BUFFETT PARTNERSHIP. LTD.610 KIEWIT PLAZAOMAHA, NEBRASKA 68131TELEPHONE 042-4110

December 26, 1969

To My Partners:

Our plans regarding the initial cash distribution have been finalized and we expect to mail to you on January 3rd a check dated January 5th, 1970 for approximately 64% of your January 1st. 1969 capital, less any distributions made to you (including monthly payments) since January 1st. 1969. If you have taken no monthly payments during 1969, there will be a small interest adjustment in your favor; if you have had loans from BPL, there will be an interest charge. I couldn't be more delighted about the action of the bond and stock markets from the standpoint of the timing of our liquidation. I believe practically all partners - whether they would have invested in bonds or stocks - will be far better off receiving the cash now than if we had liquidated at the end of last year. Those seeking income will receive about 40% more after tax on the same principal investment than they would have achieved only a year ago at what then seemed like generous yields.

Our tax picture is virtually complete and it appears that you will have ordinary income (dividends plus interest income less ordinary loss) for Federal tax purposes of about 3 –3/4% of your January 1st. 1969 capital (item 1 in enclosed letter), no significant long-term capital gain or loss, and a short-term capital loss of about 8-1/2% of your January 1st, 1969 unrealized appreciation (item 3). These estimates are just rough approximations - definitive figures will reach you in early February.

The sale of our 371,400 shares of Blue Chip Stamps was not completed in 1969. When the stock went into registration, it was selling at about \$24 per share. The underwriters indicated a range where they expected to offer our shares (along with others) with heavy weight placed on a comparison with Sperry & Hutchinson. Shortly before the stock was to be offered, with the Dow-Jones Industrials much lower but S & H virtually unchanged, they indicated a price below their former range. We reluctantly agreed and felt we had a deal but, on the next business day, they stated that our agreed price was not feasible. We then withdrew and a much smaller offering was done.

I intend to hold our block of Blue Chip Stamps in BPL for a more advantageous disposal or eventual distribution to our partners. The odds are decent that we will do better in this manner -even if it takes a year or two - than if we had participated in a very large sale into a somewhat distressed market. Unless there is a material change in the market in the next few days, I plan to value our Blue Chip holdings at yearend at the price received by selling shareholders on the public offering after underwriting discount and expenses.

Various questions have been asked pursuant to the last letter:

1. If we are not getting a good return on the textile business of Berkshire Hathaway Inc., why do we continue to operate it?

Pretty much for the reasons outlined in my letter. I don't want to liquidate a business employing 1100 people when the Management has worked hard to improve their relative industry position, with reasonable results, and as long as the business does not require substantial additional capital investment. I have no desire to trade severe human dislocations for a few percentage points additional return per annum. Obviously, if we faced material compulsory additional investment or sustained operating losses, the decision might have to be different, but I don't anticipate such alternatives.

2. How large is our investment in Sun Newspapers, etc., and do we intend to expand in the newspaper, radio and TV business?

The combined investment in Sun, Blacker Printing and Gateway Underwriters is a little over \$1 per share of Berkshire Hathaway, and earns something less than 10 cent per share. We have no particular plans to expand in the communication field.

3. What does Gateway Underwriters do?

Gateway Underwriters serves primarily as a General Agent for National Indemnity Company in the State of Missouri.

4. Are there good "second men" to take over from the men running the three excellent operating businesses?

In any company where the founder and chief driving force behind the enterprise is still active, it is very difficult to evaluate "second men". The only real way to see how someone is going to do when running a company is to let him run it. Some of our businesses have certainly been more "one-man shows" than the typical corporation. Subject to the foregoing caveat, I think that we do have some good “second men” coming along.

5. In what area do you plan to invest the cash in Diversified Retailing Company and do you intend to stick primarily to the retailing field?

While we prefer the retailing field, we do not preclude anything that will make sense. We have been looking without success for two years for an intelligent acquisition for DRC, so we are not about to rule out any industry, if the business looks good. Pending such time as we find one or more operating businesses to buy, the money will be invested in marketable securities.

6. Why didn't DRC payout the money it received on the sale of Hochschild, Kohn & Company?

In addition to the fact that such a payment would constitute a dividend, taxable in significant part as ordinary income, there are restrictions in the bond indenture which prevent such a pay-out without turning over control of the company to the bondholders.

7. Will distribution of the DRC stock cause the DRC debentures to be called?

After distribution of the stock, I will be the largest stockholder in DRC and, hence, the call provision will not apply.

8. How would we know if the DRC debentures were called?

All stockholders and debenture holders would find out directly from the company through regular or special reports that the company issues to its security holders. There is no intention at all of calling the debentures.

9. Why did you not register our Berkshire Hathaway and Diversified Retailing shares so that the stock, when received by the partners, would be freely marketable?

We considered this possibility but rejected it for both practical and legal considerations. I will just discuss the practicalities, since they would independently dictate the decision we made.

There is presently no existing market for Diversified Retailing, and our holdings of Berkshire Hathaway are probably four or five times the present floating supply of this stock. An attempt to quickly buy or sell a few thousand shares can easily move BH stock several points or more. We own 691,441 shares. Were we to distribute these stocks to you via a registration without an underwriting, and with the possibility that a substantial portion would be offered for sale by many sellers operating individually but virtually simultaneously, there is a real likelihood, particularly in a stock market environment such as we have seen recently, that the market for these two stocks would be little short of chaotic. It has not seemed to me that this was the kind of situation with which I should leave you, both from the standpoint of the price level which might prevail, as well as for the reason that different partners might well have to liquidate at widely varying price levels. The more sophisticated partners might have an important edge on the less sophisticated ones, and I believe many partner’s might have no chance to realize the prices I anticipate using for yearend valuation. This would rightly seem most unfair to you, since I would have received some allocation of 1969 BPL profits based upon these yearend valuations. If the markets were to become distressed, I would probably come in for criticism, whether I personally bought at lower prices or, perhaps more so, if I refrained from buying.

Were we to attempt to sponsor an underwriting in connection with a registration for those partners who might wish to sell, there would be, in my opinion, the likelihood that the result would still be far less than satisfactory. We have just been around this track with our holdings of Blue Chip Stamps, where we watched the price of our stock go from 24 to 16-1/2 after announcement of the underwriting, of which we originally were to be a part. I did not want this sort of result for the partners with respect to their holdings of Berkshire and Diversified.

It is my belief that, by confining sales to private placements, those partners who wish to sell will realize more for their stock (with the sophisticated partners having no marketing edge on the less knowledgeable) than would be achieved, through an underwriting at this time. Also, the stock should be more likely to find its way into the hands of long-term investment-minded holders, which should mean less volatile markets in the future. We have had several phone calls from persons indicating that they wish to make private sales - we anticipate there will be no difficulty in effectuating such sales at prices related to our yearend valuations.

Those partners who would prefer an underwritten distribution always have the option of having a registration of their own. I will be glad to facilitate this by placing all partners in touch with each other who indicate to me their desire to sell via a registered underwriting, at their expense and through an underwriter of their choice. In this way the expense of an underwriting, which can be considerable, would be borne by the selling partners and not by the partners as a whole.

I have also had partners ask if they could participate in a registered offering in the future if I should sell shares in this manner. I think it is almost certain I will never sell stock via public offering but, should it ever happen, I will be glad to let any of you participate in any underwritten offering in which I might be involved. In all probability, if it ever did happen, your stock would already be “free”, although mine would still be restricted. I cannot make the same commitment to you regarding any private sale I might make in the future, just as I can't expect you to restrict any sale options you might have in order to include me.

10. Will you let us know if you sell your holdings of BH or DRC?

You would undoubtedly know from corporate communications, reports in the press and reports to Government agencies if I disposed of my holdings. I have no intention at all of doing so in the foreseeable future - I merely make no commitment not to. However, former BPL partners will have no priority over other BH or DRC security holders in obtaining information relating to their corporate activities.

11. Should I hold my BH or DRC stock?

I can’t give you the answer on this one. All I can say is that I’m going to do so and I plan to buy more. I am very happy to have a material portion of my net worth invested in these companies on a long term basis. Obviously, I think they will be worth significantly more money five or ten years hence. Compared to most stocks, I think there is a low risk of loss. I hope their price patterns follow a rather moderate range related to business results rather than behaving in a volatile manner related to speculative enthusiasm or depression. Obviously, I cannot control the latter phenomena, but there is no intent to "promote" the stocks a la much of the distasteful general financial market activity of recent years.

12. Can I give either BH or DRC shares to my wife or children?

We are advised by counsel that this is permissible but, of course the same restrictions on transfer that applied to you would apply to the donee of the gift.

13. Why are you waiting until March to give us your suggestions regarding bonds?

January and February promise to be very busy months. Many partners may want to talk to me about their questions and objectives regarding bonds. I want to have all important BPL matters out of the way before I talk with any of them on an individual basis. I make no forecasts regarding the bond market (or stock market) - it may be higher or lower in March than now. After my October letter, several partners became very eager to buy bonds immediately - to date they are much better off by waiting. The excellent quality taxfree bonds I talked about at that time with yields of 6 -1/2% can now be bought to yield about 7%.

Cordially,

Warren E. Buffett

WEB/glk

BUFFETT PARTNERSHIP. LTD.

610 KIEWIT PLAZA
OMAHA, NEBRASKA 68131
TELEPHONE 042-4110

1969年12月26日

致各位合伙人：

关于首次现金分配的计划已经敲定，我们预计将于1月3日向各位寄出一张日期为1970年1月5日的支票，金额约为你1969年1月1日资本的64%，扣除自1969年1月1日以来已分配给你的款项（包括每月付款）。如果你在1969年未提取每月付款，将有一笔小额的利息调整对你有益；如果你曾向BPL借款，将收取利息。从我们清算时机的角度来看，我对债券和股票市场的表现感到无比欣喜。我相信几乎所有合伙人——无论他们本来会投资债券还是股票——现在拿到现金，都比去年年底清算要有利得多。那些寻求收入的合伙人，在相同的本金投资下，税后收入将比一年前（当时看似回报丰厚）高出约40%。

我们的税务情况几乎已确定。用于联邦税目的，你的普通收入（股息加利息收入减去普通亏损）约为你1969年1月1日资本（随函所附信件第1项）的约3¾%；没有重要的长期资本利得或损失；短期资本损失约为你1969年1月1日未实现增值（第3项）的约8½%。这些估算只是粗略近似值——确切数字将在2月初送达。

我们持有的371,400股蓝筹印花公司（Blue Chip Stamps）股票在1969年未能完成出售。该股票进入注册阶段时，售价约为每股24美元。承销商给出了一个预计发行价范围（包括其他股票），并重点参考了Sperry & Hutchinson（S&H）的股价。就在股票即将发行前，道指大幅下跌，而S&H几乎未变，他们给出的价格低于之前的范围。我们勉强同意，以为交易已达成，但下一个交易日，他们表示我们商定的价格不可行。于是我们退出，随后完成了一次规模小得多的发行。

我计划将BPL持有的这批蓝筹印花股票保留，以待更有利的处置时机，或最终分配给各位合伙人。这样做——即使花上一两年——比我们参与一笔大规模抛售到承压市场，成功的几率更大。除非未来几天市场发生重大变化，我打算按公开发行中卖出股东在扣除承销折扣和费用后获得的价格，对年底持有的蓝筹印花股票进行估值。

各位针对上一封信提出了各种问题：

1. 如果我们从伯克希尔·哈撒韦公司（Berkshire Hathaway Inc.）的纺织业务中未能获得良好回报，为什么还要继续运营它？

基本如我信中所概述的原因。我不愿清盘一家雇佣1100人的企业，而管理层一直在努力改善其相对行业地位，并取得了合理成果，同时该业务不需要大量额外资本投入。我不想为了每年多赚几个百分点的回报，而给人们造成严重的生计困难。显然，如果面临重大的强制性额外投资或持续的经营亏损，决策可能会不同，但我预计不会出现这种情况。

2. 我们在《太阳报》（Sun Newspapers）等方面的投资规模有多大？我们是否打算在报纸、广播和电视业务上扩张？

在《太阳报》、Blacker Printing和Gateway Underwriters的合计投资略高于每股1美元（伯克希尔·哈撒韦股票），收益略低于每股10美分。我们没有在传媒领域扩张的具体计划。

3. Gateway Underwriters是做什么的？

Gateway Underwriters主要担任National Indemnity Company在密苏里州的总代理。

4. 经营三家优秀运营企业的管理层身后，有好的"接班人"吗？

在任何一家公司，如果创始人兼核心推动力仍然活跃，就很难评估"接班人"。检验一个人是否能经营公司的唯一真正办法，就是让他去经营。我们的一些业务肯定比典型公司更依赖"个人秀"。鉴于上述提醒，我认为我们确实有一些不错的"接班人"正在成长。

5. 你打算将多元化零售公司（Diversified Retailing Company）的现金投资于哪个领域？是否主要坚持零售领域？

虽然我们偏好零售领域，但我们不排除任何有意义的投资。我们已为DRC寻找合理的收购目标两年未果，因此如果某业务看起来不错，我们不会排除任何行业。在找到一家或多家运营企业收购之前，资金将投资于有价证券。

6. 为什么DRC没有将出售Hochschild, Kohn & Company所得款项分配出去？

除了这样的分配将构成股息，大部分需按普通收入纳税外，债券契约中有条款限制，除非将公司控制权交给债券持有人，否则不能进行此类分配。

7. DRC股票的分配会导致DRC债券被赎回吗？

股票分配后，我将成为DRC的最大股东，因此赎回条款不适用。

8. 我们如何知道DRC债券是否被赎回？

所有股东和债券持有人都将直接从公司发布的定期或特别报告（公司向其证券持有人发布）中得知。目前完全没有赎回债券的意图。

9. 你为什么没有将我们的伯克希尔·哈撒韦和多元化零售公司股票进行注册，以便合伙人收到股票后可以自由交易？

我们考虑过这种可能性，但出于实际和法律考虑拒绝了。我将只讨论实际原因，因为它们本身就决定了我们的决定。

目前多元化零售公司没有现有市场，而我们持有的伯克希尔·哈撒韦股票可能是现有流通量的四到五倍。试图快速买卖几千股很容易使BH股票波动几个点甚至更多。我们拥有691,441股。如果通过注册（不附带承销）将这些股票分配给你们，并且大量股票可能由许多卖家同时但独立出售，那么尤其是在近期这样的股市环境下，这两只股票的市场很可能陷入混乱。在我看来，我不应该把你们置于这种境地，无论是从可能出现的价格水平来看，还是因为不同合伙人可能不得不在差异很大的价格水平上变现。较为精明的合伙人可能比不太精明的合伙人有重要优势，而且我相信许多合伙人可能根本没有机会实现我计划用于年末估值的价格。这似乎对你们极为不公平，因为我将根据这些年末估值获得1969年BPL利润的部分分配。如果市场陷入困境，无论是我自己以较低价格买入，还是（可能更糟）我选择不买入，都可能招致批评。

如果我们试图为希望出售的合伙人发起一次与注册相关的承销，依我看，结果仍可能远不能令人满意。我们刚刚在蓝筹印花股票的持有中经历了这一过程，在宣布承销（我们原本是其中一部分）后，我们股票的价格从24美元跌至16.50美元。我不希望合伙人在伯克希尔和多元化零售的持股上出现这种结果。

我相信，通过将销售限制在私募交易中，那些希望出售的合伙人将为他们的股票获得比当前通过承销更高的价格（且精明的合伙人在市场上没有优势）。此外，股票更有可能落入长期投资导向的持有者手中，这意味着未来市场波动性降低。我们接到几通电话，表示希望进行私募出售——我们预计以接近年末估值的价格完成此类出售不会有困难。

那些更倾向于承销分配的合伙人，始终可以选择自行注册。我将乐于促成此事，将所有向我表示希望通过注册承销方式出售的合伙人联系在一起，费用由他们承担，并通过他们选择的承销商进行。这样，承销费用（可能相当可观）将由出售的合伙人承担，而非全体合伙人。

还有合伙人问我，如果我未来通过注册方式出售股票，他们是否可以参与。我几乎可以确定我永远不会通过公开发行出售股票，但如果发生这种情况，我将乐于让你们中任何人参与我可能涉及的任何承销发行。很可能即使发生，你们的股票已经"自由"了，而我的仍然受限。但我无法对你们做出同样的承诺，关于我未来可能进行的任何私募出售，正如我不能期望你们限制自己可能拥有的任何出售选择权以包括我一样。

10. 如果你出售你在BH或DRC的持股，你会通知我们吗？

如果我处置了我的持股，你们无疑会从公司通讯、新闻报道和向政府机构提交的报告中得知。我在可预见的将来完全没有这样做的意图——我只是不做不卖的承诺。但是，前BPL合伙人在获取与其公司活动相关的信息方面，将不享有优先于其他BH或DRC证券持有人的权利。

11. 我应该持有我的BH或DRC股票吗？

这个问题我无法给你答案。我只能说我会持有，并且计划买入更多。我非常高兴将我净资产的重要部分长期投资于这些公司。显然，我认为它们五到十年后的价值会高得多。与大多数股票相比，我认为亏损风险较低。我希望它们的价格走势与商业结果保持适度相关范围，而不是随投机热情或悲观情绪剧烈波动。显然，我无法控制后者，但无意像近年来许多令人不快的普遍金融市场活动那样"炒作"这些股票。

12. 我可以将BH或DRC股票赠予我的妻子或孩子吗？

我们咨询了法律顾问，这是允许的，但当然，适用于你的转让限制同样适用于受赠人。

13. 你为什么等到三月才给我们关于债券的建议？

一月和二月预计会很忙。许多合伙人可能想和我讨论他们关于债券的问题和目标。我希望在单独与任何合伙人交谈之前，先把所有重要的BPL事务处理完毕。我不对债券市场（或股票市场）做出预测——三月可能比现在更高或更低。在我十月份的信之后，几位合伙人非常急于立即购买债券——到目前为止，等待对他们更有利。我当时谈到的优质免税债券收益率6.5%，现在可以买到约7%的收益率。

此致，

Warren E. Buffett

WEB/glk