Berkshire Hathaway 2013 Annual Letter

[cubsfan]

What a fantastic investment, this deal will have made BRK 4-5 times it's money plus interest on the preferred.

 

Berkshire has one major equity position that is not included in the table: We can buy 700 million shares of Bank of America at any time prior to September 2021 for $5 billion. At yearend these shares were worth $10.9 billion. We are likely to purchase the shares just before expiration of our option. In the meantime, it is important for you to realize that Bank of America is, in effect, our fifth largest equity investment and one we value highly

 

BeerBaron

 

The BAC investment is insane.  Best investment he's made in the last however-many years.

 

What's IV on the warrants right now?  If you have a strong opinion on BAC, as many on this board do, the compounding on that until expiry is gonna be awesome.

 

For any of you that understand account way better than I do:

 

The economic value of this BAC position today is $10.9B.

 

What is the accounting book value of the position?

The preferred stock is classified as available-for-sale, so it is carried on the books at fair value.

 

Ok, thanks - so the Book value of the position is $10.9B - correct?

 

And it's not understated.

[Guest wellmont]

His farm investment is up 5 times over what he paid - over a 30 year time frame that's 5.5% pa excluding dividends.

 

My guess is that most of those earnings were reinvested to generate productivity growth, so maybe the dividend yield on purchase price was 2%? (20% payout?). So total return 7 to 10% pa?

 

Doesn't seem to be an unrealistic hurdle rate for holding stocks for "only" 3 to 5 years.

 

why would you need to reinvest "most" of the earnings year after year?  didn't he say it had a "current yield" of 10%? that to me implies owners earnings. He has always said low return businesses should either buy back stock or distribute earnings as dividends.

 

The farm probably came with equipment, which would have needed to be upgraded over time. but the 10% was after depreciation. it would be interesting to get some farm economics from an experienced farmer on this one...

[Guest wellmont]

That makes sense if that 10% yield is actually distributable. My guess is Howard Buffett did not pay out 100% of annual earnings - I would further guess he actually reinvested 100% given Buffett would not have cared about receiving a $28,000 annual check. Thus those reinvested earnings are what drove the rise in the farm's valuation.

 

I think he would be more than happy to receive an annual check of $28k. And it doesn't make sense that if he didn't, the only other option would be to reinvest in the farm. I think he saw this as an investment that would throw off cash, not one that would consume it. Farms are not notorious for having great ROIC. This was a classic Buffett inflation hedge that of course soundly trounced the annual rate of price increases. And he probably took the cash out and compounded it at way over 20% per annum.

[matjone]

I took as meaning it was a 10% cash on cash return on day 1 and grew from there.  I don't know about nebraska but in southern illinois where I grew up yields have about doubled since the 80's if I remember right.

[bmichaud]

I would guess that reinvestment over and above d&a would have been needed in order to obtain current productivity levels. Were Deere tractors nearly as technologically advanced then as they are now? Did a technologically inferior Deere tractor cost as much then as it does now in inflation adjusted terms?

 

In order to receive the full 10% yield plus the 6.6% growth, that means the 6.6% is pure 100% pricing power over and above cost inflation - zero reinvestment-based growth. That means farming has one of the strongest pricing power profiles I've ever heard of.

[matjone]

this could be an interesting page

 

http://agecon.unl.edu/realestate.html

 

I was looking at cash rents.  I am guessing the dryland cropland east region would be the column that would be most comparable to his farm, but I could be wrong.  For that column cash rent is up 3.8x since '86, and cpi is up 2.1x

[wknecht]

What a fantastic investment, this deal will have made BRK 4-5 times it's money plus interest on the preferred.

 

Berkshire has one major equity position that is not included in the table: We can buy 700 million shares of Bank of America at any time prior to September 2021 for $5 billion. At yearend these shares were worth $10.9 billion. We are likely to purchase the shares just before expiration of our option. In the meantime, it is important for you to realize that Bank of America is, in effect, our fifth largest equity investment and one we value highly

 

BeerBaron

 

The BAC investment is insane.  Best investment he's made in the last however-many years.

 

What's IV on the warrants right now?  If you have a strong opinion on BAC, as many on this board do, the compounding on that until expiry is gonna be awesome.

 

For any of you that understand account way better than I do:

 

The economic value of this BAC position today is $10.9B.

 

What is the accounting book value of the position?

The preferred stock is classified as available-for-sale, so it is carried on the books at fair value.

 

Ok, thanks - so the Book value of the position is $10.9B - correct?

 

And it's not understated.

Previously I should have said both the preferreds and the warrants are AFS, not just the preferreds.

 

Where do you get the $10.9B? The sentence in the letter where Buffett says "At yearend these shares were worth $10.9 billion."?

 

I'm not sure the exact amounts are disclosed or if similar prices can easily be seen. But without being precise, the preferreds can be called by BAC at $5.25B, so they are probably worth close to this (given the directional movements of rates and credit spreads/worthiness). The warrants can be exercised into shares worth $10.9B at an additional cost of $5B, so the intrinsic value is $5.9B (at year end). These don't expire until 9/2021 so there's a lot of time value also (option value= intrinsic value + time value). Not sure how much this is valued at, but regardless we can say that the preferreds and warrants combined are on the balance sheet for at least $11.15b ($5.25B + $5.9B), probably a bit more.

 

You are correct, they should not understated unless Berkshire intentionally marks them conservatively for some reason, which is doubtful.

[cubsfan]

What a fantastic investment, this deal will have made BRK 4-5 times it's money plus interest on the preferred.

 

Berkshire has one major equity position that is not included in the table: We can buy 700 million shares of Bank of America at any time prior to September 2021 for $5 billion. At yearend these shares were worth $10.9 billion. We are likely to purchase the shares just before expiration of our option. In the meantime, it is important for you to realize that Bank of America is, in effect, our fifth largest equity investment and one we value highly

 

BeerBaron

 

The BAC investment is insane.  Best investment he's made in the last however-many years.

 

What's IV on the warrants right now?  If you have a strong opinion on BAC, as many on this board do, the compounding on that until expiry is gonna be awesome.

 

For any of you that understand account way better than I do:

 

The economic value of this BAC position today is $10.9B.

 

What is the accounting book value of the position?

The preferred stock is classified as available-for-sale, so it is carried on the books at fair value.

 

Ok, thanks - so the Book value of the position is $10.9B - correct?

 

And it's not understated.

Previously I should have said both the preferreds and the warrants are AFS, not just the preferreds.

 

Where do you get the $10.9B? The sentence in the letter where Buffett says "At yearend these shares were worth $10.9 billion."?

 

I'm not sure the exact amounts are disclosed or if similar prices can easily be seen. But without being precise, the preferreds can be called by BAC at $5.25B, so they are probably worth close to this (given the directional movements of rates and credit spreads/worthiness). The warrants can be exercised into shares worth $10.9B at an additional cost of $5B, so the intrinsic value is $5.9B (at year end). These don't expire until 9/2021 so there's a lot of time value also (option value= intrinsic value + time value). Not sure how much this is valued at, but regardless we can say that the preferreds and warrants combined are on the balance sheet for at least $11.15b ($5.25B + $5.9B), probably a bit more.

 

You are correct, they should not understated unless Berkshire intentionally marks them conservatively for some reason, which is doubtful.

 

Yes, thanks for that clarification - what I meant was the $10.9B minus original cost - to get a net figure reflected in current book value.

 

I stated it poorly - but that was what I was getting at.

 

I don't remember all the rules for the accounting values of  derivatives, warrants, etc - so your AFS explanation is perfect.

 

I wanted to know if the BAC intrinsic value was understated because of accounting rules.

 

Thanks for bearing with me.

[Packer16]

What a fantastic investment, this deal will have made BRK 4-5 times it's money plus interest on the preferred.

 

Berkshire has one major equity position that is not included in the table: We can buy 700 million shares of Bank of America at any time prior to September 2021 for $5 billion. At yearend these shares were worth $10.9 billion. We are likely to purchase the shares just before expiration of our option. In the meantime, it is important for you to realize that Bank of America is, in effect, our fifth largest equity investment and one we value highly

 

BeerBaron

 

The BAC investment is insane.  Best investment he's made in the last however-many years.

 

What's IV on the warrants right now?  If you have a strong opinion on BAC, as many on this board do, the compounding on that until expiry is gonna be awesome.

 

For any of you that understand account way better than I do:

 

The economic value of this BAC position today is $10.9B.

 

What is the accounting book value of the position?

The preferred stock is classified as available-for-sale, so it is carried on the books at fair value.

 

Ok, thanks - so the Book value of the position is $10.9B - correct?

 

And it's not understated.

Previously I should have said both the preferreds and the warrants are AFS, not just the preferreds.

 

Where do you get the $10.9B? The sentence in the letter where Buffett says "At yearend these shares were worth $10.9 billion."?

 

I'm not sure the exact amounts are disclosed or if similar prices can easily be seen. But without being precise, the preferreds can be called by BAC at $5.25B, so they are probably worth close to this (given the directional movements of rates and credit spreads/worthiness). The warrants can be exercised into shares worth $10.9B at an additional cost of $5B, so the intrinsic value is $5.9B (at year end). These don't expire until 9/2021 so there's a lot of time value also (option value= intrinsic value + time value). Not sure how much this is valued at, but regardless we can say that the preferreds and warrants combined are on the balance sheet for at least $11.15b ($5.25B + $5.9B), probably a bit more.

 

You are correct, they should not understated unless Berkshire intentionally marks them conservatively for some reason, which is doubtful.

 

Yes, thanks for that clarification - what I meant was the $10.9B minus original cost - to get a net figure reflected in current book value.

 

I stated it poorly - but that was what I was getting at.

 

I don't remember all the rules for the accounting values of  derivatives, warrants, etc - so your AFS explanation is perfect.

 

I wanted to know if the BAC intrinsic value was understated because of accounting rules.

 

Thanks for bearing with me.

 

On page 56 of the annual report the valuation inputs for the preferreds and warrants are disclosed.  Since BRK holds other preferred stocks, the total preferred value for BRK is not broken out but par value is a good estimate.  The warrants are valued using a warrant valuation model and have a 9% discount for lack of marketability.

 

Packer

[cubsfan]

What a fantastic investment, this deal will have made BRK 4-5 times it's money plus interest on the preferred.

 

Berkshire has one major equity position that is not included in the table: We can buy 700 million shares of Bank of America at any time prior to September 2021 for $5 billion. At yearend these shares were worth $10.9 billion. We are likely to purchase the shares just before expiration of our option. In the meantime, it is important for you to realize that Bank of America is, in effect, our fifth largest equity investment and one we value highly

 

BeerBaron

 

The BAC investment is insane.  Best investment he's made in the last however-many years.

 

What's IV on the warrants right now?  If you have a strong opinion on BAC, as many on this board do, the compounding on that until expiry is gonna be awesome.

 

For any of you that understand account way better than I do:

 

The economic value of this BAC position today is $10.9B.

 

What is the accounting book value of the position?

The preferred stock is classified as available-for-sale, so it is carried on the books at fair value.

 

Ok, thanks - so the Book value of the position is $10.9B - correct?

 

And it's not understated.

Previously I should have said both the preferreds and the warrants are AFS, not just the preferreds.

 

Where do you get the $10.9B? The sentence in the letter where Buffett says "At yearend these shares were worth $10.9 billion."?

 

I'm not sure the exact amounts are disclosed or if similar prices can easily be seen. But without being precise, the preferreds can be called by BAC at $5.25B, so they are probably worth close to this (given the directional movements of rates and credit spreads/worthiness). The warrants can be exercised into shares worth $10.9B at an additional cost of $5B, so the intrinsic value is $5.9B (at year end). These don't expire until 9/2021 so there's a lot of time value also (option value= intrinsic value + time value). Not sure how much this is valued at, but regardless we can say that the preferreds and warrants combined are on the balance sheet for at least $11.15b ($5.25B + $5.9B), probably a bit more.

 

You are correct, they should not understated unless Berkshire intentionally marks them conservatively for some reason, which is doubtful.

 

Yes, thanks for that clarification - what I meant was the $10.9B minus original cost - to get a net figure reflected in current book value.

 

I stated it poorly - but that was what I was getting at.

 

I don't remember all the rules for the accounting values of  derivatives, warrants, etc - so your AFS explanation is perfect.

 

I wanted to know if the BAC intrinsic value was understated because of accounting rules.

 

Thanks for bearing with me.

 

On page 56 of the annual report the valuation inputs for the preferreds and warrants are disclosed.  Since BRK holds other preferred stocks, the total preferred value for BRK is not broken out but par value is a good estimate.  The warrants are valued using a warrant valuation model and have a 9% discount for lack of marketability.

 

Packer

 

Thanks for pointing me to that section with the table of discounts.

[adesigar]

As shown by the fact that a lot of people found discussing Buffets Farm purchase as the most interesting topic from the annual letter there was nothing much in the letter, same old same old. Nothing about failing his 5 year period (Its obvious to us why it happened but he should have mentioned it). No explanation about the reason for 1.2x book for Share buybacks. Only points of any interest was Todd and Ted have 7 billion each to manage and they outperformed him by a lot. 3 Billion in bolt on acquisitions was good. Hope for a nice Warren and the 3T's (Todd, Ted, Traci) interview on Monday.

[kevin4u2]

If I buy a piece of farmland and rent it out for 10% cash on cash and then sell it 28 years later for 5x my investment, it will have returned 16.6% with zero reinvestment. 

 

It is entirely reasonable if purchases at opportune times.  I could have purchased farmland close to where I live for 7-8% yield a few years back, but not today though.  It also depends if you take straight rent or sign a crop sharing agreement.  Typically you can earn an extra point or two return by signing a crop share agreement. 

 

All Buffett did was look at normal earnings when the market was depressed.  He bought the farm from the FDIC, or basically at the point of maximum pessimism.  Same goes for the piece of real estate he bought near NYU.  Neither were earning 10% on the asset immediately. 

 

"Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake."

 

I would guess that reinvestment over and above d&a would have been needed in order to obtain current productivity levels. Were Deere tractors nearly as technologically advanced then as they are now? Did a technologically inferior Deere tractor cost as much then as it does now in inflation adjusted terms?

 

In order to receive the full 10% yield plus the 6.6% growth, that means the 6.6% is pure 100% pricing power over and above cost inflation - zero reinvestment-based growth. That means farming has one of the strongest pricing power profiles I've ever heard of.

[bmichaud]

The "rent" part of the equation is likely the answer. By WEB's language, I assumed he was participating in actual farming earnings, not simply collecting rent. Why bother discussing crop pricing and productivity if you are simply collecting rent and paying no other expenses?

 

But yes if he purchased land at the bottom of the market at a 10% cap rate, then he very likely collected a 10% cash yield, and since the rents were likely bottom cycle, they very well could be five times higher now, even though rents increasing 6.6% pa in general is ridiculous.

[plato1976]

10% cash on cash before any cost ?

 

If I buy a piece of farmland and rent it out for 10% cash on cash and then sell it 28 years later for 5x my investment, it will have returned 16.6% with zero reinvestment. 

 

It is entirely reasonable if purchases at opportune times.  I could have purchased farmland close to where I live for 7-8% yield a few years back, but not today though.  It also depends if you take straight rent or sign a crop sharing agreement.  Typically you can earn an extra point or two return by signing a crop share agreement. 

 

All Buffett did was look at normal earnings when the market was depressed.  He bought the farm from the FDIC, or basically at the point of maximum pessimism.  Same goes for the piece of real estate he bought near NYU.  Neither were earning 10% on the asset immediately. 

 

"Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake."

 

I would guess that reinvestment over and above d&a would have been needed in order to obtain current productivity levels. Were Deere tractors nearly as technologically advanced then as they are now? Did a technologically inferior Deere tractor cost as much then as it does now in inflation adjusted terms?

 

In order to receive the full 10% yield plus the 6.6% growth, that means the 6.6% is pure 100% pricing power over and above cost inflation - zero reinvestment-based growth. That means farming has one of the strongest pricing power profiles I've ever heard of.

[jdawg]

Does anyone know why DaVita is not listed as one of the top 15 holdings by market value?  I show that it was a $2b+ plus position by year end, so based on size I would think it would  be listed.

[valueinvesting101]

Why does GS investment has cost basis of $750mn? I thought Berkshire got those without paying out any money.

 

Also in last letter he mentioned that S&P is likely to beat BRK book value growth in 2013. But there is no such statement in this year report. I think it was kind of obvious for him that S&P will perform well in 2013 and interestingly he writes this letter well in advance.

 

This emphasis is establishing 1.2 book value base and consistent call to indicate that book value understates intransic value might be coming from need to sell BRK stock by Gates foundation and similar sale for charity by other long term berkshire shareholders. Indicating bargain available for BRK stock should support stock price due to selling pressure.

 

 

 

[captkerosene]

Does anyone know why DaVita is not listed as one of the top 15 holdings by market value?  I show that it was a $2b+ plus position by year end, so based on size I would think it would  be listed.

 

I think there is a note stating that pension assets are not included in the stock totals. So maybe DaVita is held in pension accounts.

[valueinvesting101]

Yes. Lot of Davita stock is held by Pension fund. It was posted by someone on the board and mentioned by Buffett in one of the interview.

[james22]

Personally I hope the media does slam BRK, that some money manager comes out and says WEB just doesn't get it anymore etc, etc.....hopefully makes for a good buying opportunity  :D

 

cheers

Zorro

 

Berkshire: Has Buffett Lost His Touch?

 

http://seekingalpha.com/article/2060813-berkshire-has-buffett-lost-his-touch

[JBird]

I was disappointed to see the rolling 5-year comparison page not included in the annual letter. I was puzzled that Buffett didn't acknowledge failing the test. Other than that, was pleasantly surprised at how well Berkshire is doing.

[dartmonkey]

No commentary on its five year track record. It becomes six years track record (2008/2013). Typical of traditional money managers!

 

Yes I thought that was a bizarre and disappointing sleight of hand.  The time period has always been 5 years, and here without offering any explanation he suddenly makes it 6 years, which not-so-coincidentally includes 2008 when Berkshire had a huge advantage over the S&P.

 

Berkshire has failed this test, and will surely continue to occasionally do so over time as it has simply become too large, basically I think it will fail to keep up in up markets.  This will (or should) lead to a change in the company's dividend policy.  I thought it would be better for Buffett to address this while he is still at the helm rather than let his successor break that news, and really thought this was going to be the year that he did it... guess not.

 

I agree that he should have said he was changing the yardstick, instead of just changing it. Maybe having said last year that he WOULDN'T change the yardstick made it harder, but he in fact has, so he might as well own up to it.

 

That said, the new yardstick, I believe, is not 6 years, it is full cycle. Time will tell if the end of this cycle is 2014 or later.

[thepupil]

Shifting away from farms and folksy wisdom conveyed by Mr. Buffett, what a year of operating performance!

 

$28.8B of Pretax Income, comprised of:

 

$15B non insurance operating (sustainable and growing)

$3B of insurance underwriting (i hesitate to call that sustainable but they do keep grinding it out)

$2.6B derivative gains on index puts (non recurring)

$4.7B investment income from securities portfolio (will take a short term hit from crisis investments being called, but should then grow)

+ some other stuff i can't think of and am not going to look up write now

 

So 28.8B/220B = pretax roe of 13% (using end of year equity as denominator) and post tax roe 8.9%.

 

In terms of adjusting for the quasi permanent delta between cash taxes paid and tax expense (MidAmerican + BNSF related), income tax expense was $8.9B and cash taxes were $5.4B, so there is a portion of the difference between pretax ROE and ROE that is on permanent loan from the government and benefits shareholders. 

 

I think of non insurance operating earnings + investment income as the sustainable growing earnings of Berkshire which are about 70% of this year's pretax ROE. So I see Berkshire book as a bond that never matures and pays a growing 9% on a growing par value. I am very happy to own that bond at 127.5% of par (particularly since I've accumulated said bond over the past three years at 96% of today's par). Underwriting gains and losses will add and detract to this coupon in a given year. This year they added 135 bps (3/220) and the derivative gains added 118 (2.6/220), a nice little bonus coupon.

 

I did not go into any discussion of change in the value of the securities portfolio. Most of the benefit of that is captured in the future increase in investment income. This helps grow par value and can be exchanged for growth in coupon. For example the recent swap of Phillips 66 shares for one of PSX's businesses is a great example of turning investment gains (growing par) into operating profits (coupon). A similar deal with Graham Holdings is in the works.

 

Edit: And unlike a bond where your coupon gets reinvested by you, this coupon i reinvested by the century's best capital allocator and his handpicked team of successors (and into the nation's most important railroad and largest utility). Also the 9% is pretax, bonds are purchased pretax as well (unless held in a tax advantaged account)

 

[Palantir]

What is a "cycle"?  ;)

 

Now I don't hold it against web for underperforming, but why not a mea culpa? He had been touting the metric in previous years, he should stand by it now.

[greenwave]

No commentary on its five year track record. It becomes six years track record (2008/2013). Typical of traditional money managers!

 

Yes I thought that was a bizarre and disappointing sleight of hand.  The time period has always been 5 years, and here without offering any explanation he suddenly makes it 6 years, which not-so-coincidentally includes 2008 when Berkshire had a huge advantage over the S&P.

 

Berkshire has failed this test, and will surely continue to occasionally do so over time as it has simply become too large, basically I think it will fail to keep up in up markets.  This will (or should) lead to a change in the company's dividend policy.  I thought it would be better for Buffett to address this while he is still at the helm rather than let his successor break that news, and really thought this was going to be the year that he did it... guess not.

 

I agree that he should have said he was changing the yardstick, instead of just changing it. Maybe having said last year that he WOULDN'T change the yardstick made it harder, but he in fact has, so he might as well own up to it.

 

That said, the new yardstick, I believe, is not 6 years, it is full cycle. Time will tell if the end of this cycle is 2014 or later.

 

-----

-----

Possibly Warren is pointing out to Berkshire shareholders the fact that the Dow had dropped to 8000 at the end of 2008 from 12650 at the end of 2007, which contributed significantly to the Dow’s “out-performance” over  the 5 year timeframe?  The 6 year benchmark seems more meaningful to me under the chaotic financial market circumstances in 2008 and 2009 .

 

greenwave 

 

…………

      BRKA & DJI year end prices for years ended 2008, 2009, and 2013

 

 

      BRKA                                                  DOW JONES IND. AVERAGE

 

 

 

2-Jan-14        169,511.00                                2-Jan-14          15,698.85       

 

     

2-Jan-09          89,502.00                                2-Jan-09            8,000.90

 

2-Jan-08        136,000.00                                2-Jan-08            12,650.40

 

[Guest longinvestor]

No commentary on its five year track record. It becomes six years track record (2008/2013). Typical of traditional money managers!

 

Yes I thought that was a bizarre and disappointing sleight of hand.  The time period has always been 5 years, and here without offering any explanation he suddenly makes it 6 years, which not-so-coincidentally includes 2008 when Berkshire had a huge advantage over the S&P.

 

Berkshire has failed this test, and will surely continue to occasionally do so over time as it has simply become too large, basically I think it will fail to keep up in up markets.  This will (or should) lead to a change in the company's dividend policy.  I thought it would be better for Buffett to address this while he is still at the helm rather than let his successor break that news, and really thought this was going to be the year that he did it... guess not.

 

I agree that he should have said he was changing the yardstick, instead of just changing it. Maybe having said last year that he WOULDN'T change the yardstick made it harder, but he in fact has, so he might as well own up to it.

 

That said, the new yardstick, I believe, is not 6 years, it is full cycle. Time will tell if the end of this cycle is 2014 or later.

 

-----

-----

Possibly Warren is pointing out to Berkshire shareholders the fact that the Dow had dropped to 8000 at the end of 2008 from 12650 at the end of 2007, which contributed significantly to the Dow’s “out-performance” over  the 5 year timeframe?  The 6 year benchmark seems more meaningful to me under the chaotic financial market circumstances in 2008 and 2009 .

 

greenwave 

 

…………

      BRKA & DJI year end prices for years ended 2008, 2009, and 2013

 

 

      BRKA                                                  DOW JONES IND. AVERAGE

 

 

 

2-Jan-14        169,511.00                                2-Jan-14          15,698.85       

 

     

2-Jan-09          89,502.00                                2-Jan-09            8,000.90

 

2-Jan-08        136,000.00                                2-Jan-08            12,650.40

 

+1

Exactly how I see it as a shareholder. 2008-09 was clearly a 1-in-50 year event and the comparison is nothing but "noise" created by moodswings in the market. Shareholders like I, who bought myself BRK stock during this time paid a pretty price to get the value of the rest of my life. Value investing at it's best!

 

WEB is pointing out in his 2012 and 13 letters that they have been able to put so many "birds in the bush" during this time. These two letters are quite out of character for WEB and he has seldom come this clear in telling his Shareholders "You should be buying BRK, because I am" . Very much enjoy other jokes that WEB shares, versus this joke of this comparison.

 

And then you have the talking heads who have been shouting from the rooftops that buying BRK is the same as buying the index. Just read all the headlines on Fool.com, Barrons, CNBC et al since 8 AM Saturday. This is payback for the bet WEB is winning against the hedge funds.

 

Love it all! For my part, I will be publishing the relative performance of BRK/Vanguard Index/ CoBFF fund every January from here on out.