Berkshire Hathaway Annual Letter 2020

Over the last 40 years, Warren Buffett releases his annual letter to Berkshire Hathaway shareholders, become required to read across the investment community.

Berkshire’s Class A stock, the most expensive share price of any company in history costing $330,000, has increased by more than 2,700,000% since 1965.

Mr. Buffett has been the CEO and chairman of Berkshire Hathaway since 1970, the longest-term CEO in the S&P 500.

What He’s Saying

1. Stock Repurchase – In 2019, Berkshire spent $5 billion on repurchasing its stock, about 1% of the company.

2. Succession Plan – Mr. Buffett told shareholders that Berkshire is “100 % prepared” for the day that he and his business partner Charles Munger will leave the scene, and in the meantime has no plans to retire anytime soon. Ajit Jain and Greg Abel have been speculated as potential successors.

3. Insurance Success – Berkshire praised Jain’s 2012 $221 million purchase of GUARD Insurance Group, based in Pennsylvania. In 2019, GUARD had a volume of $1.9 billion, surged 379% since 2012, and the revenue float by 265%. A ridiculously rare insurance record.

4. Big Acquisitions – “Elephant-Gun”, Mr. Buffett’s favorite description of that $128 billion cash hoard. Berkshire did not make a major acquisition in 2019, marking the 3rd year in a row. Saying, volatile market prices were preventing him to buy large positions in publicly-traded companies that meet his standards.

Mr. Buffett is still on the hunt for big acquisitions that meet 3 criteria.

• 1st, the business must earn good returns in their operation.
• 2nd, the business must be run by able and honest managers.
• 3rd, the business must be available at a sensible price.

5. Berkshire Hathaway Energy (BHE) – BHE is now supplying Iowa wind power, will be 100% “wind self-sufficient” by 2021.

6. Berkshire’s Newspaper Holdings – The sale of Berkshire’s newspaper holdings, was a sign that Mr. Buffett gave up on the news business.

References:

• Buffett talks investing, takeovers and ‘Dancing with the Stars’ in letter – here are highlights – cnbc.com
• 26 Lessons From Warren Buffett’s Annual Letters To Shareholders – cbinsights.com
• Read Warren Buffett’s annual letter to Berkshire Hathaway shareholders – cnbc.com
• Warren Buffett Praises Performance, but Offers No Surprises in Annual Letter – nytimes.com
• Here are the biggest takeaways from Warren Buffett’s annual letter – markets.businessinsider.com
• Warren Buffett releases annual letter, reassures investors about future of Berkshire Hathaway – axios.com
• 6 Big Surprises From Warren Buffett’s 2019 Shareholder Letter – fool.com