Charlie Munger, Berkshire Hathaway vice chair, has died

Each letter typically begins with the change in book value over the course of the year. Berkshire has averaged a book value growth rate of 19.7% compounded annually from $19 per share in 1965 to $114,214 per share in 2012. Following these results is usually a discussion of how the change in intrinsic value is the metric that counts, but that book value is a conservative substitute that approximately tracks intrinsic value.

• Charles Thomas Munger was born on Jan. 1, 1924, in Omaha, the first of three children of Alfred Munger and the former Florence Russell, who was known as Toody.
• One company that could be on the short list has previously earned high praise from Buffett and Berkshire Hathaway Vice Chairman Charlie Munger.
• Munger’s fortune was small compared to Buffett’s, but he was still a billionaire twice over.
• You see only the letters from 1977 and onward are available at berkshirehathaway.com.
• Effectively, some retained earnings are worth more than 100 cents on the dollar, while some are worth considerably less.

By viewing market prices as quotes from a manic-depressive business partner, the investor is now put in a position of power over market prices rather than enslaved by them (a far-too-common occurrence). Following this discussion, Buffett spends the majority of each letter berkshire hathaway letters to shareholders detailing the operations of Berkshire’s subsidiary companies as well as the results of its major non-controlling investments. Occasionally, Buffett will choose to include special topics in his letters on whatever topic he feels that his shareholders should be aware.

Munger’s fortune was small compared to Buffett’s, but he was still a billionaire twice over. He was a major benefactor of the University of Michigan, giving more than $23 million over the course of his life, as well as 10 Class A shares of Berkshire Hathaway, worth more than $4 million more. In his mind, the best directors are those who have their interests best aligned with shareholders. In fact, being a major, long-term shareholder is one of the primary qualities that Buffett takes into account when searching for directors. In this case, the corporation has a controlling owner not involved in management.

Lifestyle

When he presents financial statements on a pro forma basis, he does so to reveal truth to his shareholders, rather than display the statements as if nothing bad had happened to the company. I’ve been investing most of my life and have managed money professionally for 9 years. Buffett’s philosophies have had a huge impact on how I run my businesses and live my life.

• Through Warren Buffett’s annual letters to his shareholders, his readers follow Berkshire’s journey from struggling textile mill to diversified juggernaut with a great amount of detail.
• Together with increased imports, this led to greater competition and decreased prices.
• The purpose of the durable competitive advantage is not to boost growth or expected future earnings, but rather to ensure that a company’s current level of profitability can be maintained in the future through adverse events that may occur along the way.
• It is surreal (and almost humorous) to look at the astounding amount of change that has taken place during his forty-eight years at the helm.
• Over these same 63 years, the average market return was just under 10%, including dividends.
• When it went public in 1971, the company prioritized achieving a combined ratio of 96, meaning it would earn $0.04 of profit for every dollar of premium earned.

Keep abreast of significant corporate, financial and political developments around the world. Stay informed and spot emerging risks and opportunities with independent global reporting, expert commentary and analysis you can trust. “Charlie has always emphasized, ‘Let’s buy truly wonderful businesses,’” Buffett told the Omaha World-Herald in 1999. Then he went on to earn a law degree from Harvard University in 1948 even though he hadn’t finished an undergraduate degree. He co-founded a law firm in Los Angeles that still bears his name, but decided before long that he preferred investing.

On Dividend Policy

I’m a value investor but, I use swing trading techniques to manage my position sizes and risk. It’s possible that Berkshire Hathaway sees Progressive’s ongoing outperformance and decided to add shares to its $354 billion portfolio. Progressive’s long history of collecting driver data is one part of its stellar underwriting performance, and maybe Buffett and his team caved and wanted a piece of the action. When it comes to pricing models, more data helps Progressive make more informed decisions, manage its risk well, and keep loss ratios low. In 2019, Jain said that GEICO is working on its telematics program and hoped to catch up to Progressive over time.

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A billionaire himself, he was the witty vice chairman of Mr. Buffett’s powerhouse investment firm Berkshire Hathaway. Jain appreciates Progressive’s underwriting performance and has credited its outperformance to several factors, including its use of telematics. Telematics uses driver data like mileage driven, speed, and braking time and personalizes rates for drivers based on this information. When it went public in 1971, the company prioritized achieving a combined ratio of 96, meaning it would earn $0.04 of profit for every dollar of premium earned. This philosophy has been core to Progressive’s disciplined underwriting and is a big reason for the insurer’s massive success.

And getting a 700 page lesson from the most successful investor in the world is a pretty good value proposition for anyone who is thinking about money management, or even just securities and business analysis. However, investors can’t know for sure if Berkshire is buying Progressive until the company posts its fourth-quarter filing (assuming the purchase is not still marked as confidential), which won’t come out until mid-February. Regardless, Progressive has been an excellent long-term performer for investors, and even if Berkshire isn’t buying it, it can make an excellent addition to your portfolio today. Buffett and his team at Berkshire occasionally request confidentiality when they accumulate a stock position and don’t want to tip off the markets until they finish buying. The company last requested confidentiality when building stakes in Chevron and Verizon Communications in 2020.

It never happens instantly. The business game is longer than you know.

Buffett noted that working capital on a per share basis had grown to $22.76 from $14.41 six years prior. Whether or not you buy The Berkshire Hathaway Annual Letters to Shareholders, you can always access the most recent ones on BerkshireHathaway.com But this book is the only way you can get the complete Berkshire story, from start to presence. The downside is that it takes about 700 pages to summarize and analyze all of Berkshires behavior throughout that time frame.

“Charlie has taught me a lot about valuing businesses and about human nature,” Buffett said in 2008. OMAHA, Neb. (AP) — Charlie Munger, who helped Warren Buffett build Berkshire Hathaway into an investment powerhouse, has died at a California hospital. It was, in fact, Munger’s investing blueprint that has helped Berkshire Hathaway. Buffett was already an investor at that point, but Munger’s focus was his own legal career in California. By the early 1960s, however, Buffett had convinced him to give up being a lawyer and focus on finance.

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However, a sizeable chunk of that amount is in a mystery stock on which Berkshire has requested confidential treatment. Buffett credited Munger with broadening his approach to investing beyond mentor Benjamin Graham’s insistence on buying stocks at a fraction of the value of their underlying assets. With Munger’s help, he began assembling the insurance, railroad, manufacturing and consumer goods conglomerate that posted nearly $24 billion of operating profit in 2019. Munger was vice chairman of Berkshire and one of its biggest shareholders, with stock valued at about $2.1 billion as of March 2, 2022. A lawyer by training, Munger (rhymes with “hunger”) helped Buffett, who was seven years his junior, craft a philosophy of investing in companies for the long term.

On Efficient Markets

Mr. Munger counseled Mr. Buffett that if he wanted to build a large, sustainable company that would outperform other investors, he should buy solid brand-name companies. “He was the architect and I was the general contractor,” Mr. Buffett said of their relationship. Although overshadowed by Mr. Buffett, who relished the spotlight, Mr. Munger, a billionaire in his own right — Forbes listed his fortune as $2.6 billion this year — had far more influence at Berkshire than his title of vice chairman suggested.