Warren Buffett’s shareholder letter 2021

Warren Buffett published his shareholder letter for 2021 back in February. As we have seen over the last few years, his letter has gotten shorter with less advice on investing and more focus on numbers and facts. There are still some nuggets of advice to take away.

3 ways to increase the value of your investment

In talking about share buy backs, Buffett looks at how they can grow an investors money. In order:

1. Increase the long term earning power of Berkshire through internal growth and making acquisitions. They find the opportunities for growth present better returns than acquisitions in today’s market.
2. Buy a non-controlling holding in publicly traded companies. Although today, they find little that excites them. Low long term interest rates are pushing valuations upwards and as we know, value is everything for Buffett.
3.  Share buy backs. Over the last two years, they repurchased 9% of the shares that were outstanding at the 2019 year end at a cost of $51.7 billion. But like with any other purchase, their shares must offer appropriate value.

Career Advice

Teaching and writing helps him clarify his own thoughts. Charlies Munger calls this the orangutan effect: if you sit down with an orangutan and carefully lay out one of your big ideas, you may leave behind a confused looking ape, but you will yourself leave thinking more clearly.

His advice to students who have not yet begun their careers; pick an industry and work with the kind of people that you would select if you didn’t need the money. He acknowledges that economic necessities may get in the way of this but never stop looking for the job and colleagues that makes your job feel as if you aren’t working.

In Berkshire, they have a simple recruitment strategy – no jerks. You can’t go wrong with that.

Steven Barrett

18 April 2022