely,GEICO’s CEO,took over in1993,that share was2.0%,a level at which it hadbeen stuck for more than a decade.GEICO became a different company under Tony,finding a path to consistentgrowth while simultaneously maintaining underwriting discipline and keeping its costs low.Let me quantify Tony’s achievement.When,in1996,we bought the50%of GEICO we didn’t alreadyown,it cost us about$2.3billion.That price implied a value of$4.6billion for100%. GEICO then had tangiblenet worth of$1.9billion.The excess over tangible net worth of the implied value–$2.7billion–was what we estimatedGEICO’s“goodwill”to be worth at that time.That goodwill represented the economic value of the policyholderswho were then doing business with GEICO.In1995,those customers had paid the company $2.8billion inpremiums.Consequently,we were valuing GEICO’s customers at about97%(2.7/2.8)of what they wereannually paying the company.By industry standards,that was a very high price.But GEICO was no ordinaryinsurer:Because of the company’s low costs,its policyholders were consistently profitable and unusually loyal.Today,premium volume is$14.3billion and growing.Yet we carry the goodwill of GEICO on ourbooks at only$1.4billion,an amount that will remain unchanged no matter how much the value of GEICOincreases.(Under accounting rules,you write down the carrying value of goodwill if its economic valuedecreases,but leave it unchanged if economic value increases.)Using the 97%-of-premium-volume yardstick weapplied to our1996purchase,the real value today of GEICO’s economic goodwill is about$14billion.And thisvalue is likely to be much higher ten and twenty years from now.GEICO–off to a strong start in2011–is thegift that keeps giving.9One not-so-small footnote:Under Tony,GEICO has developed one of the country’s largest personallinesinsurance agencies,which primarily sells homeowners policies to our GEICO auto insurance customers.Inthis business,we represent a number of insurers that are not affiliated with us.They take the risk;we simply signup the st year we sold769,898new policies at this agency operation,up 34%from the year before.The obvious way this activity aids us is that it produces commission revenue;equally important is the fact that itfurther strengthens our relationship with our policyholders,helping us retain them.I owe an enormous debt to Tony and Davy(and,come to think of it,to that janitor as well).************Now,let’s examine the four major sectors of Berkshire.Each has vastly different balance sheet andincome characteristics from the others.Lumping them together therefore impedes analysis.So we’ll present themas four separate businesses,which is how Charlie and I view them.We will look first at insurance,Berkshire’s core operation and the engine that has propelled ourexpansion over the years.InsuranceProperty-casualty(“P/C”)insurers receive premiums upfront and pay claims later. In extreme cases,such as those arising from certain workers’compensation accidents,payments can stretch over decades.Thiscollect-now,pay-later model leaves us holding large sums–money we call “float”–that will eventually go toothers.Meanwhile,we get to invest this float for Berkshire’s benefit.Though individual policies and claimscome and go,the amount of float we hold remains remarkably stable in relation to premium volume.Consequently,as our business grows,so does our float.And how we have grown:Just take a look at thefollowing table:YearendFloat(in$millions) 1970........................................ $39 1980........................................ 237 1990........................................ 1,632 2000........................................。
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巴菲特给股东的信英文版
Dear Shareholders,
I wanted to take this opportunity to update you on the current state of Berkshire Hathaway and provide some insights into our recent activities.
Firstly, I am pleased to report that 2020 was another successful year for Berkshire Hathaway, despite the challenges brought about by the global pandemic. Our net earnings for the year were $42.5 billion, and our operating earnings were $21.9 billion. This success was largely driven by the outstanding performance of our operating businesses, as well as the improving market conditions.
Our insurance subsidiaries, in particular, had an exceptional year. Both GEICO and Berkshire Hathaway Reinsurance Group reported strong results, and we are confident in the long-term prospects of these businesses.
In addition to our operating businesses, we also made several significant investments during the year. Some of the notable investments include a substantial purchase of Apple stock, as well as new investments in Verizon Communications and Chevron Corporation. We believe that these investments align with our long-term financial goals and will continue to generate value for our shareholders in the years to come.
In terms of capital allocation, we continue to prioritize the repurchase of Berkshire Hathaway shares. In 2020, we repurchased a record $24.7 billion worth of shares, a further indication of our
confidence in the intrinsic value of our company. We will continue to pursue this strategy in the future, as long as we believe that repurchases represent good value for our shareholders.
Looking ahead, we remain optimistic about the future prospects of Berkshire Hathaway. Our strong balance sheet, diversified portfolio, and talented management team position us well to navigate any challenges that may come our way. We will continue to seek out attractive investment opportunities and grow our businesses organically in order to create long-term value for our shareholders.
Lastly, I want to express my gratitude to you, our shareholders, for your ongoing support and confidence in Berkshire Hathaway. We are committed to delivering on our promises and working tirelessly to generate superior returns for all of our shareholders.
Sincerely,
Warren Buffett。