Berkshire Hathaway Annual Letter 2023

The annual letter from Warren Buffett to shareholders in Berkshire Hathaway Inc was published yesterday. It's always published on a Saturday, presumably to allow time for shareholders to read 144 pages of wit, humility, wisdom and numbers over the weekend. 

I own some of their 'B' class shares, and so far so good with with them up up 3.3% in 2022, a year where anything positive was a rarity, and up 35.8% since I bought them a little over two years ago: 

One of my best individual holdings continues to be Warren Buffett's Berkshire Hathaway which I bought a little over two years ago and has quietly increased by a little over 37% in that time. It's not a jazzy holding, but it's a very solid one, and as regular readers will know, I'm a long time fan of Warren Buffett and his philosophy, although changes at the top for Berkshire Hathaway are unavoidable fairly soon with straight-talking vice-chairman Charlie Munger turning 99 yesterday.

The Class 'A' shares are currently priced at $461,705 and just one would be a rather significant percentage of my savings, but you only need to own a single 'A' or 'B' share to be eligible to attend the AGM in Omaha in person. 

While I have no plans to do so, the 'B' share is currently priced at a rather more manageable $304.02 and the AGM is a popular event with around 40,000 investors attending in person, and hotel rooms in town priced at more than triple the usual rate. 

Buffett's letters are always worth a read, and this year's is no exception. He pointed out that he's been investing for almost one-third of the country's existence, which is quite amazing. A couple of lines that caught my eye:

It’s crucial to understand that stocks often trade at truly foolish prices, both high and low. “Efficient” markets exist only in textbooks. In truth, marketable stocks and bonds are baffling, their behavior usually understandable only in retrospect.

And this one on stock buybacks, which appears to be targeted at a certain US Senator:

The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices. Just as surely, when a company overpays for repurchases, the continuing shareholders lose. At such times, gains flow only to the selling shareholders and to the friendly, but expensive, investment banker who recommended the foolish purchases. 

The key point here is the clarification that the repurchases need to be made at value-accretive prices. In October, it was reported that Meta, formerly known as Facebook, conducted a $45 billion buyback initiative at $300 a share. The only slight problem with this was that the stock dipped below $90 not long after!  

The letter also had some good one-liners as usual:

The world is full of foolish gamblers, and they will not do as well as the patient investor.

Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.

Don’t bail away in a sinking boat if you can swim to one that is seaworthy.

There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice.

You have to keep learning if you want to become a great investor. When the world changes, you must change.

Some good advice there for all of us.