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Berkshire Hathaway 2021 annual report [pdf]
- dazc 5y ago> we employ decent and talented people – no jerks. Seems like a good idea few other businesses have caught on to?
- Eddy_Viscosity2 5y agoThis might depend on his definition of "jerk": https://www.lawyersgunsmoneyblog.com/2021/12/a-capitalist-is-a-capitalist-no-matter-which-political-party-they-join https://www.lawyersgunsmoneyblog.com/2021/12/a-capitalist-is...
- dazc 5y agoIt also depends on whether you think everything should be measured in a political context?
- Eddy_Viscosity2 5y agoEvery billionaire probably should be. The vast wealth they have means they have exceptional power in society to do or not do things that affect many people; a power that can be equal to or greater than that of the actual politicians.
- adventured 5y agoThat depends on whether the linked article has any validity (it doesn't). > But when the rubber meets the road, Buffett and [JP] Morgan are basically the same person. Word for word one of the least accurate articles I've ever seen linked on HN. Shallow on content and it gets nothing right, it's an impressive feat. It wasn't even well written, if it were at least it would be well written fiction and there might be something to enjoy in that fantasy aspect. The character and personalities of Buffett and Morgan are very different and not "basically" the same. How they treated people - including workers - is dramatically different, that alone ends the article. Rather comically - as one would have to be exceptionally ignorant of history, or a lying clown to miss by so much - the article is pretending to equate the barbarity of the late 19th century labor conflicts (a time during which Morgan thrived), with workers only getting a $2,000 signing bonus and small pay raises each year. Only a fool would proclaim - on a thin argument at that - to judge a person's 90 year life on one matter. At numerous turns throughout his business career (including in regards to Berkshire Hathaway itself, the textile mills), Buffett delayed or avoided layoffs even when it's exactly what he should have done as a rational business move, missing out on large sums of money by not doing that. Of course Buffett isn't a Socialist, which is a good thing.
- xibalba 5y agoThe key distinction is that they own a lot of Apple stock, but not enough to call people who work at Apple their own employees.
- gaws 5y agoDon't hire jerks. It's that easy.
- christophilus 5y agoOne of my favorite thing about this massively profitable company is their website [0]. Buffett’s power point presentations are equally slick. [0] https://www.berkshirehathaway.com/ https://www.berkshirehathaway.com/
- nxmnxm99 5y agoThis is such a random post right at the top: https://www.berkshirehathaway.com/message.html https://www.berkshirehathaway.com/message.html Warren Buffet really is a 100 billion dollar door to door salesman
- BbzzbB 5y agoI've always found it very funny that their first link is a GEICO ad. I think he sees the humor in that too, he's no stoic. Edit: Just finished the letter and he sure is ever the salesman, closing the letter with "cousin" Jimmy Buffett's pontoon party boat, exclusive 10% discount for shareholders!
- rendall 5y agoYou can also buy a T-shirt: https://berkshirewear.com/ https://berkshirewear.com/
- BbzzbB 5y agoBasically every company has merch tho, albeit Berkshire's is decently priced, in-house (subsidiary) manufactured and prominently displayed. Three first thematic examples I googled (conglomerate, railway, insurer). https://www.microsoftmerchandise.com/Shop https://www.microsoftmerchandise.com/Shop https://www.cnboutique.com https://www.cnboutique.com https://uhg.corpmerchandise.com/default.aspx https://uhg.corpmerchandise.com/default.aspx
- deleted 5y ago[deleted]
- elevaet 5y ago> 2021 percentage change in per-share market value of Berkshire: +29.7% Oof.
- Forge36 5y agoOof?
- elevaet 5y agoAs in: Oof, that's a big gain. But commenters above don't seem to think so, perhaps my sentiment is naive.
- qznc 5y agoFTSE All-World index was 28,21%. Slightly beating the market then.
- dazc 5y agoI beat that index last year, and the year before that, by simply picking the right tracker. Could I keep doing this year on year though - no.
- voidfunc 5y agoI bought a bunch of BRK-B a few months ago, its a nice portfolio balancer to the S&P500 which is heavily tech weighted now.
- mmmpop 5y agoSame. I quit my salaried gig and cashed out retirement into a Roth IRA chock full of about 25% BRK/B, 25% AAPL, and the other half more boring stuff. The boring stuff has really been dragging down the otherwise stellar performance of my portfolio.
- lotsofpulp 5y agoBRK is 45%+ AAPL. SPY is ~21% MAMAA. https://www.cnbc.com/berkshire-hathaway-portfolio/ https://www.cnbc.com/berkshire-hathaway-portfolio/ https://finance.yahoo.com/quote/SPY/holdings/ https://finance.yahoo.com/quote/SPY/holdings/ Seems like SPY is more diversified from “tech” than BRK, which would hardly accomplish the goal of balancing away from tech, unless that means going heavy on Apple compared to the other 4 in MAMAA.
- mxschumacher 5y agoYou did not read the letter or look at the financials. Apple makes up about half of the equity portfolio, but there are also massive private ownership stakes (bhe, BNSF, insurance and many more) and ~$144bn in cash
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- throwthere 5y agoOddly this letter doesn’t have an overarching lesson. Some of the teaching points are that interest rates are low driving up valuations of everything, adjusted earnings including ebitda are suspect, don’t bet against America, float is under appreciated by gaap.
- elisharobinson 5y agofull picture . they own biggest 'infra' position holding on cash to weather the shit storm . will buy back stock if we fall behind index funds to deliver value .
- gwern 5y agoIt was another lousy year for Berkshire Hathaway. Hey, at least this year they matched blind dumb indexing! But no interesting major purchases, no benefit from their cash stockpile despite another extraordinary year of volatility & opportunity, and reading the letter is unimpressive - as much as ever it reads like a rambling copy-paste job from the previous year. One wonders at what point the shareholders should hold a family meeting and take the keys away from great-uncle Warren, and if that point is already past.
- voisin 5y agoHe had some lousy years in the dot com bubble too and some investors jumped ship. I think those investors are likely regretting that decision in retrospect.
- xiphias2 5y agoIt looks like at this point Bershire Hathaway is an Apple wrapper. But I’m not sure they know more about Apple products than an average person younger than them.
- nostrademons 5y agoThey did a bit better than the index - the S&P 500 went up about 21% in 2021, Berkshire Hathaway went up 37%. 37% is a very respectable one-year return for any stock, particularly one that invests conservatively. Also not true that they simply wrap Apple, which went up 32% in 2021. They also beat Tesla, which went up 18%.
- mixedbit 5y agoBerkshire continues to sit on cash (144B) with a thesis that productive assets are expensive due to the long period of low interest rates: 'That’s largely because of a truism: Long-term interest rates that are low push the prices of all productive investments upward, whether these are stocks, apartments, farms, oil wells, whatever. Other factors influence valuations as well, but interest rates will always be important.' Upcoming interest rate increases may create good opportunities for Berkshire to invest this money and grow.
- sanderjd 5y agoSince I'm not confident I'll be able to figure this out myself from the article, I'll ask you: how exactly are they keeping this "cash"? It is predominantly some kind of treasury security or something, presumably?
- danielmarkbruce 5y agoshort term treasuries - that's almost always the answer when a company says cash. Sometimes it's other things, with almost exactly the same characteristics.
- mornuup 5y agoIt's written plainly in the report: "Of this sum, $120 billion is held in U.S. Treasury bills, all maturing in less than a year." So, T-bills.
- jcalabro 5y ago> Much of our huge value creation in insurance is attributable to Berkshire’s good luck in my 1986 hiring of Ajit Jain. We first met on a Saturday morning, and I quickly asked Ajit what his insurance experience had been. He replied, “None.” > I said, “Nobody’s perfect,” and hired him. That was my lucky day: Ajit actually was as perfect a choice as could have been made. Better yet, he continues to be – 35 years later. This made me laugh. I wish my hiring process was this robust! I'd be curious to know more about why he actually chose him.
- james-redwood 5y agoBuffett has mentioned on more than one occasion that Jain is a near genius, if not one. I remember watching him say that he’s one of the smartest people he’s ever met. Given Buffet’s wide network of people, Jain is clearly extraordinarily special, something that would have shined through in an interview.
- newyankee 5y agoIf you were in India, the last name Jain is enough of a brand if you need someone who can grow the business. The community/ last name is synonymous with successful businesspeople.
- frontman1988 5y agoThat isn't really the case. Jains are of all kinds. From monks to businessmen. He was probably hired because of his IIT + Harvard degree, not his surname.
- User23 5y agoI’m sure you’re right, but every Jain I’ve ever met has been impeccably ethical which is an attractive trait in a person you’re asking to manage billions.
- boeingUH60 5y agoYou didn’t meet Naveen Jain :) https://www.wsj.com/articles/SB1061619270471300 https://www.wsj.com/articles/SB1061619270471300
- drexlspivey 5y agoIf you are considering investing keep in mind that Berkshire is trading at 1.5 price-to-book ratio. Is there an actual reason to buy the stock instead of roughly replicating their portfolio and maybe periodically rebalancing? You might get slightly different returns but you are not paying a massive 50% premium + fees. Also Buffet and Munger are in their 90s and I am not sure how the stock will react when the inevitable happens. Personally I would stay away
- danielmarkbruce 5y agoYou should read the actual letter, you can't replicate their portfolio, much of it is privately held assets.
- drexlspivey 5y agoThat’s why I said “rouglhy”, the vast majority of the portfolio is publicly traded companies and half of it is Apple. Is exposure to those few private assets worth 50%?
- deleted 5y ago[deleted]
- dazc 5y agoThe private assets provide the cash to buy the public assets, maybe?
- danielmarkbruce 5y agoMany of the public assets also provide cash.
- danielmarkbruce 5y ago"vast majority" isn't right though. The market cap of the company is $700 bill. The equities are worth around $350 bill. So people who spend all day figuring the value of Berkshire think the other assets make up 50% of the value. The book value of those private assets (worth about $350 billion) isn't especially meaningful. Amazon book value is $100 bill or something, the company is valued at $1.5T or so. Apple is less than 100 bill book value, market cap 2.5 trill or so. One could effectively arb out the 350 bill of equities, and they'd be paying 350 bill for a set of assets which have a book value of 100-150 bill. So what? It says nothing.
- FredWeschler 5y agoThe best place on the Internet for Berkshire Hathaway news and discussion is on Reddit: r/brkb It has more than two dozen value investor moderators and it was created by the legendary and eccentric u/100_PERCENT_BRKB... somewhat of a jerk, but he runs a tight subreddit.
- mrfusion 5y agoI don’t find much activity in that sub. The discussion that does happen is really well educated though.
- FredWeschler 5y agoThe discussion is mainly in the Live Chat. Tell me if you can find a better source of Berkshire-related information.
- mrfusion 5y ago> Tell me if you can find a better source of Berkshire-related information. I can’t! That’s the problem.
- apollo1213 5y agoDirect link to view the PDF file: https://docmadeeasy.com/v/192887667 https://docmadeeasy.com/v/192887667
- bmmayer1 5y agoBest line: "bull markets breed bloviated bull"
- cushychicken 5y agoI love the story about TTI's chairman. Warren and Charlie have always struck me as deeply humanist folks. I really like that about them.
- parenthesis 5y ago> I love the story about TTI's chairman. Which is also a masterful advertisement for private business owners in a similar situation to sell to Berkshire Hathaway, for less money than they might otherwise get. This is not a criticism: if I wanted to sell a private business and didn't trust any of the obvious trade buyers (nor private equity), I can imagine myself happily selling to Berkshire for less.
- cushychicken 5y agoI think that's a big part of their humanism. They understand that the folks that they want to invest in aren't in it entirely for the money. In return, they make it easy to to sell to them: they'll give you a dollar amount, and close nine figure deals inside of a month. It's self fulfilling and self reflecting.
- bmitc 5y ago> Warren and Charlie have always struck me as deeply humanist folks. I really like that about them. Take a look at Munger’s “architecture” for a counter to that argument.
- mhh__ 5y agoWhen I looked at that I got the impression he was just wrong rather than evil i.e. it feels like a boomer-y "touch grass rather than go to therapy" ideal of social housing where people are "forced" to mingle. That was my impression of the most recent design, maybe the older ones are more brazen.
- bmitc 5y agoWell it's just far and away from anything I'd describe as humanist. Munger's response to the criticisms was even worse than the initial proposal.
- paulpauper 5y agoWarren Buffett and Charlie Munger are 91 and 97 years old respectively and have famously bad diets and do no exercise yet are both healthy and productive. Many other examples, like William Shatner, who is 91. Or Henry Kissinger, 98. I think much of conventional wisdom about weight, diet, health is wrong. Outcomes are influenced much more by genes than anything else. That's how these old guys keep going when the 'conventional health wisdom' by the experts says they should be dead.
- marvin 5y agoHard to reason from world-famous anecdotes. They could also just have supremely healthy genetics, thus explaining why they’re able and willing to work very hard far beyond the normal retirement age. You’d need large studies to learn more.
- victor106 5y agoThis also surprises me. Is this survivorship bias? Also, I think a stress free happy life could be equally or more important than diet and exercise.
- JackMorgan 5y ago> Is this survivorship bias? I'm not sure if you mean this in jest, but yes it is. So if you meant it as dry humor, you made me chuckle. It's almost too on the nose, considering we're talking about the habits of literal survivors being taken out of context.
- zemvpferreira 5y agoIf you're interested in learning more about the factors influencing ageing, you could do worse than listening to dr Horvath talking about epigenetics: https://www.youtube.com/watch?v=A_aaBKubJnA https://www.youtube.com/watch?v=A_aaBKubJnA The summary as I understood is that hereditary factors will determine about 40% of your ageing rate. Doing the right things (eating your greens etc) will affect maybe 10-15% of your ageing rate if you're generally healthy. Avoiding the bad stuff (obesity, smoking, alcohol) will drastically affect your healthspan and lifespan. It's hard to take these men as an example not to care. Who knows what genetic cards they were dealt, and who knows how much luck or invisible preparedness they have with their bodies. The conventional health wisdom you mention is borne of millions more examples and unequivocally points in the direction of keeping your body in as good a shape as possible through your whole life.
- beejiu 5y ago> Also, a significant portion of the dollars that Todd and Ted manage are lodged in various pension plans of Berkshire-owned businesses, with the assets of these plans not included in this table. Perhaps this is poorly worded, but can someone explain how that's not a conflict of interest?
- victor106 5y ago> If the many essential products BNSF carries were instead hauled by truck, America’s carbon emissions would soar. I wonder if Railroads will ever be replaceable, maybe if an EV truck is widely available?
- skybrian 5y agoWhen they're appropriate they're more efficient than trucks, so why would you want to replace them?
- vineyardmike 5y agoUntil we get the electricity from green sources, an EV won't matter. I attended a talk from an energy research group at my uni a few years ago and the TLDR was "the energy from the grid in this region is so dirty that driving a Tesla has more emissions/mile than a fuel efficient car". Really colored my views on EVs. I still think the message is wrong to reject EVs, but instead that modernizing the grid would instantly improve all EV cars in the region, without needed to coordinate with thousands of drivers to upgrade.