Buffett

Honoring Benjamin Graham: The Father of Value Investing

The Intelligent Investor – Author: Benjamin Graham
Warren Buffett suggests that you take special note of chapter 8 (Market Fluctuations) and chapter 20 (Margin Of Safety). (Hardcover)

Fluctuations In The Market Price
“Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to…the operating results of his companies.”–Ben Graham, “The Intelligent Investor”.

We are not concerned with whether the market quickly revalues upward securities that we believe are selling at bargain prices.  In fact, we prefer just the opposite since, in most years, we expect to have funds available to be a net buyer of securities.  (1978 Chairman’s Letter [CTRL-F] Key Word: Concerned)

Investors who expect to be ongoing buyers of investments throughout their lifetimes should adopt a similar attitude toward market fluctuations; instead many illogically become euphoric when stock prices rise and unhappy when they fall. (1990 Chairman’s Letter [CTRL-F] Key Word: Euphoric)

We try to price, rather than time, purchases. (1994 Chairman’s Letter [CTRL-F] Key Word: Folly)

If you expect to be a net saver during the next 5 years, should you hope for a higher or
lower stock market during that period?  Many investors get this one wrong. (1997 Chairman’s Letter [CTRL-F] Key Word: Saver)

Margin Of Safety
In the final chapter of The Intelligent Investor Ben Graham forcefully rejected the dagger thesis: “Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.” Forty-two years after reading that, I still think those are the right three words. (1990 Chairman’s Letter [CTRL-F] Key Word:Forty-two)

Second, and equally important, we insist on a margin of safety in our purchase price. If we calculate the value of a common stock to be only slightly higher than its price, we’re not interested in buying. We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success. (1992  Chairman’s Letter [CTRL-F] Key Word:Slightly)

The Margin Of Safety Should Just Scream At You
Munger: I don’t know. We have such a fingers and toes-style around here. Warren often talks about these discounted cash flows, but I’ve never seen him do one.

Buffett: Some things you only do in private, Charlie.

Munger: Yeah. If it isn’t perfectly obvious that it’s going to work out well if you do the calculation, then he tends to go on to the next idea.

Buffett: That’s true. It’s sort of automatic. If you have to actually do it with pencil and paper, it’s too close to think about. It ought to just kind of scream at you that you’ve got this huge margin of safety. (1996 Annual Meeting)

What Does The Term “Intrinsic Value” Mean?
Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life. The calculation of intrinsic value, though, is not so simple. As our definition suggests, intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised. Two people looking at the same set of facts, moreover – and this would apply even to Charlie and me – will almost inevitably come up with at least slightly different intrinsic value figures. That is one reason we never give you our estimates of intrinsic value. What our annual reports do supply, though, are the facts that we ourselves use to calculate this value. (Owner’s Manual[CTRL-F] Key Word: All-important)

We define intrinsic value as the discounted value of the cash that can be taken out of a business during its remaining life.  Anyone calculating intrinsic value necessarily comes up with a highly subjective figure that will change both as estimates of future cash flows are revised and as interest rates move.  Despite its fuzziness, however, intrinsic value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses. (1994 Chairman’s Letter [CTRL-F] Key Word: Define)

Book Value and Intrinsic Value
We regularly report our per-share book value, an easily calculable number, though one of limited use.  Just as regularly, we tell you that what counts is intrinsic value, a number that is impossible to pinpoint but essential to estimate.  (1994 Chairman’s Letter [CTRL-F] Key Word: Intrinsic)

Buffett: I don’t think you can go from year to year and trace intrinsic value precisely by tracing changes in book value. We use changes in book value as a very rough guide as to movement [in intrinsic value]. And there have been certain annual reports where I’ve said that our intrinsic value has moved more than the proportional move in book value and others where I’ve said I thought it was roughly the same.
So I don’t think you can stick some multiplier on it and come up with a precise number. However, I do think that it’s a guide to movement in value.  (1996 Annual Meeting)

Intrinsic Value and Capital Allocation
Understanding intrinsic value is as important for managers as it is for investors.  When managers are making capital allocation decisions – including decisions to repurchase shares – it’s vital that they act in ways that increase per-share intrinsic value and avoid moves that decrease it.  This principle may seem obvious but we constantly see it violated.  And, when misallocations occur, shareholders are hurt. (1994 Chairman’s Letter[CTRL-F] Key Word: Allocation)

Guides to Intrinsic Value
I often talk in these pages about intrinsic value, a key, though far from precise, measurement we utilize in our acquisitions of businesses and common stocks. (For an extensive discussion of this, and other investment and accounting terms and concepts, please refer to our Owner’s Manual on pages 55 – 62. Intrinsic value is discussed on page 60.) (1999 Chairman’s Letter [CTRL-F] Key Word: Guides)

Buffett: For our discount rate, we basically think in terms of the long-term government rate. We don’t think we’re any good at predicting interest rates. But in times of what seem like very low rates, we might use a little higher rate.  (1996 Annual Meeting)

Buffett: We want to stick with businesses we think we understand quite well and not try to have the whole panoply with all different kinds of risk rates because, frankly, we think that would just be playing games with numbers.

I don’t think you can stick numbers on a highly speculative business where the whole industry’s going to change in five years and have it mean anything when you get through. If you say, “I’m going to stick an extra 6% on the interest rate to allow for that,” I think that’s nonsense. It may look mathematical, but it’s mathematical gibberish in my view.  (1996 Annual Meeting)

Focus Investing – And The Rational For Long Term Buy & Hold
Our policy is to concentrate holdings.  We try to avoid buying a little of this or that when we are only lukewarm about the business or its price.  When we are convinced as to attractiveness, we believe in buying worthwhile amounts. (1978 Chairman’s Letter [CTRL-F] Key Word: Concentrate)

Considering the similarity of this year’s list and the last, you may decide your management is hopelessly comatose. (1993 Chairman’s Letter [CTRL-F] Key Word: Considering)

The strategy we’ve adopted precludes our following standard diversification dogma.  (1993 Chairman’s Letter[CTRL-F] Key Word: Diversification)

The great personal fortunes in this country weren’t built on a portfolio of 50 companies. They were built by someone who identified one wonderful business.  (1996 Annual Meeting)

We think diversification, as practiced generally, makes very little sense for anyone who knows what they’re doing.  Diversification serves as protection against ignorance. If you want to make sure that nothing bad happens to you relative to the market, you should own everything. There’s nothing wrong with that. It’s a perfectly sound approach for somebody who doesn’t know how to analyze businesses.

But if you know how to value businesses, it’s crazy to own 50 stocks or 40 stocks or 30 stocks, probably  because there aren’t that many wonderful businesses understandable to a single human being in all likelihood. To forego buying more of some super-wonderful business and instead put your money into #30 or #35 on your list of attractiveness just strikes Charlie and me as madness. -Warren Buffett  (1996 Annual Meeting)

At a December 6, 1994 special meeting of the New York Society of Financial Analysts which we attended, a discussion/debate broke out between Walter Schloss, Warren Buffett and several members of the audience on the subject of diversification of investments. Both Schloss and Buffett are outstanding investors, and both were employees of the great Ben Graham as young men. Buffett pointed out that some of the world’s greatest fortunes have been made from an investment in a single “wonderful” company. He feels there are a very limited number of “wonderful” businesses in the world and that it is quite a good position to be in to own a piece of a half a dozen of them. Schloss on the other hand has owned hundreds of stocks, and has a terrific record over 40 years. He referred to this method as the “used cigar butt approach”. Schloss feels that almost anything is a buy at a price.

At the meeting, Buffett stated the following on diversification:

Well, the less you know, the more stocks you have to own – because diversification is a protection against…ignorance. And if your only conviction is that equities over time are a good place to have your money, you probably ought to have at least 20 or thereabouts – I’m talking about stocks, not mutual funds which in turn own stocks themselves. But if you really analyze businesses so that you’re buying into a business and making a conscious decision about what you think the future of that business is – not just a general conviction about equities as a whole, but conviction about a specific business and the future of that business in the same way that you’d go out and buy a grocery store or a filling station in your own home town – then I really think that if you can find six or eight of those, well that’s plenty.
Our method is very simple. We just try to buy businesses with good to superb underlying economics, run by honest and able people and buy them at sensible prices. That’s all I’m trying to do.

But that means I have to understand the business. And that leaves out 90% of all businesses. By definition, there are all kinds of things I’m not going to understand – I don’t understand cocoa beans or all kinds of other things. But the only thing that counts is the pitch you swing at.

If you can find a universe of 50 companies where you think you may understand their business and then find half a dozen that look properly priced, that’s plenty.

All I can tell you is what I do basically – and that’s to try to figure out what a business is worth. It’s exactly what I would do if I were going to buy a Ford dealership in Omaha – only with a few more zeros. If I were going to try and buy that business – let’s say I weren’t going to manage it – I’d try to figure out what sort of economics are attached to it: What’s the competition like? What can the return on equity likely be over time? Is this the guy to run it? Is he going to be straight with me?

It’s the same thing with a public company. The only difference is that the numbers are bigger and you buy them in little pieces.  (Burgundy Asset Management August 1995)

What Does Charlie Munger Have to Say About Diversification?
“All intelligent investing is value investing – to acquire more than you are paying for. Investing is where you find a few great companies and then sit on your ass.” (2000 Annual Meeting)

“If you took out our 15 best ideas, most of you wouldn’t be here. (2001 Annual Meeting)

“We’re partial to putting out large amounts of money where we won’t have to make another decision.” (2001 Annual Meeting)

“In the United States, a person or institution with almost all wealth invested, long-term,  in just three fine domestic corporations is securely rich.”

Ted Williams (Discipline) Under these circumstances, we try to exert a Ted Williams kind of discipline. In his book The Science of Hitting, Ted explains that he carved the strike zone into 77 cells, each the size of a baseball. Swinging only at balls in his “best” cell, he knew, would allow him to bat .400; reaching for balls in his “worst” spot, the low outside corner of the strike zone, would reduce him to .230. In other words, waiting for the fat pitch would mean a trip to the Hall of Fame; swinging indiscriminately would mean a ticket to the minors. (1997 Chairman’s Letter [CTRL-F] Key Word: Williams)

Index Fund Versus Selecting Individual Stocks
Let me add a few thoughts about your own investments.  Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees.  Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.

Should you choose, however, to construct your own portfolio, there are a few thoughts worth remembering.  Intelligent investing is not complex, though that is far from saying that it is easy.  What an investor needs is the ability to correctly evaluate selected businesses.  Note that word “selected”:  You don’t have to be an expert on every company, or even many.  You only have to be able to evaluate companies within your circle of competence.  The size of that circle is not very important; knowing its boundaries, however, is vital.  (1996 Chairman’s Letter[CTRL-F] Key Word: Index)

“Value” Versus “Growth”
But how, you will ask, does one decide what’s “attractive”? (What is “investing” if it is not the act of seeking value at least sufficient to justify the amount paid?) (1992 Chairman’s Letter [CTRL-F] Key Word: Opposition)

Sustainable Competitive Advantage (1982 Chairman’s Letter [CTRL-F] Key Word: differentiation)

The Difference Between Growth and Sustainable Competitive Advantage
The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors. (Mr. Buffett On The Stock Market [CTRL-F] Key Word: Durability)

Why Is It So Difficult For Some People To Understand The Concept Of Buying Dollar Bills For 40 Cents? One sidelight here: it is extraordinary to me that the idea of buying dollar bills for 40 cents takes immediately with people or it doesn’t take at all. It’s like an inoculation. If it doesn’t grab a person right away, I find that you can talk to him for years and show him records, and it doesn’t make any difference. They just don’t seem able to grasp the concept, simple as it is. A fellow like Rick Guerin, who had no formal education in business, understands immediately the value approach to investing and he’s applying it five minutes later. I’ve never seen anyone who became a gradual convert over a ten-year period to this approach. It doesn’t seem to be a matter of IQ or academic training. It’s instant recognition, or it is nothing. (Transcript of Warren Buffett’s speech “The Superinvestors of Graham-and-Doddsville” – Which can be found in the appendix of  “The Intelligent Investor”, by Benjamin Graham.)

Important Lessons To Learn
If I were teaching a course on investing, there would simply be one valuation study after another with the students trying to identify the key variables in that particular business and … evaluating how predictable they were…. because that’s the first step. If something isn’t very predictable, you should forget it because you don’t have to be right about every company. You just have to make a few good decisions in a lifetime.

But the important thing is that when you do find one where you really do know what you are doing, you must buy in quantity…. Charlie and I have made a dozen or so very big decisions relative to net worth, although not as big as they should have been. And in each of those, we’ve known that we were almost certain to be right going in.

They just weren’t that complicated. We knew we were focusing on the right variables, that they were dominant. etc. And even though we couldn’t carry the figures out to five decimal places or anything like that. we knew – in a general way – that we were right about ’em.

That’s what we look for…. a fat pitch. And that’s what I would try to teach students to do. -Warren Buffett (1998 Shareholders Meeting)

Toads & Princes
In other words, investors can always buy toads at the going price for toads.  If investors instead bankroll princesses who wish to pay double for the right to kiss the toad, those kisses had better pack some real dynamite.  We’ve observed many kisses but very few miracles. (1981 Chairman’s Letter [CTRL-F] Key Word: Toads)

Thoughts On Conventional Wisdom
An irrisistable footnote: in 1971, pension fund managers invested a record 122% of net funds available in equities – at full prices they couldn’t buy enough of them. In 1974, after the bottom had fallen out, they committed a then record low of 21% to stocks. (1978 Chairman’s Letter [CTRL-F] Key Word: 122%)

I will tell you how to become rich. Close the doors. Be fearful when others are greedy.   Be greedy when others are fearful. (Warren Buffett lecturing to a group of students at Columbia U. He was 21 years old.)

What Is Berkshire’s Investment Strategy?
Our equity-investing strategy remains little changed from what it was fifteen years ago, when we said in the 1977 annual report: “We select our marketable equity securities in much the way we would evaluate a business for acquisition in its entirety. We want the business to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price.” We have seen cause to make only one change in this creed: Because of both market conditions and our size, we now substitute “an attractive price” for “a very attractive price.” (1992 Chairman’s Letter [CTRL-F] Key Word: Fifteen)

“To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses – How to Value a Business, and How to Think About Market Prices.”

“Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards – so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.” (1996 Chairman’s Letter [CTRL-F] Key Word: Beta)

Leaving aside tax factors, the formula we use for evaluating stocks and businesses is identical. Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.). (2000 Chairman’s Letter [CTRL-F] Key Word: Aesop)

What Is “Cigar Butt” Investing?
If you buy a stock at a sufficiently low price, there will usually be some hiccup in the fortunes of the business that gives you a chance to unload at a decent profit, even though the long-term performance of the business may be terrible. I call this the “cigar butt” approach to investing. A cigar butt found on the street that has only one puff left in it may not offer much of a smoke, but the “bargain purchase” will make that puff all profit. (1989 Chairman’s Letter [CTRL-F] Key Word: Cigar)

Shorting A Stock
It’s a whole lot easier to make money on the long side. You can’t make big money shorting because the risk of big losses means you can’t make big bets. -Warren Buffett (2001 Annual Meeting)

Being short and seeing a promoter take the stock up is very irritating. It’s not worth it to have that much irritation in your life. -Charlie Munger (2001 Annual Meeting)

When Do You Sell A Stock?
“The best thing to do is buy a stock that you don’t ever want to sell. That’s what we’re trying to do. And that’s true when we buy an entire business. We bought all of GEICO, we bought all of See’s Candies, Buffalo News. We’re not buying those to resell. What we’re trying to do is buy a business we’ll be happy with if we own it for the rest of our lives, and we expect to with those. –Warren Buffett

The sales that do happen–the ideal way–is when you’ve found something you like immensely better. -Charlie Munger

Buffett: There are things we think there’s no price for – and we’ve been tested sometimes and haven’t sold ’em. But my friend, Bill Gates, says that it has to be illogical at some point. At some price, you have to be willing to sell something that’s a marketable security – forgetting about our controlled businesses.

We really have a great reluctance to sell businesses where we like both the businesses and the people. So I don’t think I’d count on seeing many sales. But if you ever attend a meeting here and they’re at 60-70 times earnings, keep an eye on me.

Munger: If you’re right about the companies, you can hold them at pretty high values.

Buffett: You can hold them at extraordinary levels.

Buffett: They’re too hard to find. You’re not going to find businesses as good. So then you have to ask, “Am I going to get a chance to buy the same business at a lot lower price or am I going to buy something that’s almost as good at a lot lower price?”

And we don’t think we’re very good at doing that. So we’d rather just sit and hold the business and pretend that the stock market doesn’t exist.  (1996 Annual Meeting)

Risk Arbitrage
Since World War I the definition of arbitrage – or “risk arbitrage,” as it is now sometimes called – has expanded to include the pursuit of profits from an announced corporate event such as sale of the company, merger, recapitalization, reorganization, liquidation, self-tender, etc.  In most cases the arbitrageur expects to profit regardless of the behavior of the stock market.  The major risk he usually faces instead is that the announced event won’t happen.  (1988 Chairman’s Letter [CTRL-F] Key Word: Pursuit)

Modern Portfolio Theory
We have “professional” investors, those who manage many billions, to thank for most of this turmoil.  Instead of focusing on what businesses will do in the years ahead, many prestigious money managers now focus on what they expect other money managers to do in the days ahead.  (1987 Chairman’s Letter [CTRL-F] Key Word: Prestigious)

The preceding discussion about arbitrage makes a small discussion of “efficient market theory” (EMT) also seem relevant. (1988 Chairman’s Letter [CTRL-F] Key Word: Efficient)

We try to price, rather than time, purchases. (1994 Chairman’s Letter [CTRL-F] Key Word: Folly)

The strategy we’ve adopted precludes our following standard diversification dogma. (1993 Chairman’s Letter[CTRL-F]Key Word: Precludes)

It has no utility. It will tell you how to do average. But I think almost anybody can figure out how to do average in the fifth grade.  It’s just not that difficult. Modern portfolio theory is elaborate. There are lots of little Greek letters and all kinds of things to make you think you’re in the big leagues. But there is no value added. -Warren Buffett (1996 Annual Meeting)

The Institutional Imperative My most surprising discovery: the overwhelming importance in business of an unseen force that we might call “the institutional imperative.” In business school, I was given no hint of the imperative’s existence and I did not intuitively understand it when I entered the business world. I thought then that decent, intelligent, and experienced managers would automatically make rational business decisions. But I learned over time that isn’t so. Instead, rationality frequently wilts when the institutional imperative comes into play. (1989 Chairman’s Letter [CTRL-F] Key Word: imperative)

Warren Buffett’s Definition of Risk (Versus “Beta”)
In stating this opinion, we define risk, using dictionary terms, as “the possibility of loss or injury.” (1993 Chairman’s Letter [CTRL-F] Key Word:Opinion)

Owner Earnings
If we think through these questions, we can gain some insights about what may be called “owner earnings.” These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges such as Company N’s items (1) and (4) less ( c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume. (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in ( c) . However, businesses following the LIFO inventory method usually do not require additional working capital if unit volume does not change.)  (1986 Chairman’s Letter[CTRL-F] Key Word: Owner Earnings)

“Look-Through” Earnings I believe the best way to think about our earnings is in terms of “look-through” results, calculated as follows: Take $250 million, which is roughly our share of the 1990 operating earnings retained by our investees; subtract $30 million, for the incremental taxes we would have owed had that $250 million been paid to us in dividends; and add the remainder, $220 million, to our reported operating earnings of $371 million. Thus our 1990 “look-through earnings” were about $590 million.  (1990 Chairman’s Letter [CTRL-F] Key Word: certitude)

A Wonderful Company I could give you other personal examples of “bargain-purchase” folly but I’m sure you get the picture:  It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Charlie understood this early; I was a slow learner. But now, when buying companies or common stocks, we look for first-class businesses accompanied by first-class managements. (1989 Chairman’s Letter [CTRL-F] Key Word: learner)

Goodwill and its Amortization: The Rules and The Realities This appendix deals only with economic and accounting Goodwill – not the goodwill of everyday usage. For example, a business may be well liked, even loved, by most of its customers but possess no economic goodwill. (AT&T, before the breakup, was generally well thought of, but possessed not a dime of economic Goodwill.) And, regrettably, a business may be disliked by its customers but possess substantial, and growing, economic Goodwill. So, just for the moment, forget emotions and focus only on economics and accounting.  (1983 Chairman’s Letter [CTRL-F] Key Word: Realities)

General Acquisition Behavior
(1981 Chairman’s Letter [CTRL-F] Key Word: Acquisition)

Berkshire Acquisition Objectives
(1981 Chairman’s Letter [CTRL-F] Key Word: Objectives)

Single Year Snapshots & Prospective Near Term Earnings
(1977 Chairman’s Letter [CTRL-F] Key Word: 1948)

Equity Value-Added
A “value-added” bonus from equity capital seems natural and certain.  But is it? (1981 Chairman’s Letter[CTRL-F] Key Word: Value-Added)

Dividend Policy (1984 Chairman’s Letter [CTRL-F] Key Word: Dividend Policy)

Bonds – Business Valuation Approach Simply put, we feel that if we can buy small pieces of businesses with satisfactory underlying economics at a fraction of the per-share value of the entire business, something good is likely to happen to us – particularly if we own a group of such securities.  We extend this business-valuation approach even to bond purchases such as WPPSS. (1984 Chairman’s Letter [CTRL-F] Key Word: WPPSS)

Severe change and exceptional returns usually don’t mix.  Most investors, of course, behave as if just the opposite were true.  That is, they usually confer the highest price-earnings ratios on exotic-sounding businesses that hold out the promise of feverish change.  That prospect lets investors fantasize about future profitability rather than face today’s business realities.  For such investor-dreamers, any blind date is preferable to one with the girl next door, no matter how desirable she may be.  (1987 Chairman’s Letter [CTRL-F] Key Word: bad)

The Warren Buffett school: they have free rein, ready capital and the best boss a CEO could want. They run Berkshire Hathaway companies, and you’ve only begun to envy them (The Chief Executive  Dec, 2002)

See’s Candy
(1987 Chairman’s Letter [CTRL-F] Key Word: Pounds)
(1991 Chairman’s Letter [CTRL-F] Key Word: Milestone)
(1999 Chairman’s Letter [CTRL-F] Key Word: Chuck)

Nebraska Furniture Mart
(1983 Chairman’s Letter [CTRL-F] Key Word: Pascal)
(1984 Chairman’s Letter [CTRL-F] Key Word: Rose)
(1986 Chairman’s Letter [CTRL-F] Key Word: Amazing)
(1987 Chairman’s Letter [CTRL-F] Key Word: Mrs. B)
(1988 Chairman’s Letter [CTRL-F] Key Word: Mrs. B)
(1989 Chairman’s Letter [CTRL-F] Key Word: Mrs. B)
(1992 Chairman’s Letter [CTRL-F] Key Word: Mrs. B)

GEICO
(1980 Chairman’s Letter [CTRL-F] Key Word: GEICO Corp.)
(1986 Chairman’s Letter [CTRL-F] Key Word: GEICO Corporation)
(1995 Chairman’s Letter [CTRL-F] Key Word: GEICO Corporation)
(1996 Chairman’s Letter [CTRL-F] Key Word: Tony)
(1998 Chairman’s Letter [CTRL-F] Key Word: 1-800)
(1999 Chairman’s Letter [CTRL-F] Key Word: Telephone)
(2000 Chairman’s Letter [CTRL-F] Key Word: 1-800)
Berkshire Hathaway to buy rest of Geico for $70 per share (Corporate Growth Report Weekly  Sep 11, 1995)

Buffalo News
(1983 Chairman’s Letter [CTRL-F] Key Word: the News )
(1984 Chairman’s Letter [CTRL-F] Key Word: the News)
(1989 Chairman’s Letter [CTRL-F] Key Word: the News)
(1990 Chairman’s Letter [CTRL-F] Key Word: Newspapers)
(1991 Chairman’s Letter [CTRL-F] Key Word: Math)
(1995 Chairman’s Letter [CTRL-F] Key Word: The Buffalo News )

Scott Fetzer
(1985 Chairman’s Letter [CTRL-F] Key Word: Cleveland)
(1986 Chairman’s Letter [CTRL-F] Key Word: largest)
(1988 Chairman’s Letter [CTRL-F] Key Word: Schey)
(1989 Chairman’s Letter [CTRL-F] Key Word: Sainted)
(1990 Chairman’s Letter [CTRL-F] Key Word: mastery)
(1994 Chairman’s Letter [CTRL-F] Key Word: Academic)
(1995 Chairman’s Letter [CTRL-F] Key Word: Competition)
(1996 Chairman’s Letter [CTRL-F] Key Word: Section)

General Re
Berkshire Hathaway – General Re Merger (Slideshow: Transaction Overview)
Berkshire Hathaway And General Re To Merge
Berkshire Hathaway And General Re Close Merger (12/21/1998)
Terms Of The Merger Agreement
“Under the terms of the merger agreement, each General Re shareholder will have the option to elect to receive either 0.0035 Class A shares or 0.105 Class B shares of Berkshire for each share of General Re common stock.”
Consolidated Balance Sheet Q1 1998 [CTRL-F] Key Word: General Re)
“Berkshire issued approximately 272,200 Class A equivalent shares in exchange for the General Re shares outstanding as of December 21, 1998. The total consideration for the transaction, based upon the closing prices of Berkshire Class A Common Stock for the 10-day period ending June 26, 1998, was approximately $22 billion.”
Selected highlights regarding results for the quarter ended June 30, 2001 follow:
“Underwriting results at General Re continue to be very unsatisfactory, deteriorating from the preceding quarter, in part because of the increased amount of catastrophe and other large individual property losses reported in the current quarter.”
Berkshire News Release (2/5/2002)
“Berkshire Hathaway Inc.’s fourth quarter earnings will include a pre-tax underwriting loss of about $1.27 billion resulting from General Re’s operations.”
Letter to Bershire Shareholders discussing 2001 Third Quarter … (11/9/2001)
“Normally I write you just once a year. However, results of the third quarter, as summarized above, are anything but normal and I would like to elaborate a bit on what took place.”

Executive Jet (NetJets)
Executive Jet, Inc. Acquired July 23, 1998
(INTERIM REPORT Q2 1998 [CTRL-F] Key Word: July 23)
(Consolidated Financial Statements 1998 [CTRL-F] Key Word: July 23)
“Under the terms of the Executive Jet agreement, shareholders of Executive Jet received total consideration of approximately $700 million, consisting of $350 million in cash and the remainder in Class A and Class B Common Stock.”

Silver
Because of recent price movements in the silver market and because Berkshire Hathaway has received inquiries about its ownership of the metal, the company is releasing certain information that it would normally have published next month in its annual report.  (2/3/1998)