I have to say that I get a little excited every year with the release of the annual Berkshire Hathaway shareholder letter. I don’t know why it’s so exciting to me, but I guess I just enjoy Warren Buffett’s writing style. He has an incredible ability to, not only make things seem so simple and straightforward, but to also make observations that help me drown out the “noise” of the markets and focus on what is really important when it comes to investing successfully.
In my opinion, the 2009 shareholder letter was a real gem. Highlights of the letter include the following:
- A general discussion regarding Berkshire’s primary businesses including insurance, regulated utilities, manufacturing service and retailing operations and finance and financial products.
- Buffett’s comments regarding Berkshire’s non-traded securities in Dow Chemical, GE, Goldman Sachs, Swiss Re and Wrigley.
- A candid discussion surrounding corporate CEOs, especially regarding their responsibility to recognize and manage financial risks within their organization.
- Buffett’s thoughts on using Berkshire stock to make acquisitions. More specifically, he addresses his recent (highly scrutinized) acquisition of Burlington Northern.
The openness and candor with which Mr. Buffett treats his shareholders is so refreshing – especially in this time where many CEOs choose to treat shareholders as low-level employees and not as their boss or business partners.
Given the nature of some of the “deals” that Berkshire managed to secure over the course of the last year or so, there is no doubt that Warren Buffett is a shrewd business man. However, through his customary humble tone in the Berkshire annual letter, it is obvious that Warren Buffett is also a gentleman who understands that he is working for his shareholders.
As I allocate capital to investments (for myself and my clients), I believe that it is important to seek those investments that maintain a Buffett-like shareholder focus. When investing in mutual funds (as we do), that can mean using mutual funds with reasonable expense ratios, low turnover rates, a tax-efficient management style and an independent board of directors among other things. As Mr. Buffett has shown, this is clearly a recipe for investment success!