1/n
80 YEARS OF WISDOM
Warren Buffett's Berkshire Hathaway 2021 Annual Letter 🧵
Our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO
Charlie and I are not stock-pickers; we are business-pickers
cc @dmuthuk sir
80 YEARS OF WISDOM
Warren Buffett's Berkshire Hathaway 2021 Annual Letter 🧵
Our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO
Charlie and I are not stock-pickers; we are business-pickers
cc @dmuthuk sir
2/n
Surprise, Surprise
Berkshire owns and operates more U.S.-based “infrastructure” assets –classified on our balance sheet as property, plant and equipment –than are owned and operated by any other American corporation.
😱😱😱
Surprise, Surprise
Berkshire owns and operates more U.S.-based “infrastructure” assets –classified on our balance sheet as property, plant and equipment –than are owned and operated by any other American corporation.
😱😱😱
3/n
Everyyear, your company makes substantial federal income tax payments. In 2021, for example, we paid $3.3 billion while the U.S. Treasury reported total corporate income-tax receipts of $402 billion.
Everyyear, your company makes substantial federal income tax payments. In 2021, for example, we paid $3.3 billion while the U.S. Treasury reported total corporate income-tax receipts of $402 billion.
4/n
Our shareholders should acknowledge –indeed trumpet –the fact that Berkshire’s prosperity has been fostered mightily because the company has operated in America. Our country would have done splendidly in the years since 1965 without Berkshire.
--
VERY POWERFUL & PASSIONATE
Our shareholders should acknowledge –indeed trumpet –the fact that Berkshire’s prosperity has been fostered mightily because the company has operated in America. Our country would have done splendidly in the years since 1965 without Berkshire.
--
VERY POWERFUL & PASSIONATE
5/n
Absent our American home, however, Berkshire would never have come close to becoming what it is today. When you see the flag, say thanks.
----
WHEN WE SEE INDIAN FLAG, WE SHOULD START SAYING THANKS TOO
Absent our American home, however, Berkshire would never have come close to becoming what it is today. When you see the flag, say thanks.
----
WHEN WE SEE INDIAN FLAG, WE SHOULD START SAYING THANKS TOO
6/n
Our Four Giants
Operations of our “Big Four” companies account for a very large chunk of Berkshire
1. Insurance business is made to order for Berkshire. The product will never be obsolete, & sales volume will generally increase along with both economic growth and inflation
Our Four Giants
Operations of our “Big Four” companies account for a very large chunk of Berkshire
1. Insurance business is made to order for Berkshire. The product will never be obsolete, & sales volume will generally increase along with both economic growth and inflation
7/n
2. Apple - We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple paid us $785 million. Much of what the company retained was used to repurchase Apple shares, an act we applaud
REINVEST
2. Apple - We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple paid us $785 million. Much of what the company retained was used to repurchase Apple shares, an act we applaud
REINVEST
8/n
3. BNSF,our third Giant, continues to be the number one artery of American commerce, which makes it an indispensable asset for America as well as for Berkshire. If the many essential products BNSF carries were instead hauled by truck, America’s carbon emissions would soar.
3. BNSF,our third Giant, continues to be the number one artery of American commerce, which makes it an indispensable asset for America as well as for Berkshire. If the many essential products BNSF carries were instead hauled by truck, America’s carbon emissions would soar.
9/n
BHE, our final Giant, earned a record $4 billion in 2021. That’s up more than 30-fold from the $122 million earned in 2000, the year that Berkshire first purchased a BHE stake. Now, Berkshire owns 91.1% of the company.
BHE, our final Giant, earned a record $4 billion in 2021. That’s up more than 30-fold from the $122 million earned in 2000, the year that Berkshire first purchased a BHE stake. Now, Berkshire owns 91.1% of the company.
10/n
Investments
Investments
11/n
Treasury Bills
$144 billion of cash & equivalents (excluding the holdings of BNSF and BHE). Of this sum, $120 billion is held in U.S. Treasury bills, all maturing in less than a year. That stake leaves Berkshire financing about 1⁄2 of 1% of the publicly-held national debt
Treasury Bills
$144 billion of cash & equivalents (excluding the holdings of BNSF and BHE). Of this sum, $120 billion is held in U.S. Treasury bills, all maturing in less than a year. That stake leaves Berkshire financing about 1⁄2 of 1% of the publicly-held national debt
12/n
I always kept at least 80% of my net worth in equities. My favored status throughout that period was 100% –and still is. Berkshire’s current 80%-or-so position in businesses is a consequence of my failure to find companies which meet our criteria for long term holding.
I always kept at least 80% of my net worth in equities. My favored status throughout that period was 100% –and still is. Berkshire’s current 80%-or-so position in businesses is a consequence of my failure to find companies which meet our criteria for long term holding.
13/n
There are three ways that we can increase the value of your investment.
The first is always front and center in our minds: Increase the long-term earning power of Berkshire’s controlled businesses through internal growth or by making acquisitions.
There are three ways that we can increase the value of your investment.
The first is always front and center in our minds: Increase the long-term earning power of Berkshire’s controlled businesses through internal growth or by making acquisitions.
14/n
Our second choice is to buy non-controlling part-interests in the many good or great businesses that are publicly traded. From time to time, such possibilities are both numerous and blatantly attractive. Today, though, we find little that excites us
Our second choice is to buy non-controlling part-interests in the many good or great businesses that are publicly traded. From time to time, such possibilities are both numerous and blatantly attractive. Today, though, we find little that excites us
15/n
Final path is to repurchase Berkshire shares. Through that simple act, we increase your share of the many controlled & non-controlled businesses Berkshire owns. When the price/value equation is right, this path is the easiest and most certain way to create wealth
Final path is to repurchase Berkshire shares. Through that simple act, we increase your share of the many controlled & non-controlled businesses Berkshire owns. When the price/value equation is right, this path is the easiest and most certain way to create wealth
16/n
I want to underscore that for Berkshire repurchases to make sense, our shares must offer appropriate value. We don’t want to overpay for the shares of other companies, and it would be value-destroying if we were to overpay when we are buying Berkshire.
I want to underscore that for Berkshire repurchases to make sense, our shares must offer appropriate value. We don’t want to overpay for the shares of other companies, and it would be value-destroying if we were to overpay when we are buying Berkshire.
17/n
I taught my first investing class 70 years ago. Since then, I have enjoyed working almost every year with students of all ages, finally “retiring” from that pursuit in 2018.
I taught my first investing class 70 years ago. Since then, I have enjoyed working almost every year with students of all ages, finally “retiring” from that pursuit in 2018.
18/n
Long-term individual owners are both the “partners” Charlie and I have always sought and the ones we constantly have in mind as we make decisions at Berkshire. To them we say, “It feels good to ‘work’ for you, and you have our thanks for your trust.”
Long-term individual owners are both the “partners” Charlie and I have always sought and the ones we constantly have in mind as we make decisions at Berkshire. To them we say, “It feels good to ‘work’ for you, and you have our thanks for your trust.”
Must read for long-term #investing 👆👆👆 What a beautiful journey
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