If not, stop everything you’re doing, and read it now.īelow are a few comments I have on some of the things Buffett mentions in the letter. You’ve probably read Warren Buffett’s 2007 letter to shareholders that was released a week ago.
#SEES CANDY FREE#
What is not accounted for is excess capital reinvestment - in other words, contribution is based on GAAP net income, not true free cash flow. It implicitly accounts for both individual return and capital allocated to the investment. This measurement puts investments on an equal footing, allowing comparison across different timeframes. has contributed $200 to an initial equity base of $1,000. Contribution for that individual year would be 100/1300 = 7.7%, but cumulative contribution would be 20%, as ABC Corp. adds another $100 to a starting equity base of $1,300. So contribution after year 1 would be 10%. is purchased in year 1, adding $100 (either in net income for subs, or change in unrealized gains + dividends for investments) that year to an initial equity base of $1,000. * A simple example to show the calculation: ABC Corp. This means that had the rest of Berkshire’s investments returned 0% over those 38 years, annual book value growth would still have been 12%.
It doesn’t include insurance companies other than GEICO, as it’s too difficult to separate individual performance given available data. This is a good yardstick for comparing how successful investments were over time. The following chart shows the cumulative contribution to book value* of selected investments over 50 years. So in addition to the wall print, I hope to release a few more posts further exploring the story of how Warren Buffett transformed Berkshire over the years. Once I reformat and clean-up it up, I’ll eventually release the raw data so that others can do their own analysis.īerkshire Hathaway’s Best and Most Notable Investments
In the process of doing research for the visualization, I collected a lot of data on Berkshire’s financial history - much more data than could fit in the charts on the print. Both of these items were available at the meeting a month ago and I’ve received lots of praise about them from other shareholders, so I’m glad to finally make them available to everyone. The Berkshire Hathaway limited hardcover letters book and “50 Years of Berkshire” wall print are now available for purchase online.
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