This is part 2 of the twenty-second in a series of blog posts that will analyze / summarize Warren Buffett's shareholder letters from 1977-2015. For all of the prior shareholder letters, see here. The 1998 letter weighs in at 12,020 words, a modest 1.9% increase from 11,800 words the prior year. Berkshire's gain in net worth during 1998 was $26 billion, or 48% of beginning 1997 net worth. Most of the net gain, however, resulted from issuing Berkshire shares at well above book value in the $22 billion General Re acquisition. OPTIONS AND PRO FORMA ACCOUNTING - OR HOW TO LEGALLY MISLEAD SHAREHOLDERS In the 1998 letter Buffett returns to a subject he discussed in earlier letters, namely the acco
This is part 1 of the twenty-second in a series of blog posts that will analyze / summarize Warren Buffett's shareholder letters from 1977-2015. For all of the prior shareholder letters, see here. The 1998 letter weighs in at 12,020 words, a modest 1.9% increase from 11,800 words the prior year. Berkshire's gain in net worth during 1998 was $26 billion, or 48% of beginning 1997 net worth. Most of the net gain, however, resulted from issuing Berkshire shares at well above book value in the $22 billion General Re acquisition. WHAT THE HECK ARE CORPORATE BOARDS THINKING - NET JETS EDITION Berkshire's other large purchase during 1998 was for Executive Jet, now known as NetJets. Buffett explains
This is the twenty-first in a series of blog posts that will analyze / summarize Warren Buffett's shareholder letters from 1977-2015. For all of the prior shareholder letters, see here. The 1997 letter weighs in at 11,800 words, a modest 1.7% increase from 11,600 words the prior year. Berkshire's gain in net worth during 1997 was $8.0 billion, or 34% of beginning 1996 net worth. BUFFETT EARNED 60% ANNUAL RETURNS IN THE 1950s One side note at the outset. Buffett offhandedly mentions in the 1997 letter that his "annual results in the 1950s were better by nearly thirty percentage points than my annual gains in any subsequent decade". What he doesn't mention is that during his partnership years
This is the twentieth in a series of blog posts that will analyze / summarize Warren Buffett's shareholder letters from 1977-2015. For all of the prior shareholder letters, see here. The 1996 letter weighs in at 11,600 words, a 2.5% decrease from 11,900 words the prior year. Berkshire's gain in net worth during 1995 was $6.2 billion, or 36% of beginning 1995 net worth. MUTUAL FUND FEES AND CORPORATE OVERHEAD COSTS - A TAX ON INVESTORS Buffett in the 1996 letter points out why an investor should pay close attention to corporate fees and expenses, whether in the form of management fees for a mutual fund or in the form of general corporate overhead expenses for an individual stock holding. Thes
This is the nineteenth in a series of blog posts that will analyze / summarize Warren Buffett's shareholder letters from 1977-2015. For all of the prior shareholder letters, see here. The 1995 letter weighs in at 11,900 words, a 24% increase from 9,600 words the prior year. Berkshire's gain in net worth during 1995 was $5.3 billion, or 45% of beginning 1994 net worth. MORE ON WHY ACQUISITIONS DESTROY ACQUIRERS' SHAREHOLDERS' WEALTH Buffett in the 1995 letter explains how it is that intelligent acquirers often make incredibly foolish acquisitions. Basically it has to do with [1] the market they are choosing to play in [buying companies in negotiated transactions, where it is unlikely a seller
MOBILEYE BUYOUT BY INTEL: CITRON REFUTED(?) Today Mobileye (ticker: MBLY) announced that it was being acquired by Intel in an all-cash buyout at $63.54/share (see company PR here). One consistent and prominent bear on the stock has been Citron Research, now famous for its Valeant short call in October 2015 (see PDF here). Just a month before issuing its VRX call, Citron gave its thumbs-down verdict on Mobileye (see PDF here), stating the following: There is NOTHING in the past or present financials, business performance or realistic future prospects of Mobileye that would get it within miles of justifying its current $12 billion market cap. They do not own a bar-the-competition patent portfo
This is the eighteenth in a series of blog posts that will analyze / summarize Warren Buffett's shareholder letters from 1977-2015. For all of the prior shareholder letters, see here. The 1994 letter weighs in at 9,600 words, a 13% decrease from 11,030 words the prior year. Berkshire's gain in net worth during 1994 was $1.45 billion, or 14% of beginning 1993 net worth. BOOK VALUE VERSUS INTRINSIC VALUE Often the advocates of so-called "value investing" refer to a company's "intrinsic value". The goal of this type of investing is to purchase stocks of companies whose intrinsic value significantly exceeds its market capitalization. So what exactly is the "intrinsic value" of a company? It is s
This is the second part of the seventeenth in a series of blog posts that will analyze / summarize Warren Buffett's shareholder letters from 1977-2015. For all of the prior shareholder letters, see here. A FEW GENERAL THOUGHTS ON INVESTMENT STRATEGY 1. AGAIN--IT'S BUY AND HOLD GREAT BUSINESSES, STUPID Buffett returns to a theme echoed in prior letters, that an investor should view his or her holdings the same way a corporate CEO would view his subsidiaries (i.e., as businesses, not stock symbols): [W]e continue to think that it is usually foolish to part with an interest in a business that is both understandable and durably wonderful. Business interests of that kind are simply too hard to re
This is the seventeenth in a series of blog posts that will analyze / summarize Warren Buffett's shareholder letters from 1977-2015. For all of the prior shareholder letters, see here. The 1993 letter weighs in at 11,030 words, a 1.5% increase from 11,200 words the prior year. Berkshire's gain in net worth during 1993 was $1.5 billion, or 14% of beginning 1993 net worth. During 1993 Berkshire issued 25,203 shares of stock for consideration of $478 million, or about $16,400 per share. Today those shares would be worth $263,200 each, or about 16X greater than in 1993. This means that the shares issued in 1993 have appreciated by approximately 12.5% per annum. Clearly, Berkshire's shareholders
