2011 Shareholder Letter

[dcollon]

http://www.berkshirehathaway.com/letters/2011ltr.pdf

 

[frog03]

Little disappointed by the book value per share growth.  Finally getting too large a company?

[Guru]

Reading it right now. Favorite quote so far -

 

"We now have eight subsidiaries that would each be included in the

Fortune 500 were they stand-alone companies. That leaves only 492 to go. My task is clear, and I’m on the prowl."

[bmichaud]

Little disappointed by the book value per share growth.  Finally getting too large a company?

 

Book value growth has been less than 10% nine times since 1965, two of which were in 1973 and 1974.....

[Liberty]

It's like xmas!  ;D

[bmichaud]

I thought it was interesting he said with regard to buybacks that, "....our bids will fade in particularly weak markets."

 

What does that mean? Does not sound very Buffett-esque, but as usual, there is probably a much deeper meaning than I realize.

[orion]

I thought it was interesting he said with regard to buybacks that, "....our bids will fade in particularly weak markets."

 

What does that mean? Does not sound very Buffett-esque, but as usual, there is probably a much deeper meaning than I realize.

 

It is my understanding that, should we see "particularly weak markets", the market will offer him even better ways to allocate capital elsewhere.

[NormR]

I thought it was interesting he said with regard to buybacks that, "....our bids will fade in particularly weak markets."

 

What does that mean? Does not sound very Buffett-esque, but as usual, there is probably a much deeper meaning than I realize.

 

Just that he won't buy every share available at a certain price.  Instead, he'll wait to try to buy cheaper.  Makes sense to me 

[Valuebo]

This letter is a bit of a rehash but I guess that's my own fault considering everything I have read about the man. Still a good read.

 

I thought it was interesting he said with regard to buybacks that, "....our bids will fade in particularly weak markets."

 

What does that mean? Does not sound very Buffett-esque, but as usual, there is probably a much deeper meaning than I realize.

 

It is my understanding that, should we see "particularly weak markets", the market will offer him even better ways to allocate capital elsewhere.

 

That is my understanding as well. Particularly weak markets such as Fall 08 offer much better investment possibilities as Berkshire will still be viewed as kind of a safe haven.

 

I thought it was interesting he said with regard to buybacks that, "....our bids will fade in particularly weak markets."

 

What does that mean? Does not sound very Buffett-esque, but as usual, there is probably a much deeper meaning than I realize.

 

Just that he won't buy every share available at a certain price.  Instead, he'll wait to try to buy cheaper.  Makes sense to me 

 

So.. Buffett is going to time the market?  :-X

[NormR]

So.. Buffett is going to time the market?  :-X

 

He's just not going to defend a particular price.  He's putting traders on notice that might think he will.  No biggie.

[bmichaud]

I thought it was interesting he said with regard to buybacks that, "....our bids will fade in particularly weak markets."

 

What does that mean? Does not sound very Buffett-esque, but as usual, there is probably a much deeper meaning than I realize.

 

It is my understanding that, should we see "particularly weak markets", the market will offer him even better ways to allocate capital elsewhere.

 

Makes sense! I was thinking about it like he would deliberately stop buying in weak markets, perhaps to preserve liquidity. But this makes more sense.

[WarrenWatsa]

That's the correct understanding (that there may be materially better deals available than even Berkshire).

 

I believe this is why Berkshire didn't have a share repurchase program during 2008; there were just too many other awesome deals around.

[DCG]

I liked his IBM share buyback example, and the section about the current valuation of gold.

[redskin]

A lot of emphasis on how intrinsic value far exceeds book value.

 

I thought it was interesting he said with regard to buybacks that, "....our bids will fade in particularly weak markets."

 

What does that mean? Does not sound very Buffett-esque, but as usual, there is probably a much deeper meaning than I realize.

 

It is my understanding that, should we see "particularly weak markets", the market will offer him even better ways to allocate capital elsewhere.

 

Makes sense! I was thinking about it like he would deliberately stop buying in weak markets, perhaps to preserve liquidity. But this makes more sense.

 

I think he is saying that he will not be sitting there with 110% book value bid for $10 billion of shares.  If markets are weak he will not be the backstop for the world to front run.  If the markets know this, there is a better chance he'll be able to purchase shares.

[augustabound]

My favourite line, when talking about gold,

You can fondle the cube, but it will not respond.

[Parsad]

Good letter!  It was more of primer than anything particularly new.  I'm sure there have been alot of new shareholders added with the BNSF deal and the eventual split of the "B" shares, so he's trying to make the letter as clear as possible for ALL investors. 

 

No mention at all of Sokol or what happened.  He's made it pretty clear that he's completely excluding Sokol from Berkshire, as he credits Greg Abel for the efforts at Mid-American and Jordan Hansell at Netjets.  No mention of the turnaround that Sokol actually did at Netjets and the culture he built at Mid-American that now allows those two managers to receive these accolades.  Cheers!

[Liberty]

No mention at all of Sokol or what happened.  He's made it pretty clear that he's completely excluding Sokol from Berkshire, as he credits Greg Abel for the efforts at Mid-American and Jordan Hansell at Netjets.  No mention of the turnaround that Sokol actually did at Netjets and the culture he built at Mid-American that now allows those two managers to receive these accolades.  Cheers!

 

I think it was from Dale Carnegie that he learned to criticize generally and praise specifically. This is kind of an extension of that, it seems.

[Parsad]

No mention at all of Sokol or what happened.  He's made it pretty clear that he's completely excluding Sokol from Berkshire, as he credits Greg Abel for the efforts at Mid-American and Jordan Hansell at Netjets.  No mention of the turnaround that Sokol actually did at Netjets and the culture he built at Mid-American that now allows those two managers to receive these accolades.  Cheers!

 

I think it was from Dale Carnegie that he learned to criticize generally and praise specifically. This is kind of an extension of that, it seems.

 

No, I understand that and why he does what he does.  He had no choice but to fire Sokol.  I just believe he did so much for the company and Berkshire, that you don't simply heave it all away.  Buffett should have made mention of what happened, why he made his (or the board`s) decision, and that they obviously had little choice in the decision.  As well as indicate that the company still appreciated the years of service Sokol showed. 

 

This guy, for all intents and purpose, was the one who was going to run Berkshire when Buffett was gone.  You can't just bury him!  ``Lose a shred of reputation for the firm, and I will be ruthless``, just doesn`t cut it here.  Cheers!

 

 

[twacowfca]

No mention at all of Sokol or what happened.  He's made it pretty clear that he's completely excluding Sokol from Berkshire, as he credits Greg Abel for the efforts at Mid-American and Jordan Hansell at Netjets.  No mention of the turnaround that Sokol actually did at Netjets and the culture he built at Mid-American that now allows those two managers to receive these accolades.  Cheers!

 

I think it was from Dale Carnegie that he learned to criticize generally and praise specifically. This is kind of an extension of that, it seems.

 

No, I understand that and why he does what he does.  He had no choice but to fire Sokol.  I just believe he did so much for the company and Berkshire, that you don't simply heave it all away.  Buffett should have made mention of what happened, why he made his (or the board`s) decision, and that they obviously had little choice in the decision.  As well as indicate that the company still appreciated the years of service Sokol showed. 

 

This guy, for all intents and purpose, was the one who was going to run Berkshire when Buffett was gone.  You can't just bury him!  ``Lose a shred of reputation for the firm, and I will be ruthless``, just doesn`t cut it here.  Cheers!

 

I respectfully disagree.  That happened early last year, and was fully addressed at the AGM.  Time to move on.

 

 

Cheers!  :)

 

By the way, did you notice that their next CEO has been tapped ( with two backups ).  He ( or she if it's J. ) is described as being well known to all members of the BOD.  I've got my idea about who it is.  What's yours?

[rijk]

"By the way, did you notice that their next CEO has been tapped ( with two backups ).  He ( or she if it's J. ) is described as being well known to all members of the BOD.  I've got my idea about who it is.  What's yours?"

 

bill gates

 

regards

rijk

[shalab]

Sokol affair:

 

Good to have it behind than keep churning it. I also noticed that Sokol's name wasn't in the report. I think it is right to do so to set an example for others. If he was soft on Sokol, he will be repeating the Gutfreund mistake which I don't expect Buffett to do.

 

Sokol is getting the John Gutfreund treatment. If you read about the Gutfreund affair it has many parallels to Sokol. Sokol's reputation is permanently damaged for the rest of his life - not worth the $3 million he made in the Lubrizol deal.

 

 

[Guest longinvestor]

"By the way, did you notice that their next CEO has been tapped ( with two backups ).  He ( or she if it's J. ) is described as being well known to all members of the BOD.  I've got my idea about who it is.  What's yours?"

 

bill gates

 

regards

rijk

 

Doubt if Gates wants to spend that much time running BRK while his heart is in the Charity business. The problem he has (everyone will wish they have that problem) is to find ways to spend Warren's estate giving which is $4B or so annually. This is quite a job, finding causes that meet the B&M Gates foundation criteria.

[philassor]

No mention at all of Sokol or what happened.  He's made it pretty clear that he's completely excluding Sokol from Berkshire, as he credits Greg Abel for the efforts at Mid-American and Jordan Hansell at Netjets.  No mention of the turnaround that Sokol actually did at Netjets and the culture he built at Mid-American that now allows those two managers to receive these accolades.  Cheers!

 

I think it was from Dale Carnegie that he learned to criticize generally and praise specifically. This is kind of an extension of that, it seems.

 

No, I understand that and why he does what he does.  He had no choice but to fire Sokol.  I just believe he did so much for the company and Berkshire, that you don't simply heave it all away.  Buffett should have made mention of what happened, why he made his (or the board`s) decision, and that they obviously had little choice in the decision.  As well as indicate that the company still appreciated the years of service Sokol showed. 

 

This guy, for all intents and purpose, was the one who was going to run Berkshire when Buffett was gone.  You can't just bury him!  ``Lose a shred of reputation for the firm, and I will be ruthless``, just doesn`t cut it here.  Cheers!

 

I respectfully disagree.  That happened early last year, and was fully addressed at the AGM.  Time to move on.

 

 

Cheers!  :)

 

By the way, did you notice that their next CEO has been tapped ( with two backups ).  He ( or she if it's J. ) is described as being well known to all members of the BOD.  I've got my idea about who it is.  What's yours?

 

All right I'll play the guess game: Matt Rose (for his youth and breadth of experience)

 

I don't think it will be Ajit since he is too valuable evaluating insurance risk and has less managerial experience than Matt;

 

What is yours?

[twacowfca]

No mention at all of Sokol or what happened.  He's made it pretty clear that he's completely excluding Sokol from Berkshire, as he credits Greg Abel for the efforts at Mid-American and Jordan Hansell at Netjets.  No mention of the turnaround that Sokol actually did at Netjets and the culture he built at Mid-American that now allows those two managers to receive these accolades.  Cheers!

 

I think it was from Dale Carnegie that he learned to criticize generally and praise specifically. This is kind of an extension of that, it seems.

 

No, I understand that and why he does what he does.  He had no choice but to fire Sokol.  I just believe he did so much for the company and Berkshire, that you don't simply heave it all away.  Buffett should have made mention of what happened, why he made his (or the board`s) decision, and that they obviously had little choice in the decision.  As well as indicate that the company still appreciated the years of service Sokol showed. 

 

This guy, for all intents and purpose, was the one who was going to run Berkshire when Buffett was gone.  You can't just bury him!  ``Lose a shred of reputation for the firm, and I will be ruthless``, just doesn`t cut it here.  Cheers!

 

I respectfully disagree.  That happened early last year, and was fully addressed at the AGM.  Time to move on.

 

 

Cheers!  :)

 

By the way, did you notice that their next CEO has been tapped ( with two backups ).  He ( or she if it's J. ) is described as being well known to all members of the BOD.  I've got my idea about who it is.  What's yours?

 

All right I'll play the guess game: Matt Rose (for his youth and breadth of experience)

 

I don't think it will be Ajit since he is too valuable evaluating insurance risk and has less managerial experience than Matt;

 

What is yours?

 

Think of Poe's story, The Purloined Letter.  :)

[Kraven]

"By the way, did you notice that their next CEO has been tapped ( with two backups ).  He ( or she if it's J. ) is described as being well known to all members of the BOD.  I've got my idea about who it is.  What's yours?"

 

bill gates

 

regards

rijk

 

Chris Christie?