Note to Readers: In this article, we cover selected highlights from Warren Buffett’s letter to shareholders which was released this morning as part of the company’s 2010 annual report (pdf). Later today, we will provide a brief summary of Berkshire’s Q4 and full year 2010 results. Next week, we will publish The Rational Walk’s comprehensive report on Berkshire Hathaway, In Search of the Buffett Premium, which is currently available for pre-order.
Warren Buffett and Charlie Munger have made it a habit to never directly state their estimates of Berkshire Hathaway’s intrinsic value. Due to the fact that intrinsic value estimates are heavily dependent on assumptions made regarding the future, even Mr. Buffett and Mr. Munger come up with somewhat different estimates of Berkshire’s intrinsic value. However, Mr. Buffett has often provided shareholders with the criteria he uses to arrive at intrinsic value estimates. At times, he has either strongly implied or directly commented on his views regarding Berkshire’s stock price versus intrinsic value. In this article, we will take a brief look at additional details Mr. Buffett provided in his 2010 annual letter to shareholders regarding how shareholders should go about calculating intrinsic value. [more]
“I think the top guy won’t be as smart as Warren. But it’s silly to complain: What kind of world is this that gives me Warren Buffett for 40 years and then some bastard comes along who’s worse?” — Charlie Munger, quoted at the 2004 Wesco Financial annual meeting
“He is so good at what he does, it’s almost insulting to think that he doesn’t have a reasonable succession plan. And I frankly don’t see why he should tell anyone.” — Bruce Berkowitz, quoted in January 2011 [more]
The following article is an excerpt from The Rational Walk’s upcoming report: Berkshire Hathaway: In Search of the “Buffett Premium” scheduled for release in early March 2011. Click on this link to download a formatted pdf version of this article, with end notes, links, and references. [more]
“There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn’t awash in cash —and I don ’t want to go back.” — Berkshire Hathaway Vice Chairman Charlie Munger as quoted in Poor Charlie’s Almanack
Berkshire Hathaway has often been criticized for holding large amounts of cash but the combination of massive cash holdings and a willingness to act in a major way when opportunities appear has consistently delivered significant value for shareholders over the years. [more]
Note to Readers: The following article is an excerpt from the introduction to The Rational Walk’s analysis of Berkshire Hathaway’s 13-F filing listing positions held as of December 31, 2010. The full report, which includes a much “deeper dive” into Berkshire’s portfolio, is available for members of The Rational Walk’s Berkshire Hathaway Corner.
Berkshire Hathaway’s equity portfolio underwent significant changes during the fourth quarter of 2010 due to Lou Simpson’s retirement from GEICO. Although most media reports attribute Berkshire Hathaway’s portfolio moves exclusively to Warren Buffett, a significant portfolio has long been managed by Mr. Simpson. [more]