We follow a price — based — on — exposure , not — on — competition policy because it makes sense for our shareholders . This policy means that we are always available , given prices that we believe are adequate , to write huge volumes of almost any type of property — casualty insurance . These seven business units had combined operating earnings before interest and taxes of $ 180 million .
Warren Buffett’s letter to Berkshire Hathaway shareholders: 5 things to watch for
With the expectation of important synergy ( a term widely used in business to explain an acquisition that otherwise makes no sense ) . Still, Seifert reminded clients that «the demise or incapability of Warren Buffett would be a negative for Berkshire shares.» Customers find the information in the book priceless, and the compilation great.
Finance & economics August 10th 2024
That is , they usually confer the highest price — earnings ratios on exotic — sounding businesses that hold out the promise of feverish change . That prospect lets investors fantasize about future profitability rather than face today’s business realities . For such investor — dreamers , any blind date is preferable to one with the girl next door , no matter how desirable she may be . Apple reported lackluster financial results in the June quarter, despite beating expectations on the top and bottom lines. Revenue increased 4.8% to $85.8 billion and GAAP net income rose 7.6% to $21.4 billion.
Apple
The second test , more subjective , is whether their “ moats ” — a metaphor for the superiorities they possess that make life difficult for their competitors — have widened during the year . During my investment career , I have watched a large number of retailers enjoy terrific growth and superb returns on equity for a period , and then suddenly nosedive , often all the way into bankruptcy . This shooting — star phenomenon is far more common in retailing than it is in manufacturing or service businesses . In part , this is because a retailer must stay smart , day after day . Your competitor is always copying and then topping whatever you do .
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If Berkshire shares are selling below intrinsic business value , massive repurchases will almost certainly be the best choice . You can be comfortable that your directors will make the right decision . If a business is complex https://forexarena.net/ or subject to constant change , we’re not smart enough to predict future cash flows . What counts for most people in investing is not how much they know , but rather how realistically they define what they don’t know .
Berkshire’s financial growth supports the market-beating gains in its stock
- The opinions expressed herein are those of the publisher and are subject to change without notice.
- But Buffett could reinvest that cash (less the estimated tax bill) right away if he saw good opportunities in the market.
- Similarly , if we contemplate an acquisition , we include in our evaluation the cost of replacing any option plan .
- Our criterion of “ enduring ” causes us to rule out companies in industries prone to rapid and continuous change .
Berkshire has a market cap of $922 billion as of this writing, so its stock only needs to gain a further 8.5% to push the conglomerate into the $1 trillion club. Given its 58-year track record of 19.8% annual growth — and its 19.1% gain in 2024 so far — it appears likely to happen within the next year. Mathematically speaking, it could cross the milestone within the next six months. Apple has cultivated immense pricing power by pairing trendy hardware with proprietary software and services, creating a closed ecosystem that other manufacturers cannot replicate.
Depreciation charges for all of these non — insurance operations totaled $ 7.6 billion; capital expenditures were $ 11.5 billion . Berkshire is always looking for ways to expand its businesses and regularly incurs capital expenditures that far exceed its depreciation charge . A truly great business must have an enduring “ moat ” that protects excellent returns on invested berkshire hathaway letters to shareholders capital . The dynamics of capitalism guarantee that competitors will repeatedly assault any business “ castle ” that is earning high returns . Business history is filled with “ Roman Candles , ” companies whose moats proved illusory and were soon crossed . Similarly , if we contemplate an acquisition , we include in our evaluation the cost of replacing any option plan .
Stockmarkets were in the midst of a sell-off, after weaker-than-expected data on American employment had provoked worries about the strength of the world’s largest economy. Berkshire stock surged by 4,384,748% between 1965 and 2023, which translated to a compound annual return of 19.8%. That crushed the 31,223% gain (10.2% compounded annually) in the S&P 500 over the same period. Berkshire spent around $38 billion accumulating Apple shares since 2016, and despite selling more than half of its position this year, its remaining holding is still worth over $86 billion.
Necessarily transferred ownership of its assets or IOUs to the rest of the world . Like a very wealthy but self — indulgent family , we peeled off a bit of what we owned in order to consume more than we produced . When companies or investment professionals use terms such as “ EBITDA ” and “ pro forma , ” they want you to unthinkingly accept concepts that are dangerously flawed . We regularly report our per — share book value , an easily calculable number , though one of limited use . Just as regularly , we tell you that what counts is intrinsic value , a number that is impossible to pinpoint but essential to estimate . However , a CEO who doesn’t perform is frequently carried indefinitely .
One reason is our ability to move funds between businesses or into new ventures instantly and without tax . It takes no less than $ 7 today to buy what $ 1 did at that time . ” Translating this to our regulated businesses , he might today say , “ Take care of your customer , and the regulator — your customer’s representative — will take care of you . Winston Churchill once said , “ You shape your houses and then they shape you . Bureaucratic procedures beget more bureaucracy , and imperial corporate palaces induce imperious behavior .
With nowhere appealing to invest the cash, Berkshire’s cash and Treasury bill holdings will continue to grow. The good news for investors is that they typically handle a portfolio that’s worth less than the $600 billion in combined equities and treasuries Buffett’s in charge of. Since the change in the authorization, Buffett has bought back shares every quarter.
Buffett is a value investor, which means he likes to buy great companies at an attractive price with the intention of holding on to them for the long term. Robust profitability, reliable growth, strong management teams, and shareholder-friendly programs like stock buybacks and dividend schemes are just some of the attributes he looks for when deciding to invest. In June, however, Buffett didn’t buy back any shares of either class of stock for the first time since May 2022. On top of that, share repurchases for the entire quarter totaled a measly $345 million.
