Buffett frequently referred to Phillips 66 as one of the best businesses Berkshire invested in because of its consistent dividends and share repurchase programs. That year, ConocoPhillips completed the corporate spin-off of Phillips 66, of which Berkshire owned 27 million shares. In early 2008, Berkshire increased its stake in ConocoPhillips to 85 million shares. Buffett sold around 30% of this stake in 2013 when he “soured somewhat on the company’s then-management”, realizing a profit of $43 million. In 2017, Berkshire acquired 38.6% of truck stop chain Pilot Flying J for $2.8 billion, followed by the acquisition of an additional 41.4% of the company for $8.2 billion in 2023, and the remaining 20% in 2024 for $3 billion. In February 2016, Berkshire Hathaway acquired Duracell from Procter & Gamble for $4.7 billion in stock in P&G previously owned by Berkshire Hathaway.
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“We test the wisdom of retained earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained.” (1983) In later letters, he sets forth an in-depth example of how much frictional trading costs can eat away at investing returns. Brokers, using terms such as ‘marketable’ and ‘liquidity’, sing the praises of companies with high share turnover (those who cannot fill your pocket will confidently fill your ear). He shuns the idea that diversification limits risk because often it requires that investors move money away from winning stocks and into companies with which they are unfamiliar.
- Products are produced in the United States and Europe and are sold primarily through a global network of independent dealers and distributors, with peak sales occurring in the second and third quarters.
- In July 2005, Berkshire Hathaway acquired Forest River, the world’s largest seller of recreational vehicles, from Pete Liegl for $800 million.
- Instead of selling at the slightly lower price, Buffett bought more of the stock at an even higher price to take control of the company and fire Stanton; Stanton and his son resigned in 1965.
- He focused on selecting stocks that would be held for the long term.
- The historic county included the parts of Oxfordshire south of the River Thames, which formed its northern border, but excluded Caversham and Slough.
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It appointed two Berkshire Hathaway Energy executives as CEO and CFO of the company, retaining Jimmy Haslam as chairman. In 2020, Buffett said he overpaid for the company and wrote down its value by approximately $10 billion. In January 2016, Berkshire Hathaway acquired Precision Castparts Corp. for $32.1 billion. In 2016, it was the fifth-largest auto dealership group, with ownership of 81 dealerships and revenues of $8 billion.
The second situation is what exists at Berkshire Hathaway, where the majority shareholder also runs the business.
In 1964, Buffett offered to sell his shares back to the company for $11.50 each. Buffett personally owns 38.4% of the Class A voting shares of Berkshire Hathaway, representing a 15.1% overall economic interest in the company. Buffett makes it clear that investing is far from a science and that there is much more to being a successful investor than being the smartest person in the room. Clearly, these letters serve a far greater purpose than simply the ability to follow the activities of Berkshire Hathaway on a yearly basis. Buffett states that the best place to find true independence-“the willingness to challenge a forceful CEO when something is wrong or foolish”-is among people whose interests are aligned with shareholders.
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In the third quarter of 2022, Berkshire bought 60 million shares in TSMC valued at $4.1 billion; the berkshire hathaway letters to shareholders shares were sold in late 2022 and 2023 in part due to geopolitical tensions. However, at an annual meeting on May 4, 2024, Buffett stated that he had sold all of his shares in Paramount at a substantial loss, blaming himself for deciding to invest. In the second quarter of 2020, Berkshire added a position of more than 20 million shares in Barrick Gold; the shares were sold in 2021. Berkshire began investing in common shares of Occidental beginning in 2022 and has increased its position since.
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This area of West Berkshire is the largest centre of racehorse training in the UK after Newmarket, and is known as the ‘Valley of the Racecourse’. Biosynth Carbosynth, along with its acquired companies, vivitide and Pepscan rebranded to Biosynth in 2022. The insurance company Prudential has an administration centre in the town. Despite investments in renewable energy, the company was criticized for its decision to operate these plants until at least 2049, raising public health and environmental concerns. In May 2025, Buffett announced his intention to retire as CEO of Berkshire Hathaway at the annual shareholders’ meeting, with Greg Abel succeeding him at the end of 2025. Abel was appointed vice chairman for non-insurance business operations, and Jain became vice chairman of insurance operations.
- Each letter typically begins with the change in book value over the course of the year.
- Buffett is often asked why he does not split the stock to make it more affordable and accessible for a larger number of people.
- The county has been the site of several battles, particularly during the First English Civil War, when Reading and Wallingford were besieged two battles took place at Newbury, in 1643 and 1644.
- In early 2012, 50-year-old Ted Weschler, founder of Peninsula Capital Advisors, joined Berkshire as a second investment manager.
Buffett has described buying the Berkshire Hathaway textile company as the biggest investment mistake he had ever made, denying him compounded investment returns of about $200 billion over the subsequent 45 years. In August 2024, Berkshire Hathaway became the eighth U.S. public company and the first non-technology company to be valued at over $1 trillion on the list of public corporations by market capitalization. From 1965 to 2023, the stock price had negative performance in only eleven years. However, in the 10 years ending in 2023, Berkshire Hathaway produced a CAGR of 11.8% for shareholders, compared to a 12.0% CAGR for the S&P 500.
It applies to outlays for farms, oil royalties, bonds, stocks, lottery tickets, and manufacturing plants. This is why Buffett characterizes them as “moats” and why they are such an integral part of his long term investment decisions. The purpose of the durable competitive advantage is not to boost growth or expected future earnings, but rather to ensure that a company’s current level of profitability can be maintained in the future through adverse events that may occur along the way. While a great manager is a tremendous asset to a company, when the company’s success is tied to his/her presence, any competitive advantage created simply cannot be durable by nature. Additionally, Buffett states that the criterion of durability eliminates businesses whose success depends on having a great manager.
Berkshire later sold $1.4 billion worth of shares to Phillips 66 in exchange for Phillips Specialty Products. Berkshire sold most of its shares but held 472,000 shares until 2012. Berkshire made its first investment in Tesco in 2006, and in 2012 it raised this stake to over 5% of the company, investing a total of $2.3 billion. Buffett began investing in Wells Fargo in 1989; however, by the first quarter of 2022, Berkshire Hathaway had sold its entire interest in the company. As part of the transaction, Berkshire reduced the purchase price of the company by any fees that it paid investment bankers. In October 2022, Berkshire Hathaway acquired insurance company Alleghany Corporation for $11.6 billion.
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Known for their humor and light-heartedness, the meetings typically start with a cartoon made for Berkshire shareholders. Attendance generally totals over 40,000 people and the meetings last for 6 to 8 hours, with Buffett himself, as well as Abel and Jain, answering questions from shareholders. The salary for Buffett is $100,000 per year with no stock options, which is among the lowest salaries for CEOs of large companies in the United States. The increased market liquidity resulted in the company’s inclusion in the S&P 500.
In this Titans Brief, you will find Warren Buffett’s answers to these questions:
In his 1993 letter, Buffett lays out the three “boardroom situations” in great detail. The 20% average return produced by Buffett over this period would have grown a $1,000 original investment to $97 million. Over these same 63 years, the average market return was just under 10%, including dividends.
These “special topics” provide the most valuable insight available in the letters, and will be the focus of this brief hereafter. The content of these topics includes discussion of market fluctuations, risk, investment policy, and more. Buffett himself has said that he was “wired at birth to allocate capital,” which is evident not only through his impressive track record, but also through the tremendous amount of wisdom exuded in each of his letters.
This emphasis on trading equal amounts of intrinsic business value ensures that neither party in any of Berkshire’s acquisitions will be taken advantage of, and is ultimately the most fair basis upon which to make a stock-for-stock transaction. Buffett also believes that rather than being worried about how dilutive a merger can be in terms of per share earnings, what really counts is whether a merger is dilutive or anti-dilutive in terms of intrinsic business value. Buffet touches on this fact in his 2009 letter, in which he says, “In more than fifty years of board memberships, however, never have I heard the investment bankers (or management!) discuss the true value of what is being given.” He views a stock-for-stock transaction to be a case in which both companies are making a partial sale of themselves. While this approach may be simpler and more predictable, Buffett contends that if serious thought is not put into which earnings should be retained and which should be distributed, shareholders are hurt because they are not earning an optimal (manimum) rate of return. If a manager is able to employ all of company earnings internally at a high rate of return that will create over $1 of market value for every $1 retained, managers should do so.
Buffett has long eschewed a diversified stock portfolio in favor of trusted investments that would be over-weighted in order to leverage the anticipated return. However, the company also manages hundreds of diverse businesses all over the world. Class A shares have never split and closed above $734,000 per share on October 10th of 2025 (its Class B shares traded at about $489 on the same date). Berkshire Hathaway is a holding company for a multitude of businesses, including GEICO and Fruit of the Loom, that is led by Warren Buffett.
First, the company must have available funds (cash on hand plus sensible borrowing capacity). Buffett does not wish to see this happen, and thus refuses to split Berkshire stock. His response is that he is attempting to attract a certain class of buyers, and that splitting the stock to make it sell more cheaply would ultimately lead to a decrease in the quality of ownership of Berkshire. Buffett is often asked why he does not split the stock to make it more affordable and accessible for a larger number of people.
