Heinz bought to keep, not resell
“Though the Heinz acquisition has some similarities to a ‘private equity’ transaction, there is a crucial difference: Berkshire never intends to sell a share of the company.”
Business
Per-share results matter more than growth
“[Minor dilution] satisfies our goal of not simply growing, but rather increasing per-share results.”
Bolt-on deals add earnings, not work
“[These deals] deploy capital in activities that fit with our existing businesses and that will be managed by our corps of expert managers. The result is no more work for us and more earnings for you.”
The mother lode of opportunity is America
“Though we invest abroad as well, the mother lode of opportunity resides in America.”
Part of a gem beats a whole rhinestone
“At Berkshire, we much prefer owning a non-controlling but substantial portion of a wonderful company to owning 100% of a so-so business; it’s better to have a partial interest in the Hope diamond than to own all of a rhinestone.”
Passive investing widens capital allocation choices
“Our flexibility in capital allocation – our willingness to invest large sums passively in non-controlled businesses – gives us a significant advantage over companies that limit themselves to acquisitions they can operate.”
Betting on U.S. prosperity is nearly sure
“Charlie and I have always considered a ‘bet’ on ever-rising U.S. prosperity to be very close to a sure thing. Indeed, who has ever benefited during the past 237 years by betting against America?”
Intrinsic value resists a precise number
“As much as Charlie and I talk about intrinsic business value, we cannot tell you precisely what that number is for Berkshire shares (nor, in fact, for any other stock).”
Reporting what he would want as owner
“Our goal is to provide you with the information we would wish to have if our positions were reversed, with you being the reporting manager and we the absentee shareholders.”
Costless, lasting float is worth more than its accounting
“If our revolving float is both costless and long-enduring, which I believe it will be, the true value of [float] is dramatically less than the accounting liability.”
Low costs as an enduring moat
“GEICO’s cost advantage is the factor that has enabled the company to gobble up market share year after year. Its low costs create a moat – an enduring one – that competitors are unable to cross.”
Insurance is the sale of promises
“Simply put, insurance is the sale of promises. The ‘customer’ pays money now; the insurer promises to pay money in the future if certain events occur. Sometimes, the promise will not be tested for decades.”
Depreciation is real, so beware EBITDA
“Every dime of depreciation expense we report, however, is a real cost. And that’s true at almost all other companies as well. When Wall Streeters tout EBITDA as a valuation guide, button your wallet.”
His bad buys were misjudged economics
“I was not misled: I simply was wrong in my evaluation of the economic dynamics of the company or the industry in which it operated.”
Ordinary sense revealed the farm's upside
“I needed no unusual knowledge or intelligence to conclude that the investment had no downside and potentially had substantial upside.”
Simplicity over swinging for the fences
“Keep things simple and don’t swing for the fences.”
Without an earnings estimate, move on
“If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on.”
Understanding your own actions is enough
“No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake.”
Skeptical of sustained speculative success
“I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so.”
Games are won on the playing field
“Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.”
Irrational fellow owners infect stockholders
“Owners of stocks, however, too often let the capricious and often irrational behavior of their fellow owners cause them to behave irrationally as well.”
Liquidity turned from benefit to curse
“For [frenetic stock owners], liquidity is transformed from the unqualified benefit it should be to a curse.”
Fear is the investor's friend
“A climate of fear is your friend when investing; a euphoric world is your enemy.”
Stocks analysed as small portions of businesses
“When Charlie and I buy stocks – which we think of as small portions of businesses – our analysis is very similar to that which we use in buying entire businesses.”
Macro views never stopped a good purchase
“In the 54 years we have worked together, we have never foregone an attractive purchase because of the macro or political environment, or the views of other people.”
Non-professionals aim for a broad cross-section
“The goal of the non-professional should not be to pick winners – neither he nor his ‘helpers’ can do that – but should rather be to own a cross-section of businesses that in aggregate are bound to do well.”
Steady accumulation cures bad timing
“The antidote to [entering at extreme exuberance] is for an investor to accumulate shares over a long period and never to sell when the news is bad and stocks are well off their highs.”
Trading farmland grows no extra crops
“If ‘investors’ frenetically bought and sold farmland to each other, neither the yields nor prices of their crops would be increased.”
Mostly a low-cost index fund
“My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”
Graham's book, his best investment
“Of all the investments I ever made, buying Ben’s book was the best (except for my purchase of two marriage licenses).”
Unfunded promises breed a financial tapeworm
“Citizens and public officials typically under-appreciated the gigantic financial tapeworm that was born when promises were made that conflicted with a willingness to fund them.”
All shareholders get information simultaneously
“Charlie and I believe that all shareholders should have access to new Berkshire information simultaneously and should also have adequate time to analyze it.”
Managers run businesses like family assets
“[Our operating managers] are truly All- Stars, who run their businesses as if they were the only asset owned by their families.”