Buffett is the CEO of Berkshire Hathaway, one of the world’s richest men
(worth roughly $36 billion) and the most famous value investor.
Company stock prices often rise and fall upon his actions to buy or sell
as investors follow his every move.
I recently read Buffett’s
annual letter to the shareholders of Berkshire and was struck by how decidedly
different his letter was from the slick publications most corporations provide
You will find no full-color
pictures of officers, legalese or technical accounting jargon, only witty humor,
simple explanations of the company’s business transactions and clear answers
as to why its ventures proved profitable (historically the case) or otherwise
during the past year. Buffett likes
to include financial reports in addition to the required GAAP financials that
present the company’s activities in a more straightforward and logical
fashion. Fascinating details of how
billion dollar deals were made or broken make the report hard to put down.
In an age of Internet
stocks and day trading, Buffett is the anti-tech. Mr. Buffett is old school and proud of it.
He prefers a novel approach to investing; understanding what a business
is all about before buying into it. He
also buys for the long term, rarely ever selling off a company or stock he has
purchased. The sixty-nine year old touts his latest purchases of
Benjamin Moore Paints, Acme Brick, Shaw Industries (carpet) and Justin Boots in
this year’s report - nothing to get your heart rate up there.
Berkshire prefers to
purchase entire companies rather than shares of stock and then encourages the
original owners and management to continue operating the business in the style
that made them successful in the first place.
As Buffett states, his expertise is in identifying profitable businesses,
not operating jewelry stores or manufacturing companies.
You might expect hundreds
or possibly thousands of employees would be required at corporate headquarters
in Omaha, Nebraska in order to keep up with all the activity from Berkshire’s
varied subsidiaries. A visit would
prove you wrong. The company
employs 13.8 employees after reluctantly adding one this year.
Does this give us a true picture of corporate inefficiency elsewhere?
Warren Buffett maintains an
extremely modest lifestyle despite his fortune gained through entrepreneurship
and wise investing in some of America’s best companies.
Mr. Buffett’s annual salary is $100,000 - a mere pittance compared to
the multi-million dollar salaries and bonuses executives receive at some of the
Fortune 500 companies that Berkshire invests in.
Perhaps most intriguing is
Berkshire’s annual shareholder meeting held in Omaha. 14,000 investors descend on this Midwestern town to pick the
brains of Buffett for hours, play softball against him and purchase everything
from Dairy Queen ice cream to GEICO insurance from the company they hold a stake
in. It is indeed a celebration of