26 Lessons From Warren Buffett’s Annual Letters To Shareholders

Each year, Warren Buffett writes an open letter to Berkshire Hathaway shareholders. Over the last 40 years, these letters have become an annual required read across the investing world, providing insight into how Buffett and his team think about everything from investment strategy to stock ownership to company culture, and more.

At the age of 26, a Nebraska stockbroker and school teacher named Warren Buffett took his “retirement fund” of $174,000 and decided to start his own investment business.

Two decades later, he was a billionaire.

Today, the “Oracle of Omaha” has a net worth of nearly $90B — making him the third wealthiest person in the United States after Jeff Bezos (another CEO known for his shareholder letters) and Bill Gates. Berkshire Hathaway, Buffett’s firm, has the most expensive share price of any company in history, with each Class A share costing upwards of $330,000.

Berkshire Hathaway’s fundamental strategy has been to identify valuable companies and then acquire increasingly large portions of them.

Among its most valuable holdings are roughly 10% stakes in juggernauts of the American economy like Coca-Cola, Wells Fargo, and Southwest Airlines.

Berkshire Hathaway also owns just under 19% of American Express, 11% of Delta, and almost 6% of Apple (its most valuable stake, with a market value of more than $73B). It has purchased controlling stakes in some 60 companies, including well-known brands like Geico, Dairy Queen, and Fruit of the Loom.

Berkshire Hathaway’s portfolio is also full of more obscure successes too, like See’s Candy, which Buffett calls his “dream business.” Buffett bought See’s Candy for $25M in 1972, and by 2019, it had brought in “well over” $2B — a nearly 8,000x return.

Investors in Berkshire Hathaway have done well too. Since 1965, the price of Berkshire’s Class A stock has increased by more than 2,700,000%. That’s compared to a roughly 20,000% increase in the overall gain of the S&P 500 over the same period.

It’s no wonder Buffett publishes an updated table of Berkshire’s per-share performance alongside the stock index at the beginning of each year’s shareholder letter, which has become an annual event in the world of business and finance.

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