Chairman and CEO Warren Buffett recently released his annual letter to the shareholders of Berkshire Hathaway for the 2012 fiscal year. In his estimation, Berkshire didn’t have such a good year.
When the partnership I ran took control of Berkshire in 1965, I could never have dreamed that a year in which we had a gain of $24.1 billion would be subpar, in terms of the comparison we present on the facing page.
But subpar it was. For the ninth time in 48 years, Berkshire’s percentage increase in book value was less than the S&P’s percentage gain (a calculation that includes dividends as well as price appreciation). In eight of those nine years, it should be noted, the S&P had a gain of 15% or more. We do better when the wind is in our face.
Perhaps with Anne Hathaway’s Oscar win in February, they’ll have a better year this year.
When actress Anne Hathaway is in the news, shares of Warren Buffett’s Berkshire Hathaway seem to go up in price.
Companies are trying to “correlate everything against everything,” he explained, and if they find something that they think will work time and again, they’ll try it out. The interesting, thing, though, is that it’s all statistics, removed from the real world. It’s not as if a hedge fund’s computers would spit the trading strategy as a sentence: “When Hathway news increases, buy Berkshire Hathaway.” In fact, traders won’t always know why their algorithms are doing what they’re doing. They just see that it’s found some correlation and it’s betting on Buffet’s company.
Warren Buffett’s annual letters to Berkshire Hathaway’s shareholders are always interesting to read; here’s the letter for the 2010 fiscal year.