BUFFETT PARTNERSHIP, LTD. 810 KIEWIT PLAZA OMAHA 31, NEBRASKA
November 6, 1963
To My Partners for 1964:
Enclosed is the usual assortment of Thanksgiving reading material:
(1) Two copies of an amended partnership agreement for 1964. The one with the General Provisions attached is to be kept by you (exactly the same as last year) and the other single page agreement is to be signed, notarized and returned to us. Partners in Omaha may come in and obtain the notarization at our office.
(2) A copy of that priceless treatise, "The Ground Rules,” I would like every partner to read this at least once a year, and it is going to be a regular item in my November package. Don't sign the partnership agreement unless you fully understand the concepts set forth and are in accord with them -- mentally and viscerally.
(3) Two copies of the commitment letter for 1964, one to be kept by you and one returned to us. You may amend this commitment letter right up to midnight, December 31st, so get it back to us early, and if it needs to be changed, just let us know by letter or phone.
Any withdrawals will be paid immediately after January 1st. You may withdraw any amount you desire from \$100 up to your entire equity. Similarly, additions can be for any amount and should reach us by January 10th. In the event you are disposing of anything, this will give you a chance to have the transaction in 1964 if that appears to be advantageous for tax reasons. If additions reach us in November, they take on the status of advance payments and draw interest at the rate of 6% until yearend. This is not true of additions reaching us in December.
Complete tax information for your 1963 return will be in your hands by January 25th. If you should need an estimate of your tax position before that time, let me know and I will give you a rough idea. We will also send out a short letter on taxes in late December.
At the end of October, the overall result from the Dow for 1963 was plus 18.8%. We have had a good year in all three categories, generals, work-outs and controls. A satisfactory sale on a going concern basis of Dempster Mill Manufacturing operating assets was made about a month ago. I will give the full treatment to the Dempster story in the annual letter, perhaps climaxed by some lyrical burst such as “Ode to Harry Bottle.” While we always had a built-in profit in Dempster because of our bargain purchase price, Harry accounted for several extra servings of dessert by his extraordinary job. Harry, incidentally, has made an advance payment toward becoming a limited partner in 1964-- we consider this the beginning, not the end.
However, 1963 has not been all Dempster. While a great deal can happen the last two months and therefore interim results should not be taken too seriously, at the end of October the overall gain for the partnership was about 32%. Based on the allocation embodied in our agreement, this works out to plus 25 1/2% for the limited partners before monthly payments to those who take them. Of our approximate \$3 million gain, something over \$2 million came from marketable securities and a little less than \$1 million from Dempster operating assets. The combined gain from our single best general and best work-out situation approximated the gain on the Dempster operating assets.
You should be aware that if our final results relative to the Dow for 1963 are as favorable as on October 31st, I will regard it as an abnormal year. I do not consider a 13.2 percentage point margin to be in the cards on a long term basis. A considerably more moderate annual edge over the Dow will be quite satisfactory.
Cordially
Warren E. Buffett
P/S. Last year we announced there would be no prizes for the last ones to get the material back to us. This continues to be our policy. Save us some last minute scurrying by getting your agreement and commitment letter back pronto. Give Bill or me a call if we can be of any help. Thanks!
巴菲特合伙企业有限公司 内布拉斯加州奥马哈31，基威特广场810号
1963年11月6日
致1964年的各位合伙人：
随信附上感恩节的常规阅读材料：
(1) 两份修订后的1964年合伙协议。附有总则的那份由您留存（与去年完全相同），另一份单页协议需要您签署、公证后寄回给我们。奥马哈的合伙人可以来我们办公室办理公证。
(2) 一份宝贵的指南《基本原则》。我希望每位合伙人每年至少阅读一次，这将是我每年十一月文件包中的常规内容。在您完全理解并认同其中所述概念之前——无论是理智上还是情感上——请不要签署合伙协议。
(3) 两份1964年承诺函，一份您留存，一份寄回给我们。您可以在12月31日午夜之前修改这份承诺函，所以请尽早寄回，如果需要更改，只需来信或来电告知。
任何提款将在1月1日之后立即支付。您可以提取从100美元到全部权益的任何金额。同样，追加资金不限金额，需在1月10日前送达。如果您正在处理某些资产，这将使您有机会让交易发生在1964年，如果这样对税务有利的话。如果追加资金在11月送达，将作为预付款处理，并按年利率6%计息至年底。12月送达的追加资金则不适用。
您1963年报税所需的完整税务信息将在1月25日前送达。如果您在此之前需要估算税务状况，请告知，我会给您一个大致数字。我们还会在12月下旬寄出一封关于税务的短函。
截至10月底，1963年道指的整体回报为上涨18.8%。我们在三类投资——低估类、套利类和控制类——上都取得了不错的成绩。大约一个月前，我们以持续经营为基础成功出售了Dempster Mill Manufacturing的经营资产。我将在年度信中全面讲述Dempster的故事，可能还会以某种抒情性的爆发作为高潮，比如“颂歌献予Harry Bottle”。虽然由于我们以低价买入Dempster，原本就内含利润，但Harry凭借其出色工作，又为我们额外赚到了几份甜点。顺便一提，Harry已经预付款项，成为1964年的有限合伙人——我们认为这只是开始，而非结束。
不过，1963年并非只有Dempster。尽管最后两个月可能发生很多事情，因此不应过分看重中期结果，但截至10月底，合伙企业的整体收益约为32%。根据我们协议中的分配方式，这意味着有限合伙人的收益为+25.5%（在向选择按月领取款项的合伙人支付前）。在我们约300万美元的收益中，超过200万美元来自有价证券，略低于100万美元来自Dempster的经营资产。我们表现最好的单一低估类投资和单一套利类投资的总收益，约等于Dempster经营资产的收益。
您应该知道，如果1963年我们相对于道指的最终结果与10月31日一样有利，我将视其为非正常年份。我认为长期来看，13.2个百分点的优势并非注定之事。每年能够适度跑赢道指，我就非常满意了。
此致
沃伦·E·巴菲特
附注：去年我们宣布，最后交回材料的人没有奖品。这一政策依然有效。请尽快交回您的协议和承诺函，省得我们最后一刻手忙脚乱。如需帮助，请给Bill或我打电话。谢谢！