1999 年巴菲特致股东的信英文版全文
To the Shareholders of Berkshire Hathaway Inc.:
Our gain in net worth during 1999 was $3.58 billion, or 5.6% per share, both Class A and Class B. Over the last 35 years (that is, since present management took over), book value has grown from $19 to $41,726 per share, a rate of 24.5% compounded annually.
We have two ways to deploy capital at Berkshire: We can buy marketable securities, or we can invest in the operations of our various businesses. In 1999, we had more money than good ideas in both areas. Our equity portfolio lagged the performance of the S&P 500 for the third year in a row, and we found few attractive opportunities to acquire new businesses.
Nevertheless, we are delighted with the progress our operating businesses made during the year. Our managers continue to do an outstanding job, and we have every reason to expect that they will continue to do so in the future.
Repurchases of Berkshire Shares
Recently, several shareholders have suggested that Berkshire consider repurchasing its shares. Such requests are usually well - intentioned, but sometimes the logic behind them is a bit strange.
Repurchases make sense for a company only under certain conditions. First, the company must have excess cash after meeting all of its short - term obligations (including working capital needs) and after funding all projects that offer a reasonable return on investment. Second, the company's stock must be selling at a significant discount to its intrinsic value, as determined by the company's management. And third, shareholders must have enough information to evaluate the company's value; otherwise, insiders could take advantage of uninformed shareholders by buying back shares at too low a price.
At Berkshire, conditions that would justify a share repurchase are rare. In general, most companies are more likely to try to boost their stock prices than to depress them.
Our own experience with repurchases has been mixed. In the past, we have sometimes missed opportunities to buy back our shares because I was too conservative in my estimate of Berkshire's value or because I was focusing on other uses of our cash. In addition, Berkshire's trading volume is relatively low, so it is difficult for us to buy back enough shares to make a significant impact on our per - share intrinsic value.
For example, if we were able to buy back 2% of our outstanding shares at a 25% discount to intrinsic value, we would increase our per - share intrinsic value by only 0.5%. And we would have to consider the opportunity cost of using that cash for other value - creating investments.
Recently, when our Class A shares fell below $45,000, we considered starting a repurchase program. But we decided to wait until shareholders had a chance to read this annual report. If we do decide to buy back shares, we will not do so through the New York Stock Exchange. We will accept only direct offers from shareholders. So if you are interested in selling your shares, please ask your broker to call Mark Millard at 402 - 346 - 1400. After a trade is completed, the broker can report it on the third market or on the NYSE. We will also be happy to buy back Class B shares at a discount of at least 2% to the price of Class A shares. However, we will not accept trades of less than 10 Class A shares or 50 Class B shares.
Please note that we will not buy back shares to prop up our stock price. We will do so only if we believe that such a use of our cash is in the best interests of the company. After all, the impact of share repurchases on a company's future return on equity is limited.
Our own experience with repurchases has been mixed. In the past, we have sometimes missed opportunities to buy back our shares because I was too conservative in my estimate of Berkshire's value or because I was focusing on other uses of our cash. In addition, Berkshire's trading volume is relatively low, so it is difficult for us to buy back enough shares to make a significant impact on our per - share intrinsic value.
For example, if we were able to buy back 2% of our outstanding shares at a 25% discount to intrinsic value, we would increase our per - share intrinsic value by only 0.5%. And we would have to consider the opportunity cost of using that cash for other value - creating investments.
Recently, when our Class A shares fell below $45,000, we considered starting a repurchase program. But we decided to wait until shareholders had a chance to read this annual report. If we do decide to buy back shares, we will not do so through the New York Stock Exchange. We will accept only direct offers from shareholders. So if you are interested in selling your shares, please ask your broker to call Mark Millard at 402 - 346 - 1400. After a trade is completed, the broker can report it on the third market or on the NYSE. We will also be happy to buy back Class B shares at a discount of at least 2% to the price of Class A shares. However, we will not accept trades of less than 10 Class A shares or 50 Class B shares.
Please note that we will not buy back shares to prop up our stock price. We will do so only if we believe that such a use of our cash is in the best interests of the company. After all, the impact of share repurchases on a company's future return on equity is limited.
Shareholder - Designated Contributions Program
About 97.3% of the outstanding shares eligible to participate in our 1999 Shareholder - Designated Contributions Program did so. Total contributions were approximately $17.2 million. For details about the program, see pages 70 - 71. (Not included in this letter.)
Since the program's inception 20 years ago, Berkshire has made contributions totaling $164 million pursuant to the instructions of our shareholders. In addition, Berkshire's subsidiaries make contributions that were established long before we acquired them. (Excluding personal - giving programs of previous owners.) In total, our affiliated companies made contributions of $13.8 million in 1999, including $2.5 million in equivalent goods.
Since the program's inception 20 years ago, Berkshire has made contributions totaling $164 million pursuant to the instructions of our shareholders. In addition, Berkshire's subsidiaries make contributions that were established long before we acquired them. (Excluding personal - giving programs of previous owners.) In total, our affiliated companies made contributions of $13.8 million in 1999, including $2.5 million in equivalent goods.
Charlie and I believe that Berkshire's shareholders are well - served by our Shareholder - Designated Contributions Program. It allows you to direct a portion of the company's profits to the charities of your choice, and it gives you a chance to make a real difference in the lives of others.
We also believe that our shareholders are well - served by the way we run the company. We focus on long - term value creation, not short - term earnings or stock - price movements. We treat all shareholders equally, regardless of their size or status. And we are committed to providing you with all the information you need to evaluate the company's performance and prospects.
Thank you for your continued support. We look forward to serving you in the years to come.
Warren E. Buffett
Chairman of the Board
February 28, 2000
