Here’s the link to this year’s letter. Feel free to point out anything you might like to discuss or anything you think might be worthy of a post.
Here are the key points:
- For just the 9th time, Berkshire’s book value rose less than the S&P 500. Buffett calls the year subpar.
- Berkshire pursued a couple of “elephants” but mostly came up empty, until the recent big Heinz deal.
- Buffett explains his five guidelines for increasing shareholder value: “In summary, Charlie and I hope to build per-share intrinsic value by (1) improving the earning power of our many subsidiaries; (2) further increasing their earnings through bolt-on acquisitions; (3) participating in the growth of our investees; (4) repurchasing Berkshire shares when they are available at a meaningful discount from intrinsic value; and (5) making an occasional large acquisition. We will also try to maximize results for you by rarely, if ever, issuing Berkshire shares.”
- Berkshire’s five biggest non-insurance companies (BNSF, Iscar, Lubrizol, Marmon Group and MidAmerican Energy) broke the goal of having over $10 billion in income this year.
- Berkshire’s new portfolio managers Todd Combs and Ted Weschler both had portfolios that beat the S&P 500 in 2012.
- Both Combs and Weschler now have portfolios of $5 billion to invest.
- Buffett expects Berkshire to buy more Coca-Cola, American Express, Wells Fargo and IBM in the future.
- CEOs who whine about “uncertainty” are silly (see more here)
- Contrary to Buffett’s expectations, the “float” from Berkshire’s insurance businesses continues to grow. He doesn’t expect it to continue, but it grew another $2.5 billion last year. (more…)