Berkshire's Performance vs. the S&P 500

Year	Annual Percentage Change
	in Per-Share Book Value of Berkshire	in Per-Share Market Value of Berkshire	in S&P 500 with Dividends Included
1965	23.8	49.5	10.0
1966	20.3	(3.4)	(11.7)
1967	11.0	13.3	30.9
1968	19.0	77.8	11.0
1969	16.2	19.4	(8.4)
1970	12.0	(4.6)	3.9
1971	16.4	80.5	14.6
1972	21.7	8.1	18.9
1973	4.7	(2.5)	(14.8)
1974	5.5	(48.7)	(26.4)
1975	21.9	2.5	37.2
1976	59.3	129.3	23.6
1977	31.9	46.8	(7.4)
1978	24.0	14.5	6.4
1979	35.7	102.5	18.2
1980	19.3	32.8	32.3
1981	31.4	31.8	(5.0)
1982	40.0	38.4	21.4
1983	32.3	69.0	22.4
1984	13.6	(2.7)	6.1
1985	48.2	93.7	31.6
1986	26.1	14.2	18.6
1987	19.5	4.6	5.1
1988	20.1	59.3	16.6
1989	44.4	84.6	31.7
1990	7.4	(23.1)	(3.1)
1991	39.6	35.6	30.5
1992	20.3	29.8	7.6
1993	14.3	38.9	10.1
1994	13.9	25.0	1.3
1995	43.1	57.4	37.6
1996	31.8	6.2	23.0
1997	34.1	34.9	33.4
1998	48.3	52.2	28.6
1999	0.5	(19.9)	21.0
2000	6.5	26.6	(9.1)
2001	(6.2)	6.5	(11.9)
2002	10.0	(3.8)	(22.1)
2003	21.0	15.8	28.7
2004	10.5	4.3	10.9
2005	6.4	0.8	4.9
2006	18.4	24.1	15.8
2007	11.0	28.7	5.5
2008	(9.6)	(31.8)	(37.0)
2009	19.8	2.7	26.5
2010	13.0	21.4	15.1
2011	4.6	(4.7)	2.1
2012	14.4	16.8	16.0
2013	18.2	32.7	32.4
2014	8.3	27.0	13.7
Compounded Annual Gain – 1965-2014	19.4%	21.6%	9.9%
Overall Gain – 1964-2014	751,113%	1,826,163%	11,196%

Notes: Data are for calendar years with these exceptions: 1965 and 1966, year ended 9/30; 1967, 15 months ended 12/31. Starting in 1979, accounting rules required insurance companies to value the equity securities they hold at market rather than at the lower of cost or market, which was previously the requirement. In this table, Berkshire's results through 1978 have been restated to conform to the changed rules. In all other respects, the results are calculated using the numbers originally reported. The S&P 500 numbers are pre-tax whereas the Berkshire numbers are after-tax. If a corporation such as Berkshire were simply to have owned the S&P 500 and accrued the appropriate taxes, its results would have lagged the S&P 500 in years when that index showed a positive return, but would have exceeded the S&P 500 in years when the index showed a negative return. Over the years, the tax costs would have caused the aggregate lag to be substantial.

A note to readers: Fifty years ago, today's management took charge at Berkshire. For this Golden Anniversary, Warren Buffett and Charlie Munger each wrote his views of what has happened at Berkshire during the past 50 years and what each expects during the next 50. Neither changed a word of his commentary after reading what the other had written. Warren's thoughts begin on page 24 and Charlie's on page 39. Shareholders, particularly new ones, may find it useful to read those letters before reading the report on 2014, which begins below.

BERKSHIRE HATHAWAY INC.

To the Shareholders of Berkshire Hathaway Inc.:

Berkshire’s gain in net worth during 2014 was \$18.3 billion, which increased the per-share book value of both our Class A and Class B stock by 8.3%. Over the last 50 years (that is, since present management took over), per-share book value has grown from \$19 to \$146,186, a rate of 19.4% compounded annually.*

During our tenure, we have consistently compared the yearly performance of the S&P 500 to the change in Berkshire's per-share book value. We've done that because book value has been a crude, but useful, tracking device for the number that really counts: intrinsic business value.

In our early decades, the relationship between book value and intrinsic value was much closer than it is now. That was true because Berkshire's assets were then largely securities whose values were continuously restated to reflect their current market prices. In Wall Street parlance, most of the assets involved in the calculation of book value were “marked to market.”

Today, our emphasis has shifted in a major way to owning and operating large businesses. Many of these are worth far more than their cost-based carrying value. But that amount is never revalued upward no matter how much the value of these companies has increased. Consequently, the gap between Berkshire's intrinsic value and its book value has materially widened.

With that in mind, we have added a new set of data – the historical record of Berkshire’s stock price – to the performance table on the facing page. Market prices, let me stress, have their limitations in the short term. Monthly or yearly movements of stocks are often erratic and not indicative of changes in intrinsic value. Over time, however, stock prices and intrinsic value almost invariably converge. Charlie Munger, Berkshire Vice Chairman and my partner, and I believe that has been true at Berkshire: In our view, the increase in Berkshire’s per-share intrinsic value over the past 50 years is roughly equal to the 1,826,163% gain in market price of the company’s shares.

The Year at Berkshire

It was a good year for Berkshire on all major fronts, except one. Here are the important developments:

- Our “Powerhouse Five” – a collection of Berkshire’s largest non-insurance businesses – had a record \$12.4 billion of pre-tax earnings in 2014, up \$1.6 billion from 2013.* The companies in this sainted group are Berkshire Hathaway Energy (formerly MidAmerican Energy), BNSF, IMC (I’ve called it Iscar in the past), Lubrizol and Marmon.

Of the five, only Berkshire Hathaway Energy, then earning \$393 million, was owned by us a decade ago. Subsequently we purchased another three of the five on an all-cash basis. In acquiring the fifth, BNSF, we paid about 70% of the cost in cash and, for the remainder, issued Berkshire shares that increased the number outstanding by 6.1%. In other words, the \$12 billion gain in annual earnings delivered Berkshire by the five companies over the ten-year span has been accompanied by only minor dilution. That satisfies our goal of not simply increasing earnings, but making sure we also increase per-share results.

If the U.S. economy continues to improve in 2015, we expect earnings of our Powerhouse Five to improve as well. The gain could reach \$1 billion, in part because of bolt-on acquisitions by the group that have already closed or are under contract.

- Our bad news from 2014 comes from our group of five as well and is unrelated to earnings. During the year, BNSF disappointed many of its customers. These shippers depend on us, and service failures can badly hurt their businesses.

BNSF is, by far, Berkshire's most important non-insurance subsidiary and, to improve its performance, we will spend \$6 billion on plant and equipment in 2015. That sum is nearly $50\%$ more than any other railroad has spent in a single year and is a truly extraordinary amount, whether compared to revenues, earnings or depreciation charges.

Though weather, which was particularly severe last year, will always cause railroads a variety of operating problems, our responsibility is to do whatever it takes to restore our service to industry-leading levels. That can't be done overnight: The extensive work required to increase system capacity sometimes disrupts operations while it is underway. Recently, however, our outsized expenditures are beginning to show results. During the last three months, BNSF's performance metrics have materially improved from last year's figures.

- Our many dozens of smaller non-insurance businesses earned \$5.1 billion last year, up from \$4.7 billion in 2013. Here, as with our Powerhouse Five, we expect further gains in 2015. Within this group, we have two companies that last year earned between \$400 million and \$600 million, six that earned between \$250 million and \$400 million, and seven that earned between \$100 million and \$250 million. This collection of businesses will increase in both number and earnings. Our ambitions have no finish line.

- Berkshire's huge and growing insurance operation again operated at an underwriting profit in 2014 – that makes 12 years in a row – and increased its float. During that 12-year stretch, our float – money that doesn't belong to us but that we can invest for Berkshire's benefit – has grown from \$41 billion to \$84 billion. Though neither that gain nor the size of our float is reflected in Berkshire's earnings, float generates significant investment income because of the assets it allows us to hold.

Meanwhile, our underwriting profit totaled \$24 billion during the twelve-year period, including \$2.7 billion earned in 2014. And all of this began with our 1967 purchase of National Indemnity for \$8.6 million.

- While Charlie and I search for new businesses to buy, our many subsidiaries are regularly making bolt-on acquisitions. Last year was particularly fruitful: We contracted for 31 bolt-ons, scheduled to cost \$7.8 billion in aggregate. The size of these transactions ranged from \$400,000 to \$2.9 billion. However, the largest acquisition, Duracell, will not close until the second half of this year. It will then be placed under Marmon's jurisdiction.

Charlie and I encourage bolt-ons, if they are sensibly-priced. (Most deals offered us aren't.) They deploy capital in activities that fit with our existing businesses and that will be managed by our corps of expert managers. This means no more work for us, yet more earnings, a combination we find particularly appealing. We will make many more of these bolt-on deals in future years.

- Two years ago my friend, Jorge Paulo Lemann, asked Berkshire to join his 3G Capital group in the acquisition of Heinz. My affirmative response was a no-brainer: I knew immediately that this partnership would work well from both a personal and financial standpoint. And it most definitely has.

I'm not embarrassed to admit that Heinz is run far better under Alex Behring, Chairman, and Bernardo Hees, CEO, than would be the case if I were in charge. They hold themselves to extraordinarily high performance standards and are never satisfied, even when their results far exceed those of competitors.

We expect to partner with 3G in more activities. Sometimes our participation will only involve a financing role, as was the case in the recent acquisition of Tim Hortons by Burger King. Our favored arrangement, however, will usually be to link up as a permanent equity partner (who, in some cases, contributes to the financing of the deal as well). Whatever the structure, we feel good when working with Jorge Paulo.

Berkshire also has fine partnerships with Mars and Leucadia, and we may form new ones with them or with other partners. Our participation in any joint activities, whether as a financing or equity partner, will be limited to friendly transactions.

- In October, we contracted to buy Van Tuyl Automotive, a group of 78 automobile dealerships that is exceptionally well-run. Larry Van Tuyl, the company's owner, and I met some years ago. He then decided that if he were ever to sell his company, its home should be Berkshire. Our purchase was recently completed, and we are now “car guys.”

Larry and his dad, Cecil, spent 62 years building the group, following a strategy that made owner-partners of all local managers. Creating this mutuality of interests proved over and over to be a winner. Van Tuyl is now the fifth-largest automotive group in the country, with per-dealership sales figures that are outstanding.

In recent years, Jeff Rachor has worked alongside Larry, a successful arrangement that will continue. There are about 17,000 dealerships in the country, and ownership transfers always require approval by the relevant auto manufacturer. Berkshire's job is to perform in a manner that will cause manufacturers to welcome further purchases by us. If we do this – and if we can buy dealerships at sensible prices – we will build a business that before long will be multiples the size of Van Tuyl's \$9 billion of sales.

With the acquisition of Van Tuyl, Berkshire now owns 9 $\frac{1}{2}$ companies that would be listed on the Fortune 500 were they independent (Heinz is the $\frac{1}{2}$ ). That leaves 490 $\frac{1}{2}$ fish in the sea. Our lines are out.

- Our subsidiaries spent a record \$15 billion on plant and equipment during 2014, well over twice their depreciation charges. About 90% of that money was spent in the United States. Though we will always invest abroad as well, the mother lode of opportunities runs through America. The treasures that have been uncovered up to now are dwarfed by those still untapped. Through dumb luck, Charlie and I were born in the United States, and we are forever grateful for the staggering advantages this accident of birth has given us.

- Berkshire's yearend employees – including those at Heinz – totaled a record 340,499, up 9,754 from last year. The increase, I am proud to say, included no gain at headquarters (where 25 people work). No sense going crazy.

- Berkshire increased its ownership interest last year in each of its “Big Four” investments – American Express, Coca-Cola, IBM and Wells Fargo. We purchased additional shares of IBM (increasing our ownership to 7.8% versus 6.3% at yearend 2013). Meanwhile, stock repurchases at Coca-Cola, American Express and Wells Fargo raised our percentage ownership of each. Our equity in Coca-Cola grew from 9.1% to 9.2%, our interest in American Express increased from 14.2% to 14.8% and our ownership of Wells Fargo grew from 9.2% to 9.4%. And, if you think tenths of a percent aren’t important, ponder this math: For the four companies in aggregate, each increase of one-tenth of a percent in our ownership raises Berkshire’s portion of their annual earnings by \$50 million.

These four investees possess excellent businesses and are run by managers who are both talented and shareholder-oriented. At Berkshire, we much prefer owning a non-controlling but substantial portion of a wonderful company to owning $100\%$ of a so-so business. It's better to have a partial interest in the Hope Diamond than to own all of a rhinestone.

If Berkshire’s yearend holdings are used as the marker, our portion of the “Big Four’s” 2014 earnings before discontinued operations amounted to \$4.7 billion (compared to \$3.3 billion only three years ago). In the earnings we report to you, however, we include only the dividends we receive – about \$1.6 billion last year. (Again, three years ago the dividends were \$862 million.) But make no mistake: The \$3.1 billion of these companies’ earnings we don’t report are every bit as valuable to us as the portion Berkshire records.

The earnings these investees retain are often used for repurchases of their own stock – a move that enhances Berkshire’s share of future earnings without requiring us to lay out a dime. Their retained earnings also fund business opportunities that usually turn out to be advantageous. All that leads us to expect that the per-share earnings of these four investees, in aggregate, will grow substantially over time (though 2015 will be a tough year for the group, in part because of the strong dollar). If the expected gains materialize, dividends to Berkshire will increase and, even more important, so will our unrealized capital gains. (For the package of four, our unrealized gains already totaled \$42 billion at yearend.)

Our flexibility in capital allocation – our willingness to invest large sums passively in non-controlled businesses – gives us a significant advantage over companies that limit themselves to acquisitions they can operate. Our appetite for either operating businesses or passive investments doubles our chances of finding sensible uses for Berkshire’s endless gusher of cash.

- I’ve mentioned in the past that my experience in business helps me as an investor and that my investment experience has made me a better businessman. Each pursuit teaches lessons that are applicable to the other. And some truths can only be fully learned through experience. (In Fred Schwed’s wonderful book, Where Are the Customers’ Yachts?, a Peter Arno cartoon depicts a puzzled Adam looking at an eager Eve, while a caption says, “There are certain things that cannot be adequately explained to a virgin either by words or pictures.” If you haven’t read Schwed’s book, buy a copy at our annual meeting. Its wisdom and humor are truly priceless.)

Among Arno’s “certain things,” I would include two separate skills, the evaluation of investments and the management of businesses. I therefore think it’s worthwhile for Todd Combs and Ted Weschler, our two investment managers, to each have oversight of at least one of our businesses. A sensible opportunity for them to do so opened up a few months ago when we agreed to purchase two companies that, though smaller than we would normally acquire, have excellent economic characteristics. Combined, the two earn \$100 million annually on about \$125 million of net tangible assets.

I've asked Todd and Ted to each take on one as Chairman, in which role they will function in the very limited way that I do with our larger subsidiaries. This arrangement will save me a minor amount of work and, more important, make the two of them even better investors than they already are (which is to say among the best).

* * * * * * * * * * * *

Late in 2009, amidst the gloom of the Great Recession, we agreed to buy BNSF, the largest purchase in Berkshire's history. At the time, I called the transaction an “all-in wager on the economic future of the United States.”

That kind of commitment was nothing new for us. We’ve been making similar wagers ever since Buffett Partnership Ltd. acquired control of Berkshire in 1965. For good reason, too: Charlie and I have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing.

Indeed, who has ever benefited during the past 238 years by betting against America? If you compare our country's present condition to that existing in 1776, you have to rub your eyes in wonder. In my lifetime alone, real per-capita U.S. output has sextupled. My parents could not have dreamed in 1930 of the world their son would see. Though the preachers of pessimism prattle endlessly about America's problems, I've never seen one who wishes to emigrate (though I can think of a few for whom I would happily buy a one-way ticket).

The dynamism embedded in our market economy will continue to work its magic. Gains won't come in a smooth or uninterrupted manner; they never have. And we will regularly grumble about our government. But, most assuredly, America's best days lie ahead.

With this tailwind working for us, Charlie and I hope to build Berkshire's per-share intrinsic value by (1) constantly improving the basic earning power of our many subsidiaries; (2) further increasing their earnings through bolt-on acquisitions; (3) benefiting from the growth of our investees; (4) repurchasing Berkshire shares when they are available at a meaningful discount from intrinsic value; and (5) making an occasional large acquisition. We will also try to maximize results for you by rarely, if ever, issuing Berkshire shares.

Those building blocks rest on a rock-solid foundation. A century hence, BNSF and Berkshire Hathaway Energy will still be playing vital roles in our economy. Homes and autos will remain central to the lives of most families. Insurance will continue to be essential for both businesses and individuals. Looking ahead, Charlie and I see a world made to order for Berkshire. We feel fortunate to be entrusted with its management.

Intrinsic Business Value

As much as Charlie and I talk about intrinsic business value, we cannot tell you precisely what that number is for Berkshire shares (nor, in fact, for any other stock). In our 2010 annual report, however, we laid out the three elements – one of them qualitative – that we believe are the keys to a sensible estimate of Berkshire’s intrinsic value. That discussion is reproduced in full on pages 123-124.

Here is an update of the two quantitative factors: In 2014 our per-share investments increased 8.4% to \$140,123, and our earnings from businesses other than insurance and investments increased 19% to \$10,847 per share.

Since 1970, our per-share investments have increased at a rate of $19\%$ compounded annually, and our earnings figure has grown at a $20.6\%$ clip. It is no coincidence that the price of Berkshire stock over the ensuing 44 years has increased at a rate very similar to that of our two measures of value. Charlie and I like to see gains in both sectors, but our main focus is to build operating earnings. That's why we were pleased to exchange our Phillips 66 and Graham Holdings stock for operating businesses last year and to contract with Procter and Gamble to acquire Duracell by means of a similar exchange set to close in 2015.

* * * * * * * * * * * *

Now, let's examine the four major sectors of our operations. Each has vastly different balance sheet and income characteristics from the others. So we'll present them as four separate businesses, which is how Charlie and I view them (though there are important and enduring advantages to having them all under one roof). Our goal is to provide you with the information we would wish to have if our positions were reversed, with you being the reporting manager and we the absentee shareholders. (But don't get any ideas!)

Insurance

Let's look first at insurance, Berkshire's core operation. That industry has been the engine that has propelled our expansion since 1967, when we acquired National Indemnity and its sister company, National Fire & Marine, for \$8.6 million. Though that purchase had monumental consequences for Berkshire, its execution was simplicity itself.

Jack Ringwalt, a friend of mine who was the controlling shareholder of the two companies, came to my office saying he would like to sell. Fifteen minutes later, we had a deal. Neither of Jack's companies had ever had an audit by a public accounting firm, and I didn't ask for one. My reasoning: (1) Jack was honest and (2) He was also a bit quirky and likely to walk away if the deal became at all complicated.

On pages 128-129, we reproduce the $1 \frac{1}{2}$ -page purchase agreement we used to finalize the transaction. That contract was homemade: Neither side used a lawyer. Per page, this has to be Berkshire's best deal: National Indemnity today has GAAP (generally accepted accounting principles) net worth of \$111 billion, which exceeds that of any other insurer in the world.

One reason we were attracted to the property-casualty business was its financial characteristics: P/C insurers receive premiums upfront and pay claims later. In extreme cases, such as those arising from certain workers' compensation accidents, payments can stretch over many decades. This collect-now, pay-later model leaves P/C companies holding large sums – money we call “float” – that will eventually go to others. Meanwhile, insurers get to invest this float for their benefit. Though individual policies and claims come and go, the amount of float an insurer holds usually remains fairly stable in relation to premium volume. Consequently, as our business grows, so does our float. And how we have grown, as the following table shows:

Year	Float (in $ millions)
1970	$ 39
1980	237
1990	1,632
2000	27,871
2010	65,832
2014	83,921

Further gains in float will be tough to achieve. On the plus side, GEICO and our new commercial insurance operation are almost certain to grow at a good clip. National Indemnity's reinsurance division, however, is party to a number of run-off contracts whose float drifts downward. If we do in time experience a decline in float, it will be very gradual – at the outside no more than 3% in any year. The nature of our insurance contracts is such that we can never be subject to immediate demands for sums that are large compared to our cash resources. This strength is a key pillar in Berkshire's economic fortress.

If our premiums exceed the total of our expenses and eventual losses, we register an underwriting profit that adds to the investment income our float produces. When such a profit is earned, we enjoy the use of free money – and, better yet, get paid for holding it.

Unfortunately, the wish of all insurers to achieve this happy result creates intense competition, so vigorous indeed that it frequently causes the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. Competitive dynamics almost guarantee that the insurance industry, despite the float income all its companies enjoy, will continue its dismal record of earning subnormal returns on tangible net worth as compared to other American businesses. The prolonged period of low interest rates our country is now dealing with causes earnings on float to decrease, thereby exacerbating the profit problems of the industry.

As noted in the first section of this report, Berkshire has now operated at an underwriting profit for twelve consecutive years, our pre-tax gain for the period having totaled \$24 billion. Looking ahead, I believe we will continue to underwrite profitably in most years. Doing so is the daily focus of all of our insurance managers, who know that while float is valuable, its benefits can be drowned by poor underwriting results. That message is given at least lip service by all insurers; at Berkshire it is a religion.

So how does our float affect intrinsic value? When Berkshire's book value is calculated, the full amount of our float is deducted as a liability, just as if we had to pay it out tomorrow and could not replenish it. But to think of float as strictly a liability is incorrect; it should instead be viewed as a revolving fund. Daily, we pay old claims and related expenses – a huge \$22.7 billion to more than six million claimants in 2014 – and that reduces float. Just as surely, we each day write new business and thereby generate new claims that add to float.

If our revolving float is both costless and long-enduring, which I believe it will be, the true value of this liability is dramatically less than the accounting liability. Owing \$1 that in effect will never leave the premises – because new business is almost certain to deliver a substitute – is worlds different from owing \$1 that will go out the door tomorrow and not be replaced. The two types of liabilities are treated as equals, however, under GAAP.

A partial offset to this overstated liability is a \$15.5 billion “goodwill” asset that we incurred in buying our insurance companies and that increases book value. In very large part, this goodwill represents the price we paid for the float-generating capabilities of our insurance operations. The cost of the goodwill, however, has no bearing on its true value. For example, if an insurance company sustains large and prolonged underwriting losses, any goodwill asset carried on the books should be deemed valueless, whatever its original cost.

Fortunately, that does not describe Berkshire. Charlie and I believe the true economic value of our insurance goodwill – what we would happily pay for float of similar quality were we to purchase an insurance operation possessing it – to be far in excess of its historic carrying value. Under present accounting rules (with which we agree) this excess value will never be entered on our books. But I can assure you that it’s real. That’s one reason – a huge reason – why we believe Berkshire’s intrinsic business value substantially exceeds its book value.

* * * * * * * * * * * *

Berkshire's attractive insurance economics exist only because we have some terrific managers running disciplined operations that possess hard-to-replicate business models. Let me tell you about the major units.

First by float size is the Berkshire Hathaway Reinsurance Group, managed by Ajit Jain. Ajit insures risks that no one else has the desire or the capital to take on. His operation combines capacity, speed, decisiveness and, most important, brains in a manner unique in the insurance business. Yet he never exposes Berkshire to risks that are inappropriate in relation to our resources.

Indeed, we are far more conservative in avoiding risk than most large insurers. For example, if the insurance industry should experience a \$250 billion loss from some mega-catastrophe – a loss about triple anything it has ever experienced – Berkshire as a whole would likely record a significant profit for the year because of its many streams of earnings. We would also remain awash in cash and be looking for large opportunities in a market that might well have gone into shock. Meanwhile, other major insurers and reinsurers would be far in the red, if not facing insolvency.

Ajit's underwriting skills are unmatched. His mind, moreover, is an idea factory that is always looking for more lines of business he can add to his current assortment. Last year I told you about his formation of Berkshire Hathaway Specialty Insurance (“BHSI”). This initiative took us into commercial insurance, where we were instantly welcomed by both major insurance brokers and corporate risk managers throughout America. Previously, we had written only a few specialized lines of commercial insurance.

BHSI is led by Peter Eastwood, an experienced underwriter who is widely respected in the insurance world. During 2014, Peter expanded his talented group, moving into both international business and new lines of insurance. We repeat last year's prediction that BHSI will be a major asset for Berkshire, one that will generate volume in the billions within a few years.

* * * * * * * * * * * *

We have another reinsurance powerhouse in General Re, managed by Tad Montross.

At bottom, a sound insurance operation needs to adhere to four disciplines. It must (1) understand all exposures that might cause a policy to incur losses; (2) conservatively assess the likelihood of any exposure actually causing a loss and the probable cost if it does; (3) set a premium that, on average, will deliver a profit after both prospective loss costs and operating expenses are covered; and (4) be willing to walk away if the appropriate premium can't be obtained.

Many insurers pass the first three tests and flunk the fourth. They simply can't turn their back on business that is being eagerly written by their competitors. That old line, “The other guy is doing it, so we must as well,” spells trouble in any business, but in none more so than insurance.

Tad has observed all four of the insurance commandments, and it shows in his results. General Re's huge float has been considerably better than cost-free under his leadership, and we expect that, on average, to continue. We are particularly enthusiastic about General Re's international life reinsurance business, which has grown consistently and profitably since we acquired the company in 1998.

It can be remembered that soon after we purchased General Re, it was beset by problems that caused commentators – and me as well, briefly – to believe I had made a huge mistake. That day is long gone. General Re is now a gem.

* * * * * * * * * * * *

Finally, there is GEICO, the insurer on which I cut my teeth 64 years ago. GEICO is managed by Tony Nicely, who joined the company at 18 and completed 53 years of service in 2014. Tony became CEO in 1993, and since then the company has been flying. There is no better manager than Tony.

When I was first introduced to GEICO in January 1951, I was blown away by the huge cost advantage the company enjoyed compared to the expenses borne by the giants of the industry. It was clear to me that GEICO would succeed because it deserved to succeed. No one likes to buy auto insurance. Almost everyone, though, likes to drive. The insurance consequently needed is a major expenditure for most families. Savings matter to them – and only a low-cost operation can deliver these. Indeed, at least 40% of the people reading this letter can save money by insuring with GEICO. So stop reading and go to geico.com or call 800-368-2734.

GEICO's cost advantage is the factor that has enabled the company to gobble up market share year after year. (We ended 2014 at $10.8\%$ compared to $2.5\%$ in 1995, when Berkshire acquired control of GEICO.) The company's low costs create a moat – an enduring one – that competitors are unable to cross. Our gecko never tires of telling Americans how GEICO can save them important money. The gecko, I should add, has one particularly endearing quality – he works without pay. Unlike a human spokesperson, he never gets a swelled head from his fame nor does he have an agent to constantly remind us how valuable he is. I love the little guy.

* * * * * * * * * * * *

In addition to our three major insurance operations, we own a group of smaller companies, most of them plying their trade in odd corners of the insurance world. In aggregate, these companies are a growing operation that consistently delivers an underwriting profit. Indeed, over the past decade, they have earned \$2.95 billion from underwriting while growing their float from \$1.7 billion to \$8.6 billion. Charlie and I treasure these companies and their managers.

	Underwriting Profit		Yearend Float
	(in millions)
Insurance Operations	2014	2013	2014	2013
BH Reinsurance	$606	$1,294	$42,454	$37,231
General Re	277	283	19,280	20,013
GEICO	1,159	1,127	13,569	12,566
Other Primary	626	385	8,618	7,430
	$2,668	$3,089	$83,921	$77,240

* * * * * * * * * * * *

Simply put, insurance is the sale of promises. The “customer” pays money now; the insurer promises to pay money in the future should certain unwanted events occur.

Sometimes, the promise will not be tested for decades. (Think of life insurance bought by people in their 20s.) Therefore, both the ability and willingness of the insurer to pay, even if economic chaos prevails when payment time arrives, is all-important.

Berkshire's promises have no equal, a fact affirmed in recent years by certain of the world's largest and most sophisticated P/C insurers, who wished to shed themselves of huge and exceptionally long-lived liabilities. That is, these insurers wished to “cede” these liabilities – most of them potential losses from asbestos claims – to a reinsurer. They needed the right one, though: If a reinsurer fails to pay a loss, the original insurer is still on the hook for it. Choosing a reinsurer, therefore, that down the road proves to be financially strapped or a bad actor threatens the original insurer with getting huge liabilities right back in its lap.

Last year, our premier position in reinsurance was reaffirmed by our writing a policy carrying a \$3 billion single premium. I believe that the policy's size has only been exceeded by our 2007 transaction with Lloyd's, in which the premium was \$7.1 billion.

In fact, I know of only eight P/C policies in history that had a single premium exceeding \$1 billion. And, yes, all eight were written by Berkshire. Certain of these contracts will require us to make substantial payments 50 years or more from now. When major insurers have needed an unquestionable promise that payments of this type will be made, Berkshire has been the party – the only party – to call.

* * * * * * * * * * * *

Berkshire's great managers, premier financial strength and a variety of business models protected by wide moats amount to something unique in the insurance world. This assemblage of strengths is a huge asset for Berkshire shareholders that will only get more valuable with time.

Regulated, Capital-Intensive Businesses

We have two major operations, BNSF and Berkshire Hathaway Energy (“BHE”), that share important characteristics distinguishing them from our other businesses. Consequently, we assign them their own section in this letter and split out their combined financial statistics in our GAAP balance sheet and income statement.

A key characteristic of both companies is their huge investment in very long-lived, regulated assets, with these partially funded by large amounts of long-term debt that is not guaranteed by Berkshire. Our credit is in fact not needed because each company has earning power that even under terrible economic conditions will far exceed its interest requirements. Last year, for example, BNSF's interest coverage was more than 8:1. (Our definition of coverage is pre-tax earnings/interest, not EBITDA/interest, a commonly used measure we view as seriously flawed.)

At BHE, meanwhile, two factors ensure the company's ability to service its debt under all circumstances. The first is common to all utilities: recession-resistant earnings, which result from these companies offering an essential service on an exclusive basis. The second is enjoyed by few other utilities: a great diversity of earnings streams, which shield us from being seriously harmed by any single regulatory body. Recently, we have further broadened that base through our \$3 billion (Canadian) acquisition of AltaLink, an electric transmission system serving 85% of Alberta's population. This multitude of profit streams, supplemented by the inherent advantage of being owned by a strong parent, has enabled BHE and its utility subsidiaries to significantly lower their cost of debt. This economic fact benefits both us and our customers.

Every day, our two subsidiaries power the American economy in major ways:

- BNSF carries about $15\%$ (measured by ton-miles) of all inter-city freight, whether it is transported by truck, rail, water, air, or pipeline. Indeed, we move more ton-miles of goods than anyone else, a fact establishing BNSF as the most important artery in our economy's circulatory system.

BNSF, like all railroads, also moves its cargo in an extraordinarily fuel-efficient and environmentally friendly way, carrying a ton of freight about 500 miles on a single gallon of diesel fuel. Trucks taking on the same job guzzle about four times as much fuel.

- BHE's utilities serve regulated retail customers in eleven states. No utility company stretches further. In addition, we are a leader in renewables: From a standing start ten years ago, BHE now accounts for $6\%$ of the country's wind generation capacity and $7\%$ of its solar generation capacity. Beyond these businesses, BHE owns two large pipelines that deliver $8\%$ of our country's natural gas consumption; the recently-purchased electric transmission operation in Canada; and major electric businesses in the U.K. and Philippines. And the beat goes on: We will continue to buy and build utility operations throughout the world for decades to come.

BHE can make these investments because it retains all of its earnings. In fact, last year the company retained more dollars of earnings – by far – than any other American electric utility. We and our regulators see this 100% retention policy as an important advantage – one almost certain to distinguish BHE from other utilities for many years to come.

When BHE completes certain renewables projects that are underway, the company's renewables portfolio will have cost \$15 billion. In addition, we have conventional projects in the works that will also cost many billions. We relish making such commitments as long as they promise reasonable returns – and, on that front, we put a large amount of trust in future regulation.

Our confidence is justified both by our past experience and by the knowledge that society will forever need massive investments in both transportation and energy. It is in the self-interest of governments to treat capital providers in a manner that will ensure the continued flow of funds to essential projects. It is concomitantly in our self-interest to conduct our operations in a way that earns the approval of our regulators and the people they represent.

Last year we fully met this objective at BHE, just as we have in every year of our ownership. Our rates remain low, our customer satisfaction is high and our record for employee safety is among the best in the industry.

The story at BNSF, however – as I noted earlier – was not good in 2014, a year in which the railroad disappointed many of its customers. This problem occurred despite the record capital expenditures that BNSF has made in recent years, with those having far exceeded the outlays made by Union Pacific, our principal competitor.

The two railroads are of roughly equal size measured by revenues, though we carry considerably more freight (measured either by carloads or ton-miles). But our service problems exceeded Union Pacific's last year, and we lost market share as a result. Moreover, U.P.'s earnings beat ours by a record amount. Clearly, we have a lot of work to do.

We are wasting no time: As I also mentioned earlier, we will spend \$6 billion in 2015 on improving our railroad's operation. That will amount to about 26% of estimated revenues (a calculation that serves as the industry's yardstick). Outlays of this magnitude are largely unheard of among railroads. For us, this percentage compares to our average of 18% in 2009-2013 and to U.P.'s projection for the near future of 16-17%. Our huge investments will soon lead to a system with greater capacity and much better service. Improved profits should follow.

Here are the key figures for Berkshire Hathaway Energy and BNSF:

Berkshire Hathaway Energy (89.9% owned)
Earnings (in millions)

	2014	2013	2012
U.K. utilities	$527	$362	$429
Iowa utility	298	230	236
Nevada utilities	549	—	—
PacifiCorp (primarily Oregon and Utah)	1,010	982	737
Gas Pipelines (Northern Natural and Kern River)	379	385	383
HomeServices	139	139	82
Other (net)	236	4	91
Operating earnings before corporate interest and taxes	3,138	2,102	1,958
Interest	427	296	314
Income taxes	616	170	172
Net earnings	$2,095	$1,636	$1,472
Earnings applicable to Berkshire	$1,882	$1,470	$1,323

BNSF
Earnings (in millions)

	2014	2013	2012
Revenues	$23,239	$22,014	$20,835
Operating expenses	16,237	15,357	14,835
Operating earnings before interest and taxes	7,002	6,657	6,000
Interest (net)	833	729	623
Income taxes	2,300	2,135	2,005
Net earnings	$3,869	$3,793	$3,372

Manufacturing, Service and Retailing Operations

Our activities in this part of Berkshire cover the waterfront. Let's look, though, at a summary balance sheet and earnings statement for the entire group.

Balance Sheet 12/31/14 (in millions)

Assets		Liabilities and Equity
Cash and equivalents	$5,765	Notes payable	$965
Accounts and notes receivable	8,264	Other current liabilities	9,734
Inventory	10,236	Total current liabilities	10,699
Other current assets	1,117
Total current assets	25,382
		Deferred taxes	3,801
Goodwill and other intangibles	28,107	Term debt and other liabilities	4,269
Fixed assets	13,806	Non-controlling interests	492
Other assets	3,793	Berkshire equity	51,827
	$71,088		$71,088

Earnings Statement (in millions)

	2014	2013*	2012*
Revenues	$97,689	$93,472	$81,432
Operating expenses	90,788	87,208	75,734
Interest expense	109	104	112
Pre-tax earnings	6,792	6,160	5,586
Income taxes and non-controlling interests	2,324	2,283	2,229
Net earnings	$ 4,468	$ 3,877	$ 3,357

* Earnings for 2012 and 2013 have been restated to exclude Marmon's leasing operations, which are now included in the Finance and Financial Products section.

Our income and expense data conforming to GAAP is on page 49. In contrast, the operating expense figures above are non-GAAP and exclude some purchase-accounting items (primarily the amortization of certain intangible assets). We present the data in this manner because Charlie and I believe the adjusted numbers more accurately reflect the true economic expenses and profits of the businesses aggregated in the table than do GAAP figures.

I won't explain all of the adjustments – some are tiny and arcane – but serious investors should understand the disparate nature of intangible assets. Some truly deplete over time, while others in no way lose value. For software, as a big example, amortization charges are very real expenses. The concept of making charges against other intangibles, such as the amortization of customer relationships, however, arises through purchase-accounting rules and clearly does not reflect reality. GAAP accounting draws no distinction between the two types of charges. Both, that is, are recorded as expenses when earnings are calculated – even though from an investor's viewpoint they could not be more different.

In the GAAP-compliant figures we show on page 49, amortization charges of \$1.15 billion have been deducted as expenses. We would call about 20% of these “real,” the rest not. The “non-real” charges, once non-existent at Berkshire, have become significant because of the many acquisitions we have made. Non-real amortization charges will almost certainly rise further as we acquire more companies.

The GAAP-compliant table on page 67 gives you the current status of our intangible assets. We now have \$7.4 billion left to amortize, of which \$4.1 billion will be charged over the next five years. Eventually, of course, every dollar of non-real costs becomes entirely charged off. When that happens, reported earnings increase even if true earnings are flat.

Depreciation charges, we want to emphasize, are different: Every dime of depreciation expense we report is a real cost. That's true, moreover, at most other companies. When CEOs tout EBITDA as a valuation guide, wire them up for a polygraph test.

Our public reports of earnings will, of course, continue to conform to GAAP. To embrace reality, however, you should remember to add back most of the amortization charges we report.

* * * * * * * * * * * *

To get back to our many manufacturing, service and retailing operations, they sell products ranging from lollipops to jet airplanes. Some of this sector's businesses, measured by earnings on unleveraged net tangible assets, enjoy terrific economics, producing profits that run from $25\%$ after-tax to far more than $100\%$ . Others generate good returns in the area of $12\%$ to $20\%$ . A few, however, have very poor returns, the result of some serious mistakes I made in my job of capital allocation. I was not misled: I simply was wrong in my evaluation of the economic dynamics of the company or the industry in which it operates.

Fortunately, my blunders normally involved relatively small acquisitions. Our large buys have generally worked out well and, in a few cases, more than well. I have not, nonetheless, made my last mistake in purchasing either businesses or stocks. Not everything works out as planned.

Viewed as a single entity, the companies in this group are an excellent business. They employed an average of \$24 billion of net tangible assets during 2014 and, despite their holding large quantities of excess cash and using little leverage, earned 18.7% after-tax on that capital.

Of course, a business with terrific economics can be a bad investment if it is bought for too high a price. We have paid substantial premiums to net tangible assets for most of our businesses, a cost that is reflected in the large figure we show for goodwill. Overall, however, we are getting a decent return on the capital we have deployed in this sector. Furthermore, the intrinsic value of these businesses, in aggregate, exceeds their carrying value by a good margin, and that premium is likely to widen. Even so, the difference between intrinsic value and carrying value in both the insurance and regulated-industry segments is far greater. It is there that the truly big winners reside.

* * * * * * * * * * * *

We have far too many companies in this group to comment on them individually. Moreover, their competitors – both current and potential – read this report. In a few of our businesses we might be disadvantaged if others knew our numbers. In some of our operations that are not of a size material to an evaluation of Berkshire, therefore, we only disclose what is required. You can find a good bit of detail about many of our operations, however, on pages 97-100.

Finance and Financial Products

This year we include in this section Marmon's very sizable leasing operations, whose wares are railcars, containers and cranes. We have also restated the previous two years to reflect that change. Why have we made it? At one time there was a large minority ownership at Marmon, and I felt it was more understandable to include all of the company's operations in one place. Today we own virtually $100\%$ of Marmon, which makes me think you will gain more insight into our various businesses if we include Marmon's leasing operations under this heading. (The figures for the many dozens of Marmon's other businesses remain in the previous section.)

Our other leasing and rental operations are conducted by CORT (furniture) and XTRA (semi-trailers). These companies are industry leaders and have substantially increased their earnings as the American economy has gained strength. Both companies have invested more money in new equipment than have many of their competitors, and that's paying off.

Kevin Clayton has again delivered an industry-leading performance at Clayton Homes, the largest home builder in America. Last year, Clayton sold 30,871 homes, about 45% of the manufactured homes bought by Americans. When we purchased Clayton in 2003 for \$1.7 billion, its share was 14%.

Key to Clayton's earnings is the company's \$13 billion mortgage portfolio. During the financial panic of 2008 and 2009, when funding for the industry dried up, Clayton was able to keep lending because of Berkshire's backing. In fact, we continued during that period to finance our competitors' retail sales as well as our own.

Many of Clayton's borrowers have low incomes and mediocre FICO scores. But thanks to the company's sensible lending practices, its portfolio performed well during the recession, meaning a very high percentage of our borrowers kept their homes. Our blue-collar borrowers, in many cases, proved much better credit risks than their higher-income brethren.

At Marmon's railroad-car operation, lease rates have improved substantially over the past few years. The nature of this business, however, is that only $20\%$ or so of our leases expire annually. Consequently, improved pricing only gradually works its way into our revenue stream. The trend, though, is strong. Our 105,000-car fleet consists largely of tank cars, but only $8\%$ of those transport crude oil.

One further fact about our rail operation is important for you to know: Unlike many other lessors, we manufacture our own tank cars, about 6,000 of them in a good year. We do not book any profit when we transfer cars from our manufacturing division to our leasing division. Our fleet is consequently placed on our books at a “bargain” price. The difference between that figure and a “retail” price is only slowly reflected in our earnings through smaller annual depreciation charges that we enjoy over the 30-year life of the car. Because of that fact as well as others, Marmon’s rail fleet is worth considerably more than the \$5 billion figure at which it is carried on our books.

Here's the earnings recap for this sector:

	2014	2013	2012
	(in millions)
Berkadia (our 50% share)	$122	$80	$35
Clayton	558	416	255
CORT	36	40	42
Marmon – Containers and Cranes	238	226	246
Marmon – Railcars	442	353	299
XTRA	147	125	106
Net financial income*	296	324	410
	$1,839	$1,564	$1,393

* Excludes capital gains or losses

Investments

Below we list our fifteen common stock investments that at yearend had the largest market value.

Shares**	Company	Percentage of Company Owned	12/31/14
			Cost*	Market
			(in millions)
151,610,700	American Express Company	14.8	$ 1,287	$ 14,106
400,000,000	The Coca-Cola Company	9.2	1,299	16,888
18,513,482	DaVita HealthCare Partners Inc.	8.6	843	1,402
15,430,586	Deere & Company	4.5	1,253	1,365
24,617,939	DIRECTV	4.9	1,454	2,134
13,062,594	The Goldman Sachs Group, Inc.	3.0	750	2,532
76,971,817	International Business Machines Corp.	7.8	13,157	12,349
24,669,778	Moody’s Corporation	12.1	248	2,364
20,060,390	Munich Re	11.8	2,990	4,023
52,477,678	The Procter & Gamble Company	1.9	336	4,683 ***
22,169,930	Sanofi	1.7	1,721	2,032
96,890,665	U.S. Bancorp	5.4	3,033	4,355
43,387,980	USG Corporation	30.0	836	1,214
67,707,544	Wal-Mart Stores, Inc.	2.1	3,798	5,815
483,470,853	Wells Fargo & Company	9.4	11,871	26,504
	Others		10,180	15,704
	Total Common Stocks Carried at Market		$55,056	$ 117,470

*This is our actual purchase price and also our tax basis; GAAP “cost” differs in a few cases because of write-ups or write-downs that have been required under GAAP rules.
**Excludes shares held by pension funds of Berkshire subsidiaries.
***Held under contract of sale for this amount.

Berkshire has one major equity position that is not included in the table: We can buy 700 million shares of Bank of America at any time prior to September 2021 for \$5 billion. At yearend these shares were worth \$12.5 billion. We are likely to purchase the shares just before expiration of our option. In the meantime, it is important for you to realize that Bank of America is, in effect, our fourth largest equity investment – and one we value highly.

* * * * * * * * * * * *

Attentive readers will notice that Tesco, which last year appeared in the list of our largest common stock investments, is now absent. An attentive investor, I'm embarrassed to report, would have sold Tesco shares earlier. I made a big mistake with this investment by dawdling.

At the end of 2012 we owned 415 million shares of Tesco, then and now the leading food retailer in the U.K. and an important grocer in other countries as well. Our cost for this investment was \$2.3 billion, and the market value was a similar amount.

In 2013, I soured somewhat on the company's then-management and sold 114 million shares, realizing a profit of \$43 million. My leisurely pace in making sales would prove expensive. Charlie calls this sort of behavior “thumb-sucking.” (Considering what my delay cost us, he is being kind.)

During 2014, Tesco's problems worsened by the month. The company's market share fell, its margins contracted and accounting problems surfaced. In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.

We sold Tesco shares throughout the year and are now out of the position. (The company, we should mention, has hired new management, and we wish them well.) Our after-tax loss from this investment was \$444 million, about 1/5 of 1% of Berkshire's net worth. In the past 50 years, we have only once realized an investment loss that at the time of sale cost us 2% of our net worth. Twice, we experienced 1% losses. All three of these losses occurred in the 1974-1975 period, when we sold stocks that were very cheap in order to buy others we believed to be even cheaper.

* * * * * * * * * * * *

Our investment results have been helped by a terrific tailwind. During the 1964-2014 period, the S&P 500 rose from 84 to 2,059, which, with reinvested dividends, generated the overall return of 11,196% shown on page 2. Concurrently, the purchasing power of the dollar declined a staggering 87%. That decrease means that it now takes \$1 to buy what could be bought for 13¢ in 1965 (as measured by the Consumer Price Index).

There is an important message for investors in that disparate performance between stocks and dollars. Think back to our 2011 annual report, in which we defined investing as “the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power – after taxes have been paid on nominal gains – in the future.”

The unconventional, but inescapable, conclusion to be drawn from the past fifty years is that it has been far safer to invest in a diversified collection of American businesses than to invest in securities – Treasuries, for example – whose values have been tied to American currency. That was also true in the preceding half-century, a period including the Great Depression and two world wars. Investors should heed this history. To one degree or another it is almost certain to be repeated during the next century.

Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments – far riskier investments – than widely-diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions. That lesson has not customarily been taught in business schools, where volatility is almost universally used as a proxy for risk. Though this pedagogic assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray.

It is true, of course, that owning equities for a day or a week or a year is far riskier (in both nominal and purchasing-power terms) than leaving funds in cash-equivalents. That is relevant to certain investors – say, investment banks – whose viability can be threatened by declines in asset prices and which might be forced to sell securities during depressed markets. Additionally, any party that might have meaningful near-term needs for funds should keep appropriate sums in Treasuries or insured bank deposits.

For the great majority of investors, however, who can – and should – invest with a multi-decade horizon, quotational declines are unimportant. Their focus should remain fixed on attaining significant gains in purchasing power over their investing lifetime. For them, a diversified equity portfolio, bought over time, will prove far less risky than dollar-based securities.

If the investor, instead, fears price volatility, erroneously viewing it as a measure of risk, he may, ironically, end up doing some very risky things. Recall, if you will, the pundits who six years ago bemoaned falling stock prices and advised investing in “safe” Treasury bills or bank certificates of deposit. People who heeded this sermon are now earning a pittance on sums they had previously expected would finance a pleasant retirement. (The S&P 500 was then below 700; now it is about 2,100.) If not for their fear of meaningless price volatility, these investors could have assured themselves of a good income for life by simply buying a very low-cost index fund whose dividends would trend upward over the years and whose principal would grow as well (with many ups and downs, to be sure).

Investors, of course, can, by their own behavior, make stock ownership highly risky. And many do. Active trading, attempts to “time” market movements, inadequate diversification, the payment of high and unnecessary fees to managers and advisors, and the use of borrowed money can destroy the decent returns that a life-long owner of equities would otherwise enjoy. Indeed, borrowed money has no place in the investor’s tool kit: Anything can happen anytime in markets. And no advisor, economist, or TV commentator – and definitely not Charlie nor I – can tell you when chaos will occur. Market forecasters will fill your ear but will never fill your wallet.

The commission of the investment sins listed above is not limited to “the little guy.” Huge institutional investors, viewed as a group, have long underperformed the unsophisticated index-fund investor who simply sits tight for decades. A major reason has been fees: Many institutions pay substantial sums to consultants who, in turn, recommend high-fee managers. And that is a fool’s game.

There are a few investment managers, of course, who are very good – though in the short run, it’s difficult to determine whether a great record is due to luck or talent. Most advisors, however, are far better at generating high fees than they are at generating high returns. In truth, their core competence is salesmanship. Rather than listen to their siren songs, investors – large and small – should instead read Jack Bogle’s The Little Book of Common Sense Investing.

Decades ago, Ben Graham pinpointed the blame for investment failure, using a quote from Shakespeare: "The fault, dear Brutus, is not in our stars, but in ourselves."

The Annual Meeting

The annual meeting will be held on Saturday, May $2^{\text{nd}}$ at the CenturyLink Center. Last year's attendance of 39,000 set a record, and we expect a further increase this year as we celebrate our Golden Anniversary. Be there when the doors open at 7 a.m.

Berkshire's talented Carrie Sova will again be in charge. Carrie joined us six years ago at the age of 24 as a secretary. Then, four years ago, I asked her to take charge of the meeting – a huge undertaking, requiring a multitude of skills – and she jumped at the chance. Carrie is unflappable, ingenious and expert at bringing out the best in the hundreds who work with her. She is aided by our entire home office crew who enjoy pitching in to make the weekend fun and informative for our owners.

And, yes, we also try to sell our visiting shareholders our products while they're here. In fact, this year we will substantially increase the hours available for purchases, opening for business at the CenturyLink on Friday, May $1^{\text{st}}$ , from noon to 5 p.m. as well as the usual 7 a.m. to 4 p.m. on meeting day. So bring a smile to Charlie's face and do some serious shopping.

Get up early on Saturday morning. At 6:20 a.m., Norman and Jake, two Texas longhorns each weighing about a ton, will proceed down $10^{\text{th}}$ Street to the CenturyLink. Aboard them will be a couple of our Justin Boot executives, who do double duty as cowboys. Following the steers will be four horses pulling a Wells Fargo stagecoach. Berkshire already markets planes, trains and automobiles. Adding steers and stagecoaches to our portfolio should seal our reputation as America's all-purpose transportation company.

At about 7:30 a.m. on Saturday, we will have our fourth International Newspaper Tossing Challenge. Our target again will be a Clayton Home porch, located precisely 35 feet from the throwing line. When I was a teenager – in my one brief flirtation with honest labor – I tossed about 500,000 papers. So I think I’m pretty good. Challenge me! Humiliate me! Knock me down a peg! I’ll buy a Dilly Bar for anyone who lands his or her throw closer to the doorstep than I do. The papers will run 36 to 42 pages, and you must fold them yourself (no rubber bands allowed). I’ll present a special prize to the 12-or-under contestant who makes the best toss. Deb Bosanek will be the judge.

At 8:30 a.m., a new Berkshire movie will be shown. An hour later, we will start the question-and-answer period, which (with a break for lunch at CenturyLink's stands) will last until 3:30 p.m. After a short recess, Charlie and I will convene the annual meeting at 3:45 p.m. This business session typically lasts only a half hour or so.

Your venue for shopping will be the 194,300-square-foot hall that adjoins the meeting and in which products from dozens of Berkshire subsidiaries will be for sale. If you don't get your shopping done on Friday, slip out while Charlie's talking on Saturday and binge on our bargains. Check the terrific BNSF railroad layout also. Even though I'm 84, it still excites me.

Last year you did your part as a shopper, and most of our businesses racked up record sales. In a nine-hour period on Saturday, we sold 1,385 pairs of Justin boots (that's a pair every 23 seconds), 13,440 pounds of See's candy, 7,276 pairs of Wells Lamont work gloves and 10,000 bottles of Heinz ketchup. Heinz has a new mustard product, so both mustard and ketchup will be available this year. (Buy both!) Now that we are open for business on Friday as well, we expect new records in every precinct.

Brooks, our running-shoe company, will again have a special commemorative shoe to offer at the meeting. After you purchase a pair, wear them the next day at our third annual “Berkshire 5K,” an 8 a.m. race starting at the CenturyLink. Full details for participating will be included in the Visitor’s Guide that will be sent to you with your credentials for the meeting. Entrants in the race will find themselves running alongside many of Berkshire’s managers, directors and associates. (Charlie and I, however, will sleep in.)

A GEICO booth in the shopping area will be staffed by a number of the company's top counselors from around the country. Stop by for a quote. In most cases, GEICO will be able to give you a shareholder discount (usually $8\%$ ). This special offer is permitted by 44 of the 51 jurisdictions in which we operate. (One supplemental point: The discount is not additive if you qualify for another discount, such as that available to certain groups.) Bring the details of your existing insurance and check out our price. We can save many of you real money.

Be sure to visit the Bookworm. It will carry about 35 books and DVDs, among them a couple of new titles. Last year, many shareholders purchased Max Olson's compilation of Berkshire letters going back to 1965, and he has produced an updated edition for the meeting. We also expect to be selling an inexpensive book commemorating our fifty years. It's currently a work in process, but I expect it to contain a wide variety of historical material, including documents from the $19^{\text{th}}$ Century.

An attachment to the proxy material that is enclosed with this report explains how you can obtain the credential you will need for admission to both the meeting and other events. Airlines have sometimes jacked up prices for the Berkshire weekend. If you are coming from far away, compare the cost of flying to Kansas City vs. Omaha. The drive between the two cities is about $2\frac{1}{2}$ hours, and it may be that Kansas City can save you significant money, particularly if you had planned to rent a car in Omaha. The savings for a couple could run to 1,000 or more. Spend that money with us.

At Nebraska Furniture Mart, located on a 77-acre site on $72^{\text{nd}}$ Street between Dodge and Pacific, we will again be having “Berkshire Weekend” discount pricing. Last year in the week surrounding the meeting, the store did a record \$40,481,817 of business. (An average week for NFM’s Omaha store is about \$9 million.)

To obtain the Berkshire discount at NFM, you must make your purchases between Tuesday, April $28^{\text{th}}$ and Monday, May $4^{\text{th}}$ inclusive, and also present your meeting credential. The period's special pricing will even apply to the products of several prestigious manufacturers that normally have ironclad rules against discounting but which, in the spirit of our shareholder weekend, have made an exception for you. We appreciate their cooperation. NFM is open from 10 a.m. to 9 p.m. Monday through Friday, 10 a.m. to 9:30 p.m. on Saturday and 10 a.m. to 8 p.m. on Sunday. From 5:30 p.m. to 8 p.m. on Saturday, NFM is having a picnic to which you are all invited.

At Borsheims, we will again have two shareholder-only events. The first will be a cocktail reception from 6 p.m. to 9 p.m. on Friday, May $1^{\text{st}}$ . The second, the main gala, will be held on Sunday, May $3^{\text{rd}}$ , from 9 a.m. to 4 p.m. On Saturday, we will remain open until 6 p.m. In recent years, our three-day volume has far exceeded our sales in all of December, normally a jeweler's best month.

We will have huge crowds at Borsheims throughout the weekend. For your convenience, therefore, shareholder prices will be available from Monday, April 27 $^{th}$ through Saturday, May 9 $^{th}$ . During that period, please identify yourself as a shareholder by presenting your meeting credentials or a brokerage statement that shows you are a Berkshire holder.

On Sunday, in the mall outside of Borsheims, Norman Beck, a remarkable magician from Dallas, will bewilder onlookers. Additionally, we will have Bob Hamman and Sharon Osberg, two of the world's top bridge experts, available to play bridge with our shareholders on Sunday afternoon. Don't play them for money.

My friend, Ariel Hsing, will be in the mall as well on Sunday, taking on challengers at table tennis. I met Ariel when she was nine and even then I was unable to score a point against her. Now, she's a sophomore at Princeton, having already represented the United States in the 2012 Olympics. If you don't mind embarrassing yourself, test your skills against her, beginning at 1 p.m. Bill Gates and I will lead off and try to soften her up.

Gorat's and Piccolo's will again be open exclusively for Berkshire shareholders on Sunday, May $3^{\text{rd}}$ . Both will be serving until 10 p.m., with Gorat's opening at 1 p.m. and Piccolo's opening at 4 p.m. These restaurants are my favorites, and I will eat at both of them on Sunday evening. Remember: To make a reservation at Gorat's, call 402-551-3733 on April $1^{\text{st}}$ (but not before); for Piccolo's, call 402-346-2865. At Piccolo's, order a giant root beer float for dessert. Only sissies get the small one.

We will again have the same three financial journalists lead the question-and-answer period at the meeting, asking Charlie and me questions that shareholders have submitted to them by e-mail. The journalists and their e-mail addresses are: Carol Loomis, who retired last year after sixty years at Fortune, but remains the expert on business and financial matters, and who may be e-mailed at loomisbrk@gmail.com; Becky Quick, of CNBC, at BerkshireQuestions@cnbc.com; and Andrew Ross Sorkin, of The New York Times, at arsorkin@nytimes.com.

From the questions submitted, each journalist will choose the six he or she decides are the most interesting and important. The journalists have told me your question has the best chance of being selected if you keep it concise, avoid sending it in at the last moment, make it Berkshire-related and include no more than two questions in any e-mail you send them. (In your e-mail, let the journalist know if you would like your name mentioned if your question is asked.)

We will also have a panel of three analysts who follow Berkshire. This year the insurance specialist will be Gary Ransom of Dowling & Partners. Questions that deal with our non-insurance operations will come from Jonathan Brandt of Ruane, Cunniff & Goldfarb and Gregg Warren of Morningstar. Our hope is that the analysts and journalists will ask questions that add to our owners' understanding and knowledge of their investment.

Neither Charlie nor I will get so much as a clue about the questions headed our way. Some will be tough, for sure, and that's the way we like it. All told we expect at least 54 questions, which will allow for six from each analyst and journalist and for 18 from the audience. (Last year we had 62 in total.) The questioners from the audience will be chosen by means of 11 drawings that will take place at 8:15 a.m. on the morning of the annual meeting. Each of the 11 microphones installed in the arena and main overflow room will host, so to speak, a drawing.

While I'm on the subject of our owners' gaining knowledge, let me remind you that Charlie and I believe all shareholders should simultaneously have access to new information that Berkshire releases and should also have adequate time to analyze it. That's why we try to issue financial data late on Fridays or early on Saturdays and why our annual meeting is always held on a Saturday. We do not talk one-on-one to large institutional investors or analysts, treating them instead as we do all other shareholders.

* * * * * * * * * * * *

We get terrific help at meeting time from literally thousands of Omaha residents and businesses who want you to enjoy yourselves. This year, because we expect record attendance, we have worried about a shortage of hotel rooms. To deal with that possible problem, Airbnb is making a special effort to obtain listings for the period around meeting time and is likely to have a wide array of accommodations to offer. Airbnb's services may be especially helpful to shareholders who expect to spend only a single night in Omaha and are aware that last year a few hotels required guests to pay for a minimum of three nights. That gets expensive. Those people on a tight budget should check the Airbnb website.

* * * * * * * * * * * *

For good reason, I regularly extol the accomplishments of our operating managers. They are truly All-Stars who run their businesses as if they were the only asset owned by their families. I believe the mindset of our managers also to be as shareholder-oriented as can be found in the universe of large publicly-owned companies. Most of our managers have no financial need to work. The joy of hitting business “home runs” means as much to them as their paycheck.

Equally important, however, are the 24 men and women who work with me at our corporate office. This group efficiently deals with a multitude of SEC and other regulatory requirements, files a 24,100-page Federal income tax return and oversees the filing of 3,400 state tax returns, responds to countless shareholder and media inquiries, gets out the annual report, prepares for the country's largest annual meeting, coordinates the Board's activities – and the list goes on and on.

They handle all of these business tasks cheerfully and with unbelievable efficiency, making my life easy and pleasant. Their efforts go beyond activities strictly related to Berkshire: Last year they dealt with the 40 universities (selected from 200 applicants) who sent students to Omaha for a Q&A day with me. They also handle all kinds of requests that I receive, arrange my travel, and even get me hamburgers and french fries (smothered in Heinz ketchup, of course) for lunch. No CEO has it better; I truly do feel like tap dancing to work every day.

Last year, for the annual report, we dropped our 48-year-old “no pictures” policy – who says I’m not flexible? – and ran a photo of our remarkable home-office crew that was taken at our Christmas lunch. I didn’t warn the gang of the public exposure they were to receive, so they didn’t have on their Sunday best. This year was a different story: On the facing page you will see what our group looks like when they think someone will be noticing. However they dress, their performance is mind-boggling.

Come meet them on May 2 $^{nd}$ and enjoy our Woodstock for Capitalists.

February 27, 2015

Warren E. Buffett

Chairman of the Board

BERKSHIRE HATHAWAY INC.

ACQUISITION CRITERIA

We are eager to hear from principals or their representatives about businesses that meet all of the following criteria:

(1) Large purchases (at least \$75 million of pre-tax earnings unless the business will fit into one of our existing units),
(2) Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround” situations),
(3) Businesses earning good returns on equity while employing little or no debt,
(4) Management in place (we can't supply it),
(5) Simple businesses (if there's lots of technology, we won't understand it),
(6) An offering price (we don't want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown).

The larger the company, the greater will be our interest: We would like to make an acquisition in the \$5-20 billion range. We are not interested, however, in receiving suggestions about purchases we might make in the general stock market.

We will not engage in unfriendly takeovers. We can promise complete confidentiality and a very fast answer – customarily within five minutes – as to whether we’re interested. We prefer to buy for cash, but will consider issuing stock when we receive as much in intrinsic business value as we give. We don’t participate in auctions.

Charlie and I frequently get approached about acquisitions that don't come close to meeting our tests: We've found that if you advertise an interest in buying collies, a lot of people will call hoping to sell you their cocker spaniels. A line from a country song expresses our feeling about new ventures, turnarounds, or auction-like sales: "When the phone don't ring, you'll know it's me."

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Berkshire – Past, Present and Future

In the Beginning

On May 6, 1964, Berkshire Hathaway, then run by a man named Seabury Stanton, sent a letter to its shareholders offering to buy 225,000 shares of its stock for \$11.375 per share. I had expected the letter; I was surprised by the price.

Berkshire then had 1,583,680 shares outstanding. About 7% of these were owned by Buffett Partnership Ltd. (“BPL”), an investing entity that I managed and in which I had virtually all of my net worth. Shortly before the tender offer was mailed, Stanton had asked me at what price BPL would sell its holdings. I answered \$11.50, and he said, “Fine, we have a deal.” Then came Berkshire’s letter, offering an eighth of a point less. I bristled at Stanton’s behavior and didn’t tender.

That was a monumentally stupid decision.

Berkshire was then a northern textile manufacturer mired in a terrible business. The industry in which it operated was heading south, both metaphorically and physically. And Berkshire, for a variety of reasons, was unable to change course.

That was true even though the industry's problems had long been widely understood. Berkshire's own Board minutes of July 29, 1954, laid out the grim facts: “The textile industry in New England started going out of business forty years ago. During the war years this trend was stopped. The trend must continue until supply and demand have been balanced.”

About a year after that board meeting, Berkshire Fine Spinning Associates and Hathaway Manufacturing – both with roots in the 19 $^{th}$ Century – joined forces, taking the name we bear today. With its fourteen plants and 10,000 employees, the merged company became the giant of New England textiles. What the two managements viewed as a merger agreement, however, soon morphed into a suicide pact. During the seven years following the consolidation, Berkshire operated at an overall loss, and its net worth shrunk by 37%.

Meanwhile, the company closed nine plants, sometimes using the liquidation proceeds to repurchase shares. And that pattern caught my attention.

I purchased BPL’s first shares of Berkshire in December 1962, anticipating more closings and more repurchases. The stock was then selling for \$7.50, a wide discount from per-share working capital of \$10.25 and book value of \$20.20. Buying the stock at that price was like picking up a discarded cigar butt that had one puff remaining in it. Though the stub might be ugly and soggy, the puff would be free. Once that momentary pleasure was enjoyed, however, no more could be expected.

Berkshire thereafter stuck to the script: It soon closed another two plants, and in that May 1964 move, set out to repurchase shares with the shutdown proceeds. The price that Stanton offered was 50% above the cost of our original purchases. There it was – my free puff, just waiting for me, after which I could look elsewhere for other discarded butts.

Instead, irritated by Stanton's chiseling, I ignored his offer and began to aggressively buy more Berkshire shares.

By April 1965, BPL owned 392,633 shares (out of 1,017,547 then outstanding) and at an early-May board meeting we formally took control of the company. Through Seabury's and my childish behavior – after all, what was an eighth of a point to either of us? – he lost his job, and I found myself with more than 25% of BPL's capital invested in a terrible business about which I knew very little. I became the dog who caught the car.

Because of Berkshire’s operating losses and share repurchases, its net worth at the end of fiscal 1964 had fallen to \$22 million from \$55 million at the time of the 1955 merger. The full \$22 million was required by the textile operation: The company had no excess cash and owed its bank \$2.5 million. (Berkshire’s 1964 annual report is reproduced on pages 130-142.)

For a time I got lucky: Berkshire immediately enjoyed two years of good operating conditions. Better yet, its earnings in those years were free of income tax because it possessed a large loss carry-forward that had arisen from the disastrous results in earlier years.

Then the honeymoon ended. During the 18 years following 1966, we struggled unremittingly with the textile business, all to no avail. But stubbornness – stupidity? – has its limits. In 1985, I finally threw in the towel and closed the operation.

* * * * * * * * * * * *

Undeterred by my first mistake of committing much of BPL's resources to a dying business, I quickly compounded the error. Indeed, my second blunder was far more serious than the first, eventually becoming the most costly in my career.

Early in 1967, I had Berkshire pay \$8.6 million to buy National Indemnity Company (“NICO”), a small but promising Omaha-based insurer. (A tiny sister company was also included in the deal.) Insurance was in my sweet spot: I understood and liked the industry.

Jack Ringwalt, the owner of NICO, was a long-time friend who wanted to sell to me – me, personally. In no way was his offer intended for Berkshire. So why did I purchase NICO for Berkshire rather than for BPL? I’ve had 48 years to think about that question, and I’ve yet to come up with a good answer. I simply made a colossal mistake.

If BPL had been the purchaser, my partners and I would have owned 100% of a fine business, destined to form the base for building the company Berkshire has become. Moreover, our growth would not have been impeded for nearly two decades by the unproductive funds imprisoned in the textile operation. Finally, our subsequent acquisitions would have been owned in their entirety by my partners and me rather than being 39%-owned by the legacy shareholders of Berkshire, to whom we had no obligation. Despite these facts staring me in the face, I opted to marry 100% of an excellent business (NICO) to a 61%-owned terrible business (Berkshire Hathaway), a decision that eventually diverted \$100 billion or so from BPL partners to a collection of strangers.

* * * * * * * * * * * *

One more confession and then I'll go on to more pleasant topics: Can you believe that in 1975 I bought Waumbec Mills, another New England textile company? Of course, the purchase price was a “bargain” based on the assets we received and the projected synergies with Berkshire’s existing textile business. Nevertheless – surprise, surprise – Waumbec was a disaster, with the mill having to be closed down not many years later.

And now some good news: The northern textile industry is finally extinct. You need no longer panic if you hear that I’ve been spotted wandering around New England.

Charlie Straightens Me Out

My cigar-butt strategy worked very well while I was managing small sums. Indeed, the many dozens of free puffs I obtained in the 1950s made that decade by far the best of my life for both relative and absolute investment performance.

Even then, however, I made a few exceptions to cigar butts, the most important being GEICO. Thanks to a 1951 conversation I had with Lorimer Davidson, a wonderful man who later became CEO of the company, I learned that GEICO was a terrific business and promptly put 65% of my \$9,800 net worth into its shares. Most of my gains in those early years, though, came from investments in mediocre companies that traded at bargain prices. Ben Graham had taught me that technique, and it worked.

But a major weakness in this approach gradually became apparent: Cigar-butt investing was scalable only to a point. With large sums, it would never work well.

In addition, though marginal businesses purchased at cheap prices may be attractive as short-term investments, they are the wrong foundation on which to build a large and enduring enterprise. Selecting a marriage partner clearly requires more demanding criteria than does dating. (Berkshire, it should be noted, would have been a highly satisfactory “date”: If we had taken Seabury Stanton’s \$11.375 offer for our shares, BPL’s weighted annual return on its Berkshire investment would have been about 40%.)

* * * * * * * * * * * *

It took Charlie Munger to break my cigar-butt habits and set the course for building a business that could combine huge size with satisfactory profits. Charlie had grown up a few hundred feet from where I now live and as a youth had worked, as did I, in my grandfather's grocery store. Nevertheless, it was 1959 before I met Charlie, long after he had left Omaha to make Los Angeles his home. I was then 28 and he was 35. The Omaha doctor who introduced us predicted that we would hit it off – and we did.

If you’ve attended our annual meetings, you know Charlie has a wide-ranging brilliance, a prodigious memory, and some firm opinions. I’m not exactly wishy-washy myself, and we sometimes don’t agree. In 56 years, however, we’ve never had an argument. When we differ, Charlie usually ends the conversation by saying: “Warren, think it over and you’ll agree with me because you’re smart and I’m right.”

What most of you do not know about Charlie is that architecture is among his passions. Though he began his career as a practicing lawyer (with his time billed at \$15 per hour), Charlie made his first real money in his 30s by designing and building five apartment projects near Los Angeles. Concurrently, he designed the house that he lives in today – some 55 years later. (Like me, Charlie can't be budged if he is happy in his surroundings.) In recent years, Charlie has designed large dorm complexes at Stanford and the University of Michigan and today, at age 91, is working on another major project.

From my perspective, though, Charlie's most important architectural feat was the design of today's Berkshire. The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.

Altering my behavior is not an easy task (ask my family). I had enjoyed reasonable success without Charlie's input, so why should I listen to a lawyer who had never spent a day in business school (when – ahem – I had attended three). But Charlie never tired of repeating his maxims about business and investing to me, and his logic was irrefutable. Consequently, Berkshire has been built to Charlie's blueprint. My role has been that of general contractor, with the CEOs of Berkshire's subsidiaries doing the real work as sub-contractors.

The year 1972 was a turning point for Berkshire (though not without occasional backsliding on my part – remember my 1975 purchase of Waumbec). We had the opportunity then to buy See’s Candy for Blue Chip Stamps, a company in which Charlie, I and Berkshire had major stakes, and which was later merged into Berkshire.

See’s was a legendary West Coast manufacturer and retailer of boxed chocolates, then annually earning about \$4 million pre-tax while utilizing only \$8 million of net tangible assets. Moreover, the company had a huge asset that did not appear on its balance sheet: a broad and durable competitive advantage that gave it significant pricing power. That strength was virtually certain to give See’s major gains in earnings over time. Better yet, these would materialize with only minor amounts of incremental investment. In other words, See’s could be expected to gush cash for decades to come.

The family controlling See’s wanted \$30 million for the business, and Charlie rightly said it was worth that much. But I didn’t want to pay more than \$25 million and wasn’t all that enthusiastic even at that figure. (A price that was three times net tangible assets made me gulp.) My misguided caution could have scuttled a terrific purchase. But, luckily, the sellers decided to take our \$25 million bid.

To date, See’s has earned \$1.9 billion pre-tax, with its growth having required added investment of only \$40 million. See’s has thus been able to distribute huge sums that have helped Berkshire buy other businesses that, in turn, have themselves produced large distributable profits. (Envision rabbits breeding.) Additionally, through watching See’s in action, I gained a business education about the value of powerful brands that opened my eyes to many other profitable investments.

* * * * * * * * * * * *

Even with Charlie's blueprint, I have made plenty of mistakes since Waumbec. The most gruesome was Dexter Shoe. When we purchased the company in 1993, it had a terrific record and in no way looked to me like a cigar butt. Its competitive strengths, however, were soon to evaporate because of foreign competition. And I simply didn't see that coming.

Consequently, Berkshire paid \$433 million for Dexter and, rather promptly, its value went to zero. GAAP accounting, however, doesn't come close to recording the magnitude of my error. The fact is that I gave Berkshire stock to the sellers of Dexter rather than cash, and the shares I used for the purchase are now worth about \$5.7 billion. As a financial disaster, this one deserves a spot in the Guinness Book of World Records.

Several of my subsequent errors also involved the use of Berkshire shares to purchase businesses whose earnings were destined to simply limp along. Mistakes of that kind are deadly. Trading shares of a wonderful business – which Berkshire most certainly is – for ownership of a so-so business irreparably destroys value.

We've also suffered financially when this mistake has been committed by companies whose shares Berkshire has owned (with the errors sometimes occurring while I was serving as a director). Too often CEOs seem blind to an elementary reality: The intrinsic value of the shares you give in an acquisition must not be greater than the intrinsic value of the business you receive.

I’ve yet to see an investment banker quantify this all-important math when he is presenting a stock-for-stock deal to the board of a potential acquirer. Instead, the banker’s focus will be on describing “customary” premiums-to-market-price that are currently being paid for acquisitions – an absolutely asinine way to evaluate the attractiveness of an acquisition – or whether the deal will increase the acquirer’s earnings-per-share (which in itself should be far from determinative). In striving to achieve the desired per-share number, a panting CEO and his “helpers” will often conjure up fanciful “synergies.” (As a director of 19 companies over the years, I’ve never heard “dis-synergies” mentioned, though I’ve witnessed plenty of these once deals have closed.) Post mortems of acquisitions, in which reality is honestly compared to the original projections, are rare in American boardrooms. They should instead be standard practice.

I can promise you that long after I'm gone, Berkshire's CEO and Board will carefully make intrinsic value calculations before issuing shares in any acquisitions. You can't get rich trading a hundred-dollar bill for eight tens (even if your advisor has handed you an expensive “fairness” opinion endorsing that swap).

* * * * * * * * * * * *

Overall, Berkshire's acquisitions have worked out well – and very well in the case of a few large ones. So, too, have our investments in marketable securities. The latter are always valued on our balance sheet at their market prices so any gains – including those unrealized – are immediately reflected in our net worth. But the businesses we buy outright are never revalued upward on our balance sheet, even when we could sell them for many billions of dollars more than their carrying value. The unrecorded gains in the value of Berkshire's subsidiaries have become huge, with these growing at a particularly fast pace in the last decade.

Listening to Charlie has paid off.

Berkshire Today

Berkshire is now a sprawling conglomerate, constantly trying to sprawl further.

Conglomerates, it should be acknowledged, have a terrible reputation with investors. And they richly deserve it. Let me first explain why they are in the doghouse, and then I will go on to describe why the conglomerate form brings huge and enduring advantages to Berkshire.

Since I entered the business world, conglomerates have enjoyed several periods of extreme popularity, the silliest of which occurred in the late 1960s. The drill for conglomerate CEOs then was simple: By personality, promotion or dubious accounting – and often by all three – these managers drove a fledgling conglomerate’s stock to, say, 20 times earnings and then issued shares as fast as possible to acquire another business selling at ten-or-so times earnings. They immediately applied “pooling” accounting to the acquisition, which – with not a dime’s worth of change in the underlying businesses – automatically increased per-share earnings, and used the rise as proof of managerial genius. They next explained to investors that this sort of talent justified the maintenance, or even the enhancement, of the acquirer’s p/e multiple. And, finally, they promised to endlessly repeat this procedure and thereby create ever-increasing per-share earnings.

Wall Street's love affair with this hocus-pocus intensified as the 1960s rolled by. The Street's denizens are always ready to suspend disbelief when dubious maneuvers are used to manufacture rising per-share earnings, particularly if these acrobatics produce mergers that generate huge fees for investment bankers. Auditors willingly sprinkled their holy water on the conglomerates' accounting and sometimes even made suggestions as to how to further juice the numbers. For many, gushers of easy money washed away ethical sensitivities.

Since the per-share earnings gains of an expanding conglomerate came from exploiting p/e differences, its CEO had to search for businesses selling at low multiples of earnings. These, of course, were characteristically mediocre businesses with poor long-term prospects. This incentive to bottom-fish usually led to a conglomerate's collection of underlying businesses becoming more and more junky. That mattered little to investors: It was deal velocity and pooling accounting they looked to for increased earnings.

The resulting firestorm of merger activity was fanned by an adoring press. Companies such as ITT, Litton Industries, Gulf & Western, and LTV were lionized, and their CEOs became celebrities. (These once-famous conglomerates are now long gone. As Yogi Berra said, “Every Napoleon meets his Watergate.”)

Back then, accounting shenanigans of all sorts – many of them ridiculously transparent – were excused or overlooked. Indeed, having an accounting wizard at the helm of an expanding conglomerate was viewed as a huge plus: Shareholders in those instances could be sure that reported earnings would never disappoint, no matter how bad the operating realities of the business might become.

In the late 1960s, I attended a meeting at which an acquisitive CEO bragged of his “bold, imaginative accounting.” Most of the analysts listening responded with approving nods, seeing themselves as having found a manager whose forecasts were certain to be met, whatever the business results might be.

Eventually, however, the clock struck twelve, and everything turned to pumpkins and mice. Once again, it became evident that business models based on the serial issuances of overpriced shares – just like chain-letter models – most assuredly redistribute wealth, but in no way create it. Both phenomena, nevertheless, periodically blossom in our country – they are every promoter's dream – though often they appear in a carefully-crafted disguise. The ending is always the same: Money flows from the gullible to the fraudster. And with stocks, unlike chain letters, the sums hijacked can be staggering.

At both BPL and Berkshire, we have never invested in companies that are hell-bent on issuing shares. That behavior is one of the surest indicators of a promotion-minded management, weak accounting, a stock that is overpriced and – all too often – outright dishonesty.

* * * * * * * * * * * *

So what do Charlie and I find so attractive about Berkshire's conglomerate structure? To put the case simply: If the conglomerate form is used judiciously, it is an ideal structure for maximizing long-term capital growth.

One of the heralded virtues of capitalism is that it efficiently allocates funds. The argument is that markets will direct investment to promising businesses and deny it to those destined to wither. That is true: With all its excesses, market-driven allocation of capital is usually far superior to any alternative.

Nevertheless, there are often obstacles to the rational movement of capital. As those 1954 Berkshire minutes made clear, capital withdrawals within the textile industry that should have been obvious were delayed for decades because of the vain hopes and self-interest of managements. Indeed, I myself delayed abandoning our obsolete textile mills for far too long.

A CEO with capital employed in a declining operation seldom elects to massively redeploy that capital into unrelated activities. A move of that kind would usually require that long-time associates be fired and mistakes be admitted. Moreover, it’s unlikely that CEO would be the manager you would wish to handle the redeployment job even if he or she was inclined to undertake it.

At the shareholder level, taxes and frictional costs weigh heavily on individual investors when they attempt to reallocate capital among businesses and industries. Even tax-free institutional investors face major costs as they move capital because they usually need intermediaries to do this job. A lot of mouths with expensive tastes then clamor to be fed – among them investment bankers, accountants, consultants, lawyers and such capital-reallocators as leveraged buyout operators. Money-shufflers don’t come cheap.

In contrast, a conglomerate such as Berkshire is perfectly positioned to allocate capital rationally and at minimal cost. Of course, form itself is no guarantee of success: We have made plenty of mistakes, and we will make more. Our structural advantages, however, are formidable.

At Berkshire, we can – without incurring taxes or much in the way of other costs – move huge sums from businesses that have limited opportunities for incremental investment to other sectors with greater promise. Moreover, we are free of historical biases created by lifelong association with a given industry and are not subject to pressures from colleagues having a vested interest in maintaining the status quo. That’s important: If horses had controlled investment decisions, there would have been no auto industry.

Another major advantage we possess is the ability to buy pieces of wonderful businesses – a.k.a. common stocks. That’s not a course of action open to most managements. Over our history, this strategic alternative has proved to be very helpful; a broad range of options always sharpens decision-making. The businesses we are offered by the stock market every day – in small pieces, to be sure – are often far more attractive than the businesses we are concurrently being offered in their entirety. Additionally, the gains we’ve realized from marketable securities have helped us make certain large acquisitions that would otherwise have been beyond our financial capabilities.

In effect, the world is Berkshire's oyster – a world offering us a range of opportunities far beyond those realistically open to most companies. We are limited, of course, to businesses whose economic prospects we can evaluate. And that's a serious limitation: Charlie and I have no idea what a great many companies will look like ten years from now. But that limitation is much smaller than that borne by an executive whose experience has been confined to a single industry. On top of that, we can profitably scale to a far larger size than the many businesses that are constrained by the limited potential of the single industry in which they operate.

I mentioned earlier that See's Candy had produced huge earnings compared to its modest capital requirements. We would have loved, of course, to intelligently use those funds to expand our candy operation. But our many attempts to do so were largely futile. So, without incurring tax inefficiencies or frictional costs, we have used the excess funds generated by See's to help purchase other businesses. If See's had remained a stand-alone company, its earnings would have had to be distributed to investors to redeploy, sometimes after being heavily depleted by large taxes and, almost always, by significant frictional and agency costs.

* * * * * * * * * * * *

Berkshire has one further advantage that has become increasingly important over the years: We are now the home of choice for the owners and managers of many outstanding businesses.

Families that own successful businesses have multiple options when they contemplate sale. Frequently, the best decision is to do nothing. There are worse things in life than having a prosperous business that one understands well. But sitting tight is seldom recommended by Wall Street. (Don’t ask the barber whether you need a haircut.)

When one part of a family wishes to sell while others wish to continue, a public offering often makes sense. But, when owners wish to cash out entirely, they usually consider one of two paths.

The first is sale to a competitor who is salivating at the possibility of wringing “synergies” from the combining of the two companies. This buyer invariably contemplates getting rid of large numbers of the seller’s associates, the very people who have helped the owner build his business. A caring owner, however – and there are plenty of them – usually does not want to leave his long-time associates sadly singing the old country song: “She got the goldmine, I got the shaft.”

The second choice for sellers is the Wall Street buyer. For some years, these purchasers accurately called themselves “leveraged buyout firms.” When that term got a bad name in the early 1990s – remember RJR and Barbarians at the Gate? – these buyers hastily relabeled themselves “private-equity.”

The name may have changed but that was all: Equity is dramatically reduced and debt is piled on in virtually all private-equity purchases. Indeed, the amount that a private-equity purchaser offers to the seller is in part determined by the buyer assessing the maximum amount of debt that can be placed on the acquired company.

Later, if things go well and equity begins to build, leveraged buy-out shops will often seek to re-leverage with new borrowings. They then typically use part of the proceeds to pay a huge dividend that drives equity sharply downward, sometimes even to a negative figure.

In truth, “equity” is a dirty word for many private-equity buyers; what they love is debt. And, because debt is currently so inexpensive, these buyers can frequently pay top dollar. Later, the business will be resold, often to another leveraged buyer. In effect, the business becomes a piece of merchandise.

Berkshire offers a third choice to the business owner who wishes to sell: a permanent home, in which the company's people and culture will be retained (though, occasionally, management changes will be needed). Beyond that, any business we acquire dramatically increases its financial strength and ability to grow. Its days of dealing with banks and Wall Street analysts are also forever ended.

Some sellers don't care about these matters. But, when sellers do, Berkshire does not have a lot of competition.

* * * * * * * * * * * *

Sometimes pundits propose that Berkshire spin-off certain of its businesses. These suggestions make no sense. Our companies are worth more as part of Berkshire than as separate entities. One reason is our ability to move funds between businesses or into new ventures instantly and without tax. In addition, certain costs duplicate themselves, in full or part, if operations are separated. Here's the most obvious example: Berkshire incurs nominal costs for its single board of directors; were our dozens of subsidiaries to be split off, the overall cost for directors would soar. So, too, would regulatory and administration expenditures.

Finally, there are sometimes important tax efficiencies for Subsidiary A because we own Subsidiary B. For example, certain tax credits that are available to our utilities are currently realizable only because we generate huge amounts of taxable income at other Berkshire operations. That gives Berkshire Hathaway Energy a major advantage over most public-utility companies in developing wind and solar projects.

Investment bankers, being paid as they are for action, constantly urge acquirers to pay 20% to 50% premiums over market price for publicly-held businesses. The bankers tell the buyer that the premium is justified for “control value” and for the wonderful things that are going to happen once the acquirer’s CEO takes charge. (What acquisition-hungry manager will challenge that assertion?)

A few years later, bankers – bearing straight faces – again appear and just as earnestly urge spinning off the earlier acquisition in order to “unlock shareholder value.” Spin-offs, of course, strip the owning company of its purported “control value” without any compensating payment. The bankers explain that the spun-off company will flourish because its management will be more entrepreneurial, having been freed from the smothering bureaucracy of the parent company. (So much for that talented CEO we met earlier.)

If the divesting company later wishes to reacquire the spun-off operation, it presumably would again be urged by its bankers to pay a hefty “control” premium for the privilege. (Mental “flexibility” of this sort by the banking fraternity has prompted the saying that fees too often lead to transactions rather than transactions leading to fees.)

It's possible, of course, that someday a spin-off or sale at Berkshire would be required by regulators. Berkshire carried out such a spin-off in 1979, when new regulations for bank holding companies forced us to divest a bank we owned in Rockford, Illinois.

Voluntary spin-offs, though, make no sense for us: We would lose control value, capital-allocation flexibility and, in some cases, important tax advantages. The CEOs who brilliantly run our subsidiaries now would have difficulty in being as effective if running a spun-off operation, given the operating and financial advantages derived from Berkshire's ownership. Moreover, the parent and the spun-off operations, once separated, would likely incur moderately greater costs than existed when they were combined.

* * * * * * * * * * * *

Before I depart the subject of spin-offs, let's look at a lesson to be learned from a conglomerate mentioned earlier: LTV. I'll summarize here, but those who enjoy a good financial story should read the piece about Jimmy Ling that ran in the October 1982 issue of D Magazine. Look it up on the Internet.

Through a lot of corporate razzle-dazzle, Ling had taken LTV from sales of only \$36 million in 1965 to number 14 on the Fortune 500 list just two years later. Ling, it should be noted, had never displayed any managerial skills. But Charlie told me long ago to never underestimate the man who overestimates himself. And Ling had no peer in that respect.

Ling's strategy, which he labeled “project redeployment,” was to buy a large company and then partially spin off its various divisions. In LTV’s 1966 annual report, he explained the magic that would follow: “Most importantly, acquisitions must meet the test of the 2 plus 2 equals 5 (or 6) formula.” The press, the public and Wall Street loved this sort of talk.

In 1967 Ling bought Wilson & Co., a huge meatpacker that also had interests in golf equipment and pharmaceuticals. Soon after, he split the parent into three businesses, Wilson & Co. (meatpacking), Wilson Sporting Goods and Wilson Pharmaceuticals, each of which was to be partially spun off. These companies quickly became known on Wall Street as Meatball, Golf Ball and Goof Ball.

Soon thereafter, it became clear that, like Icarus, Ling had flown too close to the sun. By the early 1970s, Ling's empire was melting, and he himself had been spun off from LTV . . . that is, fired.

Periodically, financial markets will become divorced from reality – you can count on that. More Jimmy Lings will appear. They will look and sound authoritative. The press will hang on their every word. Bankers will fight for their business. What they are saying will recently have “worked.” Their early followers will be feeling very clever. Our suggestion: Whatever their line, never forget that 2+2 will always equal 4. And when someone tells you how old-fashioned that math is --- zip up your wallet, take a vacation and come back in a few years to buy stocks at cheap prices.

* * * * * * * * * * * *

Today Berkshire possesses (1) an unmatched collection of businesses, most of them now enjoying favorable economic prospects; (2) a cadre of outstanding managers who, with few exceptions, are unusually devoted to both the subsidiary they operate and to Berkshire; (3) an extraordinary diversity of earnings, premier financial strength and oceans of liquidity that we will maintain under all circumstances; (4) a first-choice ranking among many owners and managers who are contemplating sale of their businesses and (5) in a point related to the preceding item, a culture, distinctive in many ways from that of most large companies, that we have worked 50 years to develop and that is now rock-solid.

These strengths provide us a wonderful foundation on which to build.

The Next 50 Years at Berkshire

Now let's take a look at the road ahead. Bear in mind that if I had attempted 50 years ago to gauge what was coming, certain of my predictions would have been far off the mark. With that warning, I will tell you what I would say to my family today if they asked me about Berkshire's future.

- First and definitely foremost, I believe that the chance of permanent capital loss for patient Berkshire shareholders is as low as can be found among single-company investments. That's because our per-share intrinsic business value is almost certain to advance over time.

This cheery prediction comes, however, with an important caution: If an investor's entry point into Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares have occasionally reached – it may well be many years before the investor can realize a profit. In other words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire is not exempt from this truth.

Purchases of Berkshire that investors make at a price modestly above the level at which the company would repurchase its shares, however, should produce gains within a reasonable period of time. Berkshire's directors will only authorize repurchases at a price they believe to be well below intrinsic value. (In our view, that is an essential criterion for repurchases that is often ignored by other managements.)

For those investors who plan to sell within a year or two after their purchase, I can offer no assurances, whatever the entry price. Movements of the general stock market during such abbreviated periods will likely be far more important in determining your results than the concomitant change in the intrinsic value of your Berkshire shares. As Ben Graham said many decades ago: “In the short-term the market is a voting machine; in the long-run it acts as a weighing machine.” Occasionally, the voting decisions of investors – amateurs and professionals alike – border on lunacy.

Since I know of no way to reliably predict market movements, I recommend that you purchase Berkshire shares only if you expect to hold them for at least five years. Those who seek short-term profits should look elsewhere.

Another warning: Berkshire shares should not be purchased with borrowed money. There have been three times since 1965 when our stock has fallen about 50% from its high point. Someday, something close to this kind of drop will happen again, and no one knows when. Berkshire will almost certainly be a satisfactory holding for investors. But it could well be a disastrous choice for speculators employing leverage.

- I believe the chance of any event causing Berkshire to experience financial problems is essentially zero. We will always be prepared for the thousand-year flood; in fact, if it occurs we will be selling life jackets to the unprepared. Berkshire played an important role as a “first responder” during the 2008-2009 meltdown, and we have since more than doubled the strength of our balance sheet and our earnings potential. Your company is the Gibraltar of American business and will remain so.

Financial staying power requires a company to maintain three strengths under all circumstances: (1) a large and reliable stream of earnings; (2) massive liquid assets and (3) no significant near-term cash requirements. Ignoring that last necessity is what usually leads companies to experience unexpected problems: Too often, CEOs of profitable companies feel they will always be able to refund maturing obligations, however large these are. In 2008-2009, many managements learned how perilous that mindset can be.

Here's how we will always stand on the three essentials. First, our earnings stream is huge and comes from a vast array of businesses. Our shareholders now own many large companies that have durable competitive advantages, and we will acquire more of those in the future. Our diversification assures Berkshire's continued profitability, even if a catastrophe causes insurance losses that far exceed any previously experienced.

Next up is cash. At a healthy business, cash is sometimes thought of as something to be minimized – as an unproductive asset that acts as a drag on such markers as return on equity. Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.

American business provided a case study of that in 2008. In September of that year, many long-prosperous companies suddenly wondered whether their checks would bounce in the days ahead. Overnight, their financial oxygen disappeared.

At Berkshire, our “breathing” went uninterrupted. Indeed, in a three-week period spanning late September and early October, we supplied \$15.6 billion of fresh money to American businesses.

We could do that because we always maintain at least \$20 billion – and usually far more – in cash equivalents. And by that we mean U.S. Treasury bills, not other substitutes for cash that are claimed to deliver liquidity and actually do so, except when it is truly needed. When bills come due, only cash is legal tender. Don’t leave home without it.

Finally – getting to our third point – we will never engage in operating or investment practices that can result in sudden demands for large sums. That means we will not expose Berkshire to short-term debt maturities of size nor enter into derivative contracts or other business arrangements that could require large collateral calls.

Some years ago, we became a party to certain derivative contracts that we believed were significantly mispriced and that had only minor collateral requirements. These have proved to be quite profitable. Recently, however, newly-written derivative contracts have required full collateralization. And that ended our interest in derivatives, regardless of what profit potential they might offer. We have not, for some years, written these contracts, except for a few needed for operational purposes at our utility businesses.

Moreover, we will not write insurance contracts that give policyholders the right to cash out at their option. Many life insurance products contain redemption features that make them susceptible to a “run” in times of extreme panic. Contracts of that sort, however, do not exist in the property-casualty world that we inhabit. If our premium volume should shrink, our float would decline – but only at a very slow pace.

The reason for our conservatism, which may impress some people as extreme, is that it is entirely predictable that people will occasionally panic, but not at all predictable when this will happen. Though practically all days are relatively uneventful, tomorrow is always uncertain. (I felt no special apprehension on December 6, 1941 or September 10, 2001.) And if you can't predict what tomorrow will bring, you must be prepared for whatever it does.

A CEO who is 64 and plans to retire at 65 may have his own special calculus in evaluating risks that have only a tiny chance of happening in a given year. He may, in fact, be “right” 99% of the time. Those odds, however, hold no appeal for us. We will never play financial Russian roulette with the funds you’ve entrusted to us, even if the metaphorical gun has 100 chambers and only one bullet. In our view, it is madness to risk losing what you need in pursuing what you simply desire.

- Despite our conservatism, I think we will be able every year to build the underlying per-share earning power of Berkshire. That does not mean operating earnings will increase each year – far from it. The U.S. economy will ebb and flow – though mostly flow – and, when it weakens, so will our current earnings. But we will continue to achieve organic gains, make bolt-on acquisitions and enter new fields. I believe, therefore, that Berkshire will annually add to its underlying earning power.

In some years the gains will be substantial, and at other times they will be minor. Markets, competition, and chance will determine when opportunities come our way. Through it all, Berkshire will keep moving forward, powered by the array of solid businesses we now possess and the new companies we will purchase. In most years, moreover, our country's economy will provide a strong tailwind for business. We are blessed to have the United States as our home field.

- The bad news is that Berkshire's long-term gains – measured by percentages, not by dollars – cannot be dramatic and will not come close to those achieved in the past 50 years. The numbers have become too big. I think Berkshire will outperform the average American company, but our advantage, if any, won't be great.

Eventually – probably between ten and twenty years from now – Berkshire’s earnings and capital resources will reach a level that will not allow management to intelligently reinvest all of the company’s earnings. At that time our directors will need to determine whether the best method to distribute the excess earnings is through dividends, share repurchases or both. If Berkshire shares are selling below intrinsic business value, massive repurchases will almost certainly be the best choice. You can be comfortable that your directors will make the right decision.

- No company will be more shareholder-minded than Berkshire. For more than 30 years, we have annually reaffirmed our Shareholder Principles (see page 117), always leading off with: “Although our form is corporate, our attitude is partnership.” This covenant with you is etched in stone.

We have an extraordinarily knowledgeable and business-oriented board of directors ready to carry out that promise of partnership. None took the job for the money: In an arrangement almost non-existent elsewhere, our directors are paid only token fees. They receive their rewards instead through ownership of Berkshire shares and the satisfaction that comes from being good stewards of an important enterprise.

The shares that they and their families own – which, in many cases, are worth very substantial sums – were purchased in the market (rather than their materializing through options or grants). In addition, unlike almost all other sizable public companies, we carry no directors and officers liability insurance. At Berkshire, directors walk in your shoes.

To further ensure continuation of our culture, I have suggested that my son, Howard, succeed me as a non-executive Chairman. My only reason for this wish is to make change easier if the wrong CEO should ever be employed and there occurs a need for the Chairman to move forcefully. I can assure you that this problem has a very low probability of arising at Berkshire – likely as low as at any public company. In my service on the boards of nineteen public companies, however, I’ve seen how hard it is to replace a mediocre CEO if that person is also Chairman. (The deed usually gets done, but almost always very late.)

If elected, Howard will receive no pay and will spend no time at the job other than that required of all directors. He will simply be a safety valve to whom any director can go if he or she has concerns about the CEO and wishes to learn if other directors are expressing doubts as well. Should multiple directors be apprehensive, Howard's chairmanship will allow the matter to be promptly and properly addressed.

- Choosing the right CEO is all-important and is a subject that commands much time at Berkshire board meetings. Managing Berkshire is primarily a job of capital allocation, coupled with the selection and retention of outstanding managers to captain our operating subsidiaries. Obviously, the job also requires the replacement of a subsidiary's CEO when that is called for. These duties require Berkshire's CEO to be a rational, calm and decisive individual who has a broad understanding of business and good insights into human behavior. It's important as well that he knows his limits. (As Tom Watson, Sr. of IBM said, "I'm not genius, but I'm smart in spots and I stay around those spots.")

Character is crucial: A Berkshire CEO must be “all in” for the company, not for himself. (I’m using male pronouns to avoid awkward wording, but gender should never decide who becomes CEO.) He can’t help but earn money far in excess of any possible need for it. But it’s important that neither ego nor avarice motivate him to reach for pay matching his most lavishly-compensated peers, even if his achievements far exceed theirs. A CEO’s behavior has a huge impact on managers down the line: If it’s clear to them that shareholders’ interests are paramount to him, they will, with few exceptions, also embrace that way of thinking.

My successor will need one other particular strength: the ability to fight off the ABCs of business decay, which are arrogance, bureaucracy and complacency. When these corporate cancers metastasize, even the strongest of companies can falter. The examples available to prove the point are legion, but to maintain friendships I will exhume only cases from the distant past.

In their glory days, General Motors, IBM, Sears Roebuck and U.S. Steel sat atop huge industries. Their strengths seemed unassailable. But the destructive behavior I deplored above eventually led each of them to fall to depths that their CEOs and directors had not long before thought impossible. Their one-time financial strength and their historical earning power proved no defense.

Only a vigilant and determined CEO can ward off such debilitating forces as Berkshire grows ever larger. He must never forget Charlie's plea: "Tell me where I'm going to die, so I'll never go there." If our non-economic values were to be lost, much of Berkshire's economic value would collapse as well. "Tone at the top" will be key to maintaining Berkshire's special culture.

Fortunately, the structure our future CEOs will need to be successful is firmly in place. The extraordinary delegation of authority now existing at Berkshire is the ideal antidote to bureaucracy. In an operating sense, Berkshire is not a giant company but rather a collection of large companies. At headquarters, we have never had a committee nor have we ever required our subsidiaries to submit budgets (though many use them as an important internal tool). We don't have a legal office nor departments that other companies take for granted: human relations, public relations, investor relations, strategy, acquisitions, you name it.

We do, of course, have an active audit function; no sense being a damned fool. To an unusual degree, however, we trust our managers to run their operations with a keen sense of stewardship. After all, they were doing exactly that before we acquired their businesses. With only occasional exceptions, furthermore, our trust produces better results than would be achieved by streams of directives, endless reviews and layers of bureaucracy. Charlie and I try to interact with our managers in a manner consistent with what we would wish for, if the positions were reversed.

- Our directors believe that our future CEOs should come from internal candidates whom the Berkshire board has grown to know well. Our directors also believe that an incoming CEO should be relatively young, so that he or she can have a long run in the job. Berkshire will operate best if its CEOs average well over ten years at the helm. (It’s hard to teach a new dog old tricks.) And they are not likely to retire at 65 either (or have you noticed?).

In both Berkshire's business acquisitions and large, tailored investment moves, it is important that our counterparties be both familiar with and feel comfortable with Berkshire's CEO. Developing confidence of that sort and cementing relationships takes time. The payoff, though, can be huge.

Both the board and I believe we now have the right person to succeed me as CEO – a successor ready to assume the job the day after I die or step down. In certain important respects, this person will do a better job than I am doing.

- Investments will always be of great importance to Berkshire and will be handled by several specialists. They will report to the CEO because their investment decisions, in a broad way, will need to be coordinated with Berkshire's operating and acquisition programs. Overall, though, our investment managers will enjoy great autonomy. In this area, too, we are in fine shape for decades to come. Todd Combs and Ted Weschler, each of whom has spent several years on Berkshire's investment team, are first-rate in all respects and can be of particular help to the CEO in evaluating acquisitions.

All told, Berkshire is ideally positioned for life after Charlie and I leave the scene. We have the right people in place – the right directors, managers and prospective successors to those managers. Our culture, furthermore, is embedded throughout their ranks. Our system is also regenerative. To a large degree, both good and bad cultures self-select to perpetuate themselves. For very good reasons, business owners and operating managers with values similar to ours will continue to be attracted to Berkshire as a one-of-a-kind and permanent home.

- I would be remiss if I didn't salute another key constituency that makes Berkshire special: our shareholders. Berkshire truly has an owner base unlike that of any other giant corporation. That fact was demonstrated in spades at last year's annual meeting, where the shareholders were offered a proxy resolution:

RESOLVED: Whereas the corporation has more money than it needs and since the owners unlike Warren are not multi billionaires, the board shall consider paying a meaningful annual dividend on the shares.

The sponsoring shareholder of that resolution never showed up at the meeting, so his motion was not officially proposed. Nevertheless, the proxy votes had been tallied, and they were enlightening.

Not surprisingly, the A shares – owned by relatively few shareholders, each with a large economic interest – voted “no” on the dividend question by a margin of 89 to 1.

The remarkable vote was that of our B shareholders. They number in the hundreds of thousands – perhaps even totaling one million – and they voted 660,759,855 “no” and 13,927,026 “yes,” a ratio of about 47 to 1.

Our directors recommended a “no” vote but the company did not otherwise attempt to influence shareholders. Nevertheless, 98% of the shares voting said, in effect, “Don’t send us a dividend but instead reinvest all of the earnings.” To have our fellow owners – large and small – be so in sync with our managerial philosophy is both remarkable and rewarding.

I am a lucky fellow to have you as partners.

Warren E. Buffett

Vice Chairman's Thoughts – Past and Future

To the shareholders of Berkshire Hathaway Inc.:

I closely watched the 50-year history of Berkshire's uncommon success under Warren Buffett. And it now seems appropriate that I independently supplement whatever celebratory comment comes from him. I will try to do five things.

(1) Describe the management system and policies that caused a small and unfixably-doomed commodity textile business to morph into the mighty Berkshire that now exists,
(2) Explain how the management system and policies came into being,
(3) Explain, to some extent, why Berkshire did so well,
(4) Predict whether abnormally good results would continue if Buffett were soon to depart, and
(5) Consider whether Berkshire's great results over the last 50 years have implications that may prove useful elsewhere.

The management system and policies of Berkshire under Buffett (herein together called “the Berkshire system”) were fixed early and are described below:

(1) Berkshire would be a diffuse conglomerate, averse only to activities about which it could not make useful predictions.
(2) Its top company would do almost all business through separately incorporated subsidiaries whose CEOs would operate with very extreme autonomy.
(3) There would be almost nothing at conglomerate headquarters except a tiny office suite containing a Chairman, a CFO, and a few assistants who mostly helped the CFO with auditing, internal control, etc.
(4) Berkshire subsidiaries would always prominently include casualty insurers. Those insurers as a group would be expected to produce, in due course, dependable underwriting gains while also producing substantial “float” (from unpaid insurance liabilities) for investment.
(5) There would be no significant system-wide personnel system, stock option system, other incentive system, retirement system, or the like, because the subsidiaries would have their own systems, often different.
(6) Berkshire's Chairman would reserve only a few activities for himself.

(i) He would manage almost all security investments, with these normally residing in Berkshire's casualty insurers.
(ii) He would choose all CEOs of important subsidiaries, and he would fix their compensation and obtain from each a private recommendation for a successor in case one was suddenly needed.
(iii) He would deploy most cash not needed in subsidiaries after they had increased their competitive advantage, with the ideal deployment being the use of that cash to acquire new subsidiaries.
(iv) He would make himself promptly available for almost any contact wanted by any subsidiary's CEO, and he would require almost no additional contact.
(v) He would write a long, logical, and useful letter for inclusion in his annual report, designed as he would wish it to be if he were only a passive shareholder, and he would be available for hours of answering questions at annual shareholders' meetings.
(vi) He would try to be an exemplar in a culture that would work well for customers, shareholders, and other incumbents for a long time, both before and after his departure.
(vii) His first priority would be reservation of much time for quiet reading and thinking, particularly that which might advance his determined learning, no matter how old he became; and

(viii) He would also spend much time in enthusiastically admiring what others were accomplishing.

(7) New subsidiaries would usually be bought with cash, not newly issued stock.
(8) Berkshire would not pay dividends so long as more than one dollar of market value for shareholders was being created by each dollar of retained earnings.
(9) In buying a new subsidiary, Berkshire would seek to pay a fair price for a good business that the Chairman could pretty well understand. Berkshire would also want a good CEO in place, one expected to remain for a long time and to manage well without need for help from headquarters.
(10) In choosing CEOs of subsidiaries, Berkshire would try to secure trustworthiness, skill, energy, and love for the business and circumstances the CEO was in.
(11) As an important matter of preferred conduct, Berkshire would almost never sell a subsidiary.
(12) Berkshire would almost never transfer a subsidiary's CEO to another unrelated subsidiary.
(13) Berkshire would never force the CEO of a subsidiary to retire on account of mere age.
(14) Berkshire would have little debt outstanding as it tried to maintain (i) virtually perfect creditworthiness under all conditions and (ii) easy availability of cash and credit for deployment in times presenting unusual opportunities.
(15) Berkshire would always be user-friendly to a prospective seller of a large business. An offer of such a business would get prompt attention. No one but the Chairman and one or two others at Berkshire would ever know about the offer if it did not lead to a transaction. And they would never tell outsiders about it.

Both the elements of the Berkshire system and their collected size are quite unusual. No other large corporation I know of has half of such elements in place.

How did Berkshire happen to get a corporate personality so different from the norm?

Well, Buffett, even when only 34 years old, controlled about $45\%$ of Berkshire's shares and was completely trusted by all the other big shareholders. He could install whatever system he wanted. And he did so, creating the Berkshire system.

Almost every element was chosen because Buffett believed that, under him, it would help maximize Berkshire's achievement. He was not trying to create a one-type-fits-all system for other corporations. Indeed, Berkshire's subsidiaries were not required to use the Berkshire system in their own operations. And some flourished while using different systems.

What was Buffett aiming at as he designed the Berkshire system?

Well, over the years I diagnosed several important themes:

(1) He particularly wanted continuous maximization of the rationality, skills, and devotion of the most important people in the system, starting with himself.
(2) He wanted win/win results everywhere--in gaining loyalty by giving it, for instance.
(3) He wanted decisions that maximized long-term results, seeking these from decision makers who usually stayed long enough in place to bear the consequences of decisions.
(4) He wanted to minimize the bad effects that would almost inevitably come from a large bureaucracy at headquarters.
(5) He wanted to personally contribute, like Professor Ben Graham, to the spread of wisdom attained.

When Buffett developed the Berkshire system, did he foresee all the benefits that followed? No. Buffett stumbled into some benefits through practice evolution. But, when he saw useful consequences, he strengthened their causes.

Why did Berkshire under Buffett do so well?

Only four large factors occur to me:

(1) The constructive peculiarities of Buffett,
(2) The constructive peculiarities of the Berkshire system,
(3) Good luck, and
(4) The weirdly intense, contagious devotion of some shareholders and other admirers, including some in the press.

I believe all four factors were present and helpful. But the heavy freight was carried by the constructive peculiarities, the weird devotion, and their interactions.

In particular, Buffett's decision to limit his activities to a few kinds and to maximize his attention to them, and to keep doing so for 50 years, was a lollapalooza. Buffett succeeded for the same reason Roger Federer became good at tennis.

Buffett was, in effect, using the winning method of the famous basketball coach, John Wooden, who won most regularly after he had learned to assign virtually all playing time to his seven best players. That way, opponents always faced his best players, instead of his second best. And, with the extra playing time, the best players improved more than was normal.

And Buffett much out-Woodened Wooden, because in his case the exercise of skill was concentrated in one person, not seven, and his skill improved and improved as he got older and older during 50 years, instead of deteriorating like the skill of a basketball player does.

Moreover, by concentrating so much power and authority in the often-long-serving CEOs of important subsidiaries, Buffett was also creating strong Wooden-type effects there. And such effects enhanced the skills of the CEOs and the achievements of the subsidiaries.

Then, as the Berkshire system bestowed much-desired autonomy on many subsidiaries and their CEOs, and Berkshire became successful and well known, these outcomes attracted both more and better subsidiaries into Berkshire, and better CEOs as well.

And the better subsidiaries and CEOs then required less attention from headquarters, creating what is often called a “virtuous circle.”

How well did it work out for Berkshire to always include casualty insurers as important subsidiaries?

Marvelously well. Berkshire's ambitions were unreasonably extreme and, even so, it got what it wanted.

Casualty insurers often invest in common stocks with a value amounting roughly to their shareholders' equity, as did Berkshire's insurance subsidiaries. And the S&P 500 Index produced about $10\%$ per annum, pre-tax, during the last 50 years, creating a significant tailwind.

And, in the early decades of the Buffett era, common stocks within Berkshire's insurance subsidiaries greatly outperformed the index, exactly as Buffett expected. And, later, when both the large size of Berkshire's stockholdings and income tax considerations caused the index-beating part of returns to fade to insignificance (perhaps not forever), other and better advantage came. Ajit Jain created out of nothing an immense reinsurance business that produced both a huge “float” and a large underwriting gain. And all of GEICO came into Berkshire, followed by a quadrupling of GEICO's market share. And the rest of Berkshire's insurance operations hugely improved, largely by dint of reputational advantage, underwriting discipline, finding and staying within good niches, and recruiting and holding outstanding people.

Then, later, as Berkshire's nearly unique and quite dependable corporate personality and large size became well known, its insurance subsidiaries got and seized many attractive opportunities, not available to others, to buy privately issued securities. Most of these securities had fixed maturities and produced outstanding results.

Berkshire's marvelous outcome in insurance was not a natural result. Ordinarily, a casualty insurance business is a producer of mediocre results, even when very well managed. And such results are of little use. Berkshire's better outcome was so astoundingly large that I believe that Buffett would now fail to recreate it if he returned to a small base while retaining his smarts and regaining his youth.

Did Berkshire suffer from being a diffuse conglomerate? No, its opportunities were usefully enlarged by a widened area for operation. And bad effects, common elsewhere, were prevented by Buffett's skills.

Why did Berkshire prefer to buy companies with cash, instead of its own stock? Well, it was hard to get anything in exchange for Berkshire stock that was as valuable as what was given up.

Why did Berkshire's acquisition of companies outside the insurance business work out so well for Berkshire shareholders when the normal result in such acquisitions is bad for shareholders of the acquirer?

Well, Berkshire, by design, had methodological advantages to supplement its better opportunities. It never had the equivalent of a “department of acquisitions” under pressure to buy. And it never relied on advice from “helpers” sure to be prejudiced in favor of transactions. And Buffett held self-delusion at bay as he underclaimed expertise while he knew better than most corporate executives what worked and what didn’t in business, aided by his long experience as a passive investor. And, finally, even when Berkshire was getting much better opportunities than most others, Buffett often displayed almost inhuman patience and seldom bought. For instance, during his first ten years in control of Berkshire, Buffett saw one business (textiles) move close to death and two new businesses come in, for a net gain of one.

What were the big mistakes made by Berkshire under Buffett? Well, while mistakes of commission were common, almost all huge errors were in not making a purchase, including not purchasing Walmart stock when that was sure to work out enormously well. The errors of omission were of much importance. Berkshire's net worth would now be at least \$50 billion higher if it had seized several opportunities it was not quite smart enough to recognize as virtually sure things.

The next to last task on my list was: Predict whether abnormally good results would continue at Berkshire if Buffett were soon to depart.

The answer is yes. Berkshire has in place in its subsidiaries much business momentum grounded in much durable competitive advantage.

Moreover, its railroad and utility subsidiaries now provide much desirable opportunity to invest large sums in new fixed assets. And many subsidiaries are now engaged in making wise “bolt-on” acquisitions.

Provided that most of the Berkshire system remains in place, the combined momentum and opportunity now present is so great that Berkshire would almost surely remain a better-than-normal company for a very long time even if (1) Buffett left tomorrow, (2) his successors were persons of only moderate ability, and (3) Berkshire never again purchased a large business.

But, under this Buffett-soon-leaves assumption, his successors would not be “of only moderate ability.” For instance, Ajit Jain and Greg Abel are proven performers who would probably be under-described as “world-class.” “World-leading” would be the description I would choose. In some important ways, each is a better business executive than Buffett.

And I believe neither Jain nor Abel would (1) leave Berkshire, no matter what someone else offered or (2) desire much change in the Berkshire system.

Nor do I think that desirable purchases of new businesses would end with Buffett's departure. With Berkshire now so large and the age of activism upon us, I think some desirable acquisition opportunities will come and that Berkshire's \$60 billion in cash will constructively decrease.

My final task was to consider whether Berkshire's great results over the last 50 years have implications that may prove useful elsewhere.

The answer is plainly yes. In its early Buffett years, Berkshire had a big task ahead: turning a tiny stash into a large and useful company. And it solved that problem by avoiding bureaucracy and relying much on one thoughtful leader for a long, long time as he kept improving and brought in more people like himself.

Compare this to a typical big-corporation system with much bureaucracy at headquarters and a long succession of CEOs who come in at about age 59, pause little thereafter for quiet thought, and are soon forced out by a fixed retirement age.

I believe that versions of the Berkshire system should be tried more often elsewhere and that the worst attributes of bureaucracy should much more often be treated like the cancers they so much resemble. A good example of bureaucracy fixing was created by George Marshall when he helped win World War II by getting from Congress the right to ignore seniority in choosing generals.

Sincerely,

Charles T. Munger

伯克希尔业绩 vs. 标普500

年份	年度百分比变化
	伯克希尔每股账面价值	伯克希尔每股市场价值	标普500含股息
1965	23.8%	49.5%	10.0%
1966	20.3%	(3.4%)	(11.7%)
1967	11.0%	13.3%	30.9%
1968	19.0%	77.8%	11.0%
1969	16.2%	19.4%	(8.4%)
1970	12.0%	(4.6%)	3.9%
1971	16.4%	80.5%	14.6%
1972	21.7%	8.1%	18.9%
1973	4.7%	(2.5%)	(14.8%)
1974	5.5%	(48.7%)	(26.4%)
1975	21.9%	2.5%	37.2%
1976	59.3%	129.3%	23.6%
1977	31.9%	46.8%	(7.4%)
1978	24.0%	14.5%	6.4%
1979	35.7%	102.5%	18.2%
1980	19.3%	32.8%	32.3%
1981	31.4%	31.8%	(5.0%)
1982	40.0%	38.4%	21.4%
1983	32.3%	69.0%	22.4%
1984	13.6%	(2.7%)	6.1%
1985	48.2%	93.7%	31.6%
1986	26.1%	14.2%	18.6%
1987	19.5%	4.6%	5.1%
1988	20.1%	59.3%	16.6%
1989	44.4%	84.6%	31.7%
1990	7.4%	(23.1%)	(3.1%)
1991	39.6%	35.6%	30.5%
1992	20.3%	29.8%	7.6%
1993	14.3%	38.9%	10.1%
1994	13.9%	25.0%	1.3%
1995	43.1%	57.4%	37.6%
1996	31.8%	6.2%	23.0%
1997	34.1%	34.9%	33.4%
1998	48.3%	52.2%	28.6%
1999	0.5%	(19.9%)	21.0%
2000	6.5%	26.6%	(9.1%)
2001	(6.2%)	6.5%	(11.9%)
2002	10.0%	(3.8%)	(22.1%)
2003	21.0%	15.8%	28.7%
2004	10.5%	4.3%	10.9%
2005	6.4%	0.8%	4.9%
2006	18.4%	24.1%	15.8%
2007	11.0%	28.7%	5.5%
2008	(9.6%)	(31.8%)	(37.0%)
2009	19.8%	2.7%	26.5%
2010	13.0%	21.4%	15.1%
2011	4.6%	(4.7%)	2.1%
2012	14.4%	16.8%	16.0%
2013	18.2%	32.7%	32.4%
2014	8.3%	27.0%	13.7%
1965-2014年复合年增长率	19.4%	21.6%	9.9%
1964-2014年总体增长率	751,113%	1,826,163%	11,196%

注释：数据按日历年列示，但以下年份除外：1965年和1966年截至9月30日；1967年截至12月31日（15个月）。自1979年起，会计准则要求保险公司按市价（而非之前要求的成本与市价孰低法）计量所持权益证券。在本表中，伯克希尔截至1978年的业绩已按新规则重述。其他所有方面，业绩均按最初报告的数字计算。标普500指数为税前数据，而伯克希尔数据为税后数据。如果一家像伯克希尔这样的公司只是持有标普500指数并计提相应税款，则其业绩在指数上涨年份会落后于标普500，但在指数下跌年份会超过标普500。多年来，税务成本会导致整体落后幅度相当大。

致读者：五十年前，现任管理层接手伯克希尔。值此五十周年之际，沃伦·巴菲特和查理·芒格各自撰文，回顾过去50年伯克希尔的历程，并展望未来50年。两人在阅读对方所写内容后，均未改动自己文章的一个字。沃伦的思考从第24页开始，查理从第39页开始。股东（尤其是新股东）在阅读下面开始的2014年报告之前，或许先读一下这两封信会有所裨益。

伯克希尔·哈撒韦公司

致伯克希尔·哈撒韦公司股东：

2014年伯克希尔的净资产增加了183亿美元，使我们的A类股和B类股的每股账面价值均增长了8.3%。过去50年（即自现任管理层接手以来），每股账面价值从19美元增长至146,186美元，年复合增长率为19.4%。*

在我们的任职期间，我们一直将标普500指数的年度表现与伯克希尔每股账面价值的变化进行比较。这样做是因为账面价值一直是一个粗略但有用的跟踪指标，用于衡量真正重要的数字：内在业务价值。

在最初的几十年里，账面价值与内在价值之间的关系比现在紧密得多。这是因为当时伯克希尔的资产主要是证券，其价值会根据当前市场价格持续重估。用华尔街的行话说，计算账面价值所涉及的大部分资产都是“按市价计价”的。

如今，我们的重点已大幅转向拥有和运营大型企业。其中许多企业的价值远高于其基于成本计算的账面价值。但无论这些公司的价值增长了多少，该账面金额从未被上调。因此，伯克希尔内在价值与其账面价值之间的差距已显著扩大。

考虑到这一点，我们在对页的业绩表中新增了一组数据——伯克希尔股票价格的历史记录。我要强调，市场价格在短期内有其局限性。股票的月度或年度波动往往不规则，并不反映内在价值的变化。但随着时间的推移，股票价格与内在价值几乎总会趋同。伯克希尔副董事长兼我的合伙人查理·芒格和我认为，伯克希尔的情况正是如此：在我们看来，过去50年伯克希尔每股内在价值的增长，大致相当于公司股价1,826,163%的涨幅。

伯克希尔年度回顾

对于伯克希尔来说，除了一个方面之外，所有主要战线都表现良好。以下是一些重要进展：
- 我们的"五大金刚"——伯克希尔旗下最大的非保险业务组合——在2014年创下了124亿美元的税前利润纪录，比2013年增加16亿美元。* 这个"神圣"团体中的公司包括：伯克希尔·哈撒韦能源（原中美能源）、BNSF、IMC（我之前称其为Iscar）、路博润和Marmon。

在这五家公司中，十年前我们仅拥有伯克希尔·哈撒韦能源，当时其盈利为3.93亿美元。随后，我们以全现金方式收购了其中三家。在收购第五家——BNSF时，我们支付了约70%的现金，剩余部分以发行伯克希尔股票的方式支付，导致流通股增加6.1%。换句话说，这五家公司十年间为伯克希尔贡献的120亿美元年度收益增长，仅伴随着轻微的股权稀释。这符合我们的目标：不仅增加盈利，还要确保每股收益也同步增长。

如果美国经济在2015年继续改善，我们预期"五大金刚"的盈利也会随之增长。增幅可能达到10亿美元，部分原因是该集团已完成或已签约的补强型收购。

• 2014年的坏消息同样来自这五家公司，但与盈利无关。当年，BNSF让许多客户失望。这些托运人依赖我们，服务失误会严重损害他们的业务。

BNSF是伯克希尔迄今为止最重要的非保险子公司。为改善其表现，我们将在2015年投入60亿美元用于厂房和设备。这一金额比任何其他铁路公司单年的投入高出近50%，无论与收入、盈利还是折旧费用相比，都堪称天文数字。

尽管天气——去年尤其恶劣——总会给铁路带来各种运营问题，但我们的责任是不惜一切代价将服务恢复到行业领先水平。这不可能一蹴而就：提升系统容量所需的大量工作有时会在进行过程中干扰运营。不过最近，我们的大规模投入开始显现成效。在过去三个月里，BNSF的性能指标比去年有了显著改善。

• 我们众多较小的非保险业务去年盈利51亿美元，高于2013年的47亿美元。与"五大金刚"一样，我们预期2015年这些业务还会进一步增长。在这个群体中，有两家公司去年盈利在4亿至6亿美元之间，六家在2.5亿至4亿美元之间，七家在1亿至2.5亿美元之间。这一业务组合的数量和盈利都将增长。我们的雄心没有终点。

• 伯克希尔庞大且不断增长的保险业务在2014年再次实现承销盈利——这已是连续第12年——并且浮存金也有所增加。在这12年间，我们的浮存金——那些不属于我们但我们可以为伯克希尔利益进行投资的资金——从410亿美元增长到840亿美元。尽管这一增长和浮存金的规模都没有反映在伯克希尔的盈利中，但浮存金因其让我们能够持有的资产而产生了可观的投资收入。

与此同时，在这12年间，我们的承销盈利总计240亿美元，其中包括2014年赚取的27亿美元。而这一切都始于1967年我们以860万美元收购National Indemnity（国民赔偿公司）。
- 尽管我和查理在寻找新业务收购，我们的众多子公司也经常进行补强型收购。去年尤其成果丰硕：我们签订了31项补强型收购协议，预计总花费78亿美元。这些交易的规模从40万美元到29亿美元不等。不过，最大的一笔收购——金霸王（Duracell）——要到今年下半年才能完成交割。届时它将归入马蒙集团（Marmon）管辖。

我和查理鼓励价格合理的补强型收购（大多数找上门的交易并不合理）。这些收购将资本投入与现有业务契合的领域，并由我们经验丰富的经理人团队管理。这意味着我们无需额外操劳，却能获得更多收益——这种组合我们觉得特别有吸引力。未来几年，我们还会做更多这样的补强型交易。

• 两年前，我的朋友豪尔赫·保罗·莱曼（Jorge Paulo Lemann）请伯克希尔加入他的3G资本集团收购亨氏（Heinz）。我当即同意，这根本不用多想：我立刻知道，从个人和财务角度来看，这次合作都会很成功。而事实也的确如此。

我不介意承认，亨氏在董事长亚历克斯·贝林（Alex Behring）和首席执行官贝尔纳多·希斯（Bernardo Hees）的带领下，经营得比我亲自上阵要好得多。他们对自己有着极高的绩效标准，从不满足，即便业绩已远超竞争对手。

我们期待与3G有更多合作。有时我们只承担融资角色，比如最近汉堡王（Burger King）收购提姆霍顿（Tim Hortons）的交易。但通常我们更倾向于作为永久股权合伙人联手（在某些情况下，我们也会为交易提供部分融资）。无论结构如何，与豪尔赫·保罗合作都让我们感觉良好。

伯克希尔与玛氏（Mars）和卢卡迪亚（Leucadia）也保持着良好的合作关系，未来我们可能会与他们或其他伙伴建立新的合作关系。我们参与的任何联合活动，无论是作为融资方还是股权合伙人，都将仅限于友好交易。

• 10月份，我们签约收购了范图尔汽车集团（Van Tuyl Automotive），该集团拥有78家汽车经销商，经营极为出色。公司老板拉里·范图尔（Larry Van Tuyl）和我在几年前见过面。他当时就决定，如果将来要出售公司，伯克希尔就是它的归宿。我们的收购最近已完成，现在我们也是“汽车人了”。

拉里和他的父亲塞西尔（Cecil）用了62年时间打造这家集团，其策略是让所有本地经理都成为所有者合伙人。这种利益共同体的模式一次又一次被证明是成功的。范图尔现在是全美第五大汽车集团，平均每家经销商的销售额非常突出。

近年来，杰夫·拉乔（Jeff Rachor）一直与拉里并肩工作，这一成功组合将继续下去。全美约有1.7万家经销商，所有权转让总是需要相关汽车制造商的批准。伯克希尔的任务就是以出色的表现，让制造商欢迎我们进一步收购。如果我们能做到这一点——并且能以合理的价格收购经销商——我们就能打造一个业务规模在不久后数倍于范图尔90亿美元销售额的企业。

随着范图尔的收购完成，伯克希尔现在拥有9家半公司，如果它们独立经营，都能登上《财富》500强榜单（亨氏算那半家）。那意味着海里还有490家半的鱼。我们的钓线已经甩出去了。
- 我们的子公司2014年在厂房和设备上投入了创纪录的150亿美元，远远超过其折旧费用的两倍。其中约90%的资金投在了美国。尽管我们也会在海外投资，但机会的主要矿脉仍在美国。迄今已被发掘的宝藏，与那些尚未被开发的相比，简直是小巫见大巫。靠了傻运气，查理和我出生在美国，我们永远感激这个出生地带来的巨大优势。

• 伯克希尔年末的员工总数（包括亨氏）达到了创纪录的340,499人，比去年增加了9,754人。我很自豪地说，总部（只有25人工作）没增加一个人。没必要发疯。

• 伯克希尔去年增加了对“四大”投资——美国运通、可口可乐、IBM和富国银行——的持股比例。我们增持了IBM的股份（持股比例从2013年末的6.3%升至7.8%）。同时，可口可乐、美国运通和富国银行的股份回购提高了我们在每家公司的持股比例。我们对可口可乐的权益从9.1%增至9.2%，对美国运通的权益从14.2%增至14.8%，对富国银行的持股从9.2%增至9.4%。而且，如果你觉得零点几个百分点不重要，不妨算一笔账：对这四家公司来说，我们的持股比例每增加0.1个百分点，伯克希尔来自它们年利润的份额就会增加5000万美元。

这四家被投企业拥有出色的业务，并由既才华横溢又以股东为导向的管理者经营。在伯克希尔，我们更倾向于拥有一家优秀公司非控股但可观的一部分，而不是100%拥有一家平庸企业。拥有希望之钻的部分权益，也好过拥有一整颗水钻。

如果以伯克希尔年末的持股为基准，我们在这“四大”公司2014年持续经营利润中所占的份额为47亿美元（而仅仅三年前是33亿美元）。然而，在我们向你们报告的利润中，只包含了我们收到的股息——去年大约16亿美元（同样，三年前股息是8.62亿美元）。但别搞错了：这些公司未报告的31亿美元利润，对伯克希尔的宝贵程度与已记录的部分完全相同。

这些被投企业留存的利润通常用于回购自身股票——这一举措在不花我们一分钱的情况下提高了伯克希尔未来利润的份额。它们的留存收益也用于投资商业机会，这些机会通常证明是有利的。所有这些让我们预计，这四家被投企业的每股收益合计将随着时间的推移大幅增长（尽管2015年对它们来说将是艰难的一年，部分原因是美元走强）。如果预期的收益得以实现，伯克希尔获得的股息将增加，更重要的是，我们的未实现资本收益也将增加（这四家公司合计，我们的未实现收益在年末已达420亿美元）。

我们在资本配置上的灵活性——愿意大规模被动投资于非控股企业——使我们比那些仅限于并购自己能经营的企业具有显著优势。无论是对经营性企业还是被动投资的偏好，都使我们为伯克希尔源源不断的现金找到合理用途的机会翻倍。
过去我曾提到，经商的经验让我成为更好的投资者，而投资经验又让我成为更出色的商人。这两件事的修行是相通的。有些真理，只有亲身经历才能彻底领悟。（弗雷德·施韦德那本绝妙的《客户的游艇在哪里》中，有一幅彼得·阿诺画的漫画：困惑的亚当盯着热切的夏娃，配文写道："有些事，光靠言语和图画，是无法对一个处女说清楚的。"如果你还没读过施韦德的书，来股东会时务必买一本。其中的智慧和幽默，真是无价之宝。）

在阿诺所说的"某些事"里，我认为包含两种截然不同的技能：评估投资和管理企业。因此，我觉得让我们的两位投资经理——托德·康布斯和泰德·韦施勒——每人至少负责一项旗下业务的监督工作，是件很有意义的事。几个月前，我们同意收购两家公司，虽然规模比我们通常收购的要小，但经济特征非常出色，这为两位经理提供了合适的机会。这两家公司合计拥有约1.25亿美元的有形资产净值，每年能赚1亿美元。

我请托德和泰德各自担任其中一家公司的董事长，他们的履职方式和我对大型子公司的管理一样——非常有限度的参与。这个安排既能给我省点小活儿，更重要的是，能让他们两人成为比现在更优秀的投资者（要知道，他们原本就已经是顶尖的了）。

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2009年末，在大衰退的阴霾中，我们同意收购北伯林顿铁路公司，这是伯克希尔历史上最大的一笔收购。当时，我将这笔交易称为"对美国经济未来的一次全押注"。

这种承诺对我们来说并不新鲜。自1965年巴菲特合伙有限公司取得伯克希尔控制权以来，我们一直在做类似的押注。原因也很充分：查理和我始终认为，"押注"美国日益繁荣，几乎是稳赢的事。

确实，过去238年里，有谁靠做空美国获益了？如果你把我们国家现在的状况与1776年相比，简直要揉揉眼睛，惊叹不已。光是我这辈子，美国实际人均产出就增长了五倍。我父母在1930年根本想象不到，他们的儿子将看到怎样的世界。尽管悲观论者没完没了地唠叨美国的问题，我却从没见过哪个悲观论者想移民（不过我倒能想出几位，我很乐意给他们买张单程票）。

我们市场经济内在的活力将继续施展它的魔力。增长不会一帆风顺、直线上升——从来都不是。我们也会时常抱怨政府。但毫无疑问，美国最美好的日子还在后头。

借着这股顺风，查理和我希望通过以下方式提升伯克希尔的每股内在价值：（1）持续提升我们众多子公司的基本盈利能力；（2）通过补强型收购进一步提高它们的收益；（3）从被投资企业的增长中获益；（4）在伯克希尔股价显著低于内在价值时进行股份回购；（5）偶尔进行大规模收购。我们还会尽量避免发行伯克希尔股票，以此让你们的回报最大化。

这些基石建立在一个磐石般稳固的基础之上。一百年后，北伯林顿铁路公司和伯克希尔哈撒韦能源公司仍将在我们的经济中扮演关键角色。住房和汽车仍将是大多数家庭生活的核心。保险对企业和个人而言依然不可或缺。展望未来，查理和我看到的是一个为伯克希尔量身打造的世界。我们深感荣幸，能受托管理这家企业。

内在商业价值

查理和我再怎么谈论内在商业价值，也无法精确告诉你伯克希尔股票的那个数字是多少（事实上，任何其他股票也不行）。不过，在2010年的年报中，我们列出了三个要素——其中一个是定性的——我们认为它们是合理估算伯克希尔内在价值的关键。那段讨论全文转载在第123–124页。

以下是两个定量因素的最新数据：2014年，我们每股投资的金额增长8.4%，达到140,123美元；而剔除保险和投资业务后的其他业务每股盈利增长19%，达到10,847美元。

自1970年以来，我们的每股投资以每年19%的复合增长率增长，而每股盈利则以20.6%的速度增长。伯克希尔股票在随后44年间的价格上涨速度与这两个价值指标的增长率非常接近，这并非巧合。查理和我乐于看到这两个板块都取得增长，但我们的主要精力是提升经营利润。正因如此，我们去年很乐意用菲利普斯66和格雷厄姆控股的股票换来了经营性业务，并与宝洁公司签订了协议，计划通过类似的换股交易在2015年收购金霸王(Duracell)业务。

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现在，我们来审视一下我们业务的四个主要板块。它们在资产负债表和利润表上的特征截然不同。因此，我们将把它们作为四家独立的企业来呈现——查理和我也正是这样看待它们的（尽管将它们放在同一个屋檐下，能带来重要且持久的优势）。我们的目标是向你提供我们期望获得的信息，如果我们的角色互换，你是报告经理，而我们是不在场的股东的话。（不过你可别动什么歪心思！）

保险

首先来看保险业务，这是伯克希尔的核心业务。自1967年我们以860万美元收购国民赔偿公司(National Indemnity)及其姊妹公司国民火险与海事保险公司(National Fire & Marine)以来，这个行业一直是推动我们扩张的引擎。尽管这次收购对伯克希尔具有重大意义，但执行过程却极其简单。

我的朋友杰克·林沃特(Jack Ringwalt)是这两家公司的控股股东，他来到我的办公室说想出售公司。十五分钟后，我们就达成了交易。杰克的两家公司从未接受过上市会计师事务所的审计，我也没有要求审计。我的理由是：(1) 杰克是个诚实的人；(2) 他也有点古怪，如果交易变得复杂，他很可能转身走人。

在第128–129页，我们重现了当时用来敲定这笔交易的一页半纸购买协议。那份合同是自制的：双方都没有请律师。按页数计算，这一定是伯克希尔最划算的交易：国民赔偿公司如今按美国通用会计准则(GAAP)计算的净资产为1110亿美元，超过了世界上任何其他保险公司。

我们之所以被财产意外险业务吸引，原因之一在于其财务特征：财险公司先收取保费，日后才支付理赔。在极端情况下，比如某些工伤事故，理赔款可能会拖上几十年。这种“先收钱、后付款”的模式让财险公司持有大量资金——我们称之为“浮存金”——这些钱最终会流向他人。与此同时，保险公司可以将这笔浮存金用于投资，为自己谋利。尽管保单和索赔进进出出，但保险公司持有的浮存金金额通常与保费规模保持相对稳定。因此，随着我们业务增长，浮存金也在增长。如下表所示，我们的浮存金增长了多少：

年份	浮存金（百万美元）
1970	39
1980	237
1990	1,632
2000	27,871
2010	65,832
2014	83,921
浮存金的进一步增长将很难实现。有利的一面是，GEICO和我们的新商业保险业务几乎肯定会保持快速增长。然而，国民赔偿公司的再保险部门参与了一些已停止承保的合同，其浮存金正在逐渐下降。如果我们确实在某个时候遭遇浮存金下降，那也会非常缓慢——最多每年不超过3%。我们保险合同的特性决定了我们永远不会面临与现金资源相比金额巨大的即时偿付需求。这一优势是伯克希尔经济堡垒的基石。

如果我们的保费超过了费用和最终损失的总和，我们就会实现承保利润，这为我们的浮存金所产生的投资收益锦上添花。当我们赚取这样的利润时，我们就享受到了免费资金的使用权——而且，更好的是，还能因持有它而获得报酬。

遗憾的是，所有保险公司都希望实现这一喜人结果，这导致了激烈的竞争，实际上竞争如此激烈，以至于经常让整个财产险行业的承销出现重大亏损。这种亏损，实质上就是行业为持有浮存金而付出的代价。竞争动态几乎可以保证，尽管所有保险公司都享有浮存金收入，但与其他美国企业相比，它们将继续在有形净资产上获得低于正常水平的回报，这一记录令人沮丧。我国目前正在经历的长期低利率环境导致浮存金的收益下降，从而加剧了行业的盈利问题。

如本报告第一部分所述，伯克希尔现已连续十二年实现承保盈利，期间我们的税前收益总计达240亿美元。展望未来，我相信我们在大多数年份还将继续实现承保盈利。做到这一点是我们所有保险经理的日常工作重点，他们知道，浮存金虽然宝贵，但其好处会被糟糕的承保结果淹没。这个道理，所有保险公司至少都口头重视；而在伯克希尔，这是信仰。

那么，我们的浮存金如何影响内在价值？当计算伯克希尔的账面价值时，浮存金的全部金额会被作为负债扣除，就好像我们明天必须支付出去且无法补充一样。但把浮存金严格视为负债是不正确的；它反而应该被视为一笔循环资金。每天，我们支付旧的理赔及相关费用——2014年向超过600万理赔人支付了高达227亿美元——这减少了浮存金。同样确定的是，我们每天都有新业务进账，从而产生新的理赔，这增加了浮存金。

如果我们的循环浮存金既无成本又能长期持续——我相信它会的——那么这项负债的真实价值将远低于会计负债。欠1美元但实质上永远不会离开这个屋子——因为新业务几乎肯定会提供替代品——与欠1美元但明天就要出门且不会回来，是天壤之别。然而，根据美国通用会计准则，这两种负债被同等对待。

对这种被高估的负债的部分抵消，是我们在收购保险公司时产生的155亿美元“商誉”资产，它增加了账面价值。在很大程度上，这笔商誉代表了我们为保险公司浮存金创造能力所支付的价格。然而，商誉的成本与其真实价值无关。例如，如果一家保险公司长期遭受重大承销亏损，那么账面上的任何商誉资产都应被视为毫无价值，无论其原始成本是多少。
幸运的是，伯克希尔并非如此。查理和我相信，我们保险商誉的真正经济价值——即如果我们收购一家拥有类似质量浮存金的保险业务时，我们愿意为此支付的价格——远高于其历史账面价值。根据现行会计准则（我们认同这一准则），这一超出价值永远不会记入我们的账本。但我可以向你们保证，它是真实存在的。这是一个原因——一个巨大的原因——让我们相信伯克希尔的内在商业价值远超其账面价值。

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伯克希尔之所以能拥有具有吸引力的保险经济，只是因为我们拥有一些卓越的经理人，他们运营着纪律严明的业务，且这些业务拥有难以复制的商业模式。让我介绍一下主要单元。

按浮存金规模排序，首先是伯克希尔·哈撒韦再保险集团，由 Ajit Jain 管理。Ajit 承保那些其他公司既无意愿也无资本承担的风险。他的运作将承保能力、速度、决断力，以及最重要的智慧，以一种在保险业独一无二的方式结合在一起。然而，他从未让伯克希尔暴露在与其资源不匹配的风险之下。

事实上，在规避风险方面，我们比大多数大型保险公司要保守得多。例如，如果保险行业因某场超级巨灾遭受 2500 亿美元的损失——这个损失大约是史无前例纪录的三倍——伯克希尔整体可能仍会在当年录得显著盈利，因为我们拥有众多盈利来源。我们还将现金充裕，并会在一个很可能陷入恐慌的市场中寻找大机会。与此同时，其他主要保险公司和再保险公司将深陷亏损，甚至面临破产。

Ajit 的承销技巧无与伦比。而且，他的头脑就像一座创意工厂，总在寻找更多他可以添加到现有业务组合中的业务线。去年我告诉过你们，他创立了伯克希尔·哈撒韦专项保险（Berkshire Hathaway Specialty Insurance，简称BHSI）。这一举措让我们进入了商业保险领域，我们立即受到了全美各大保险经纪公司和企业风险管理者的欢迎。此前，我们只涉足少数几项专项商业保险业务。

BHSI 由 Peter Eastwood 领导，他是一位经验丰富的核保人，在保险界广受尊敬。2014 年，Peter 扩充了他才华横溢的团队，进入了国际业务和新的保险领域。我们重申去年的预测：BHSI 将成为伯克希尔的一笔重要资产，几年内其业务量将达到数十亿美元。

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我们还有另一家再保险巨头——通用再保险（General Re），由 Tad Montross 管理。

归根结底，一家健全的保险业务必须遵守四项纪律。它必须：（1）了解所有可能导致保单发生损失的风险敞口；（2）保守评估任何风险敞口实际造成损失的可能性，以及如果发生损失可能产生的成本；（3）设定一个保费，使其在覆盖预期损失成本和运营费用后，平均能带来利润；（4）如果无法获得合理的保费，愿意放弃这笔业务。

许多保险公司通过了前三项测试，却在第四项上不及格。它们就是无法拒绝竞争对手正在积极承揽的业务。那句老话——“别人在做，所以我们也必须做”——在任何行业都意味着麻烦，但没有任何行业比保险业更甚。

Tad 遵守了全部四项保险戒律，他的业绩表现也证明了这一点。在他的领导下，通用再保险的巨额浮存金远优于零成本，我们预计平均而言，这一趋势将持续下去。我们对通用再保险的国际人寿再保险业务尤其充满热情，自 1998 年收购该公司以来，该业务一直保持稳定且盈利的增长。
我们收购通用再保险（General Re）后不久，它便麻烦缠身，以至于评论人士——也包括我本人，短暂地——认为我犯下了一个巨大的错误。那个日子早已远去。如今通用再保险是一颗宝石。

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最后是GEICO（政府雇员保险公司），64年前我初入保险业就是在这家公司练手的。GEICO由Tony Nicely管理，他18岁加入公司，到2014年已服务53载。Tony于1993年成为CEO，此后公司一直飞速发展。没有比Tony更好的管理者了。

1951年1月我第一次接触GEICO时，就被它相对于行业巨头所承担费用的巨大成本优势震撼了。我清楚地知道GEICO会成功，因为它理应成功。没人喜欢买车险。但几乎人人都喜欢开车。因此所需的保险对大多数家庭来说是笔大开销。省钱对他们很重要——而只有低成本运营才能实现这一点。事实上，至少40%阅读这封信的人可以通过在GEICO投保省钱。所以别看了，快上geico.com或拨打800-368-2734。

GEICO的成本优势是推动公司年复一年吞噬市场份额的要素。（2014年底我们的市场份额是10.8%，而1995年伯克希尔取得GEICO控制权时仅为2.5%。）公司的低成本构成了一条护城河——一条持久的护城河——竞争对手无法跨越。我们的壁虎从不厌倦告诉美国人GEICO如何为他们节省大笔钱。我还得补充，这只壁虎有一个特别讨人喜欢的特点——他免费工作。不像人类代言人，他从不因出名而得意忘形，也没有经纪人不断提醒我们他多么有价值。我喜欢这个小家伙。

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除了三大保险业务之外，我们还拥有一批较小的公司，其中大部分在保险业的小众领域经营。总体而言，这些公司是一项不断增长的业务，持续产生承销利润。事实上，过去十年间，它们从承销中赚取了29.5亿美元，同时浮存金从17亿美元增长到86亿美元。查理和我非常珍视这些公司及其管理者。

	承销利润		年末浮存金
	（单位：百万美元）
保险业务	2014	2013	2014	2013
伯克希尔·哈撒韦再保险	606	1,294	42,454	37,231
通用再保险	277	283	19,280	20,013
GEICO	1,159	1,127	13,569	12,566
其他直接保险	626	385	8,618	7,430
	2,668	3,089	83,921	77,240

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简单来说，保险就是出售承诺。客户现在付钱；保险公司承诺未来若发生某些不愿发生的事件时，将赔付资金。有时这种承诺数十年都不会被兑现。（想想20多岁的人购买的人寿保险。）因此，保险公司在赔付时刻到来时——即使经济一片混乱——其赔付能力和意愿至关重要。
伯克希尔的承诺无可匹敌，这一点近年得到了世界上一些最大、最精明的财产/意外险公司的认可，它们希望甩掉巨额且期限极长的负债。也就是说，这些保险公司希望将这些负债——其中大部分是石棉索赔的潜在损失——“分保”给一家再保险公司。不过，它们需要选对再保险人：如果再保险人无法赔付损失，原保险公司仍然得兜底负责。因此，如果选择一家日后被证明财务拮据或不守规矩的再保险人，原保险公司就可能面临巨额负债重新揽回自己怀里的风险。

去年，我们签署了一份一次性保费30亿美元的保单，再次确认了我们在再保险领域的领先地位。我相信，这笔保单的规模仅有我们2007年与劳合社达成的交易超过，当时保费为71亿美元。

事实上，据我所知，历史上只有8份财产/意外险保单的一次性保费超过10亿美元。是的，这8份全部由伯克希尔承保。其中部分合同要求我们在50年甚至更久以后支付大额赔款。当大型保险公司需要一份毋庸置疑的承诺，确保此类赔款会得到支付时，伯克希尔就是它们要找的那一方——唯一的一方。

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伯克希尔优秀的管理者、一流的财务实力以及被宽阔护城河保护的多元化商业模式，共同构成了保险界独一无二的存在。这种优势组合对伯克希尔的股东而言是一笔巨大的资产，而且会随着时间的推移变得越来越有价值。

受监管的资本密集型业务

我们有两个主要业务，BNSF和伯克希尔·哈撒韦能源公司（“BHE”），它们具有区别于我们其他业务的重要共同特征。因此，我们在本信中为它们单独设立一个章节，并在按美国通用会计准则编制的资产负债表和利润表中，将它们合并的财务数据单独列出。

这两家公司的一个关键特征是对寿命极长、受监管的资产进行了巨额投资，这些投资部分由大量长期债务提供资金，而这些债务不由伯克希尔担保。我们的信用实际上并不需要，因为每家公司即使在糟糕的经济条件下，其盈利能力也远超其利息支出要求。例如，去年BNSF的利息覆盖倍数超过8:1。（我们的覆盖倍数定义是税前利润/利息，而非EBITDA/利息，后者是一种常用指标，但我们认为其有严重缺陷。）

与此同时，在BHE，有两个因素确保该公司在任何情况下都有能力偿还债务。第一个是所有公用事业公司共有的：抗衰退的盈利能力，这是因为这些公司在独家经营的基础上提供一项基本服务。第二个是其他公用事业公司很少拥有的：盈利来源的极大多样性，这保护我们不会被任何一个监管机构严重伤害。最近，我们通过以30亿加元收购AltaLink（一个为阿尔伯塔省85%人口供电的电力传输系统），进一步拓宽了这一基础。这种多元化的利润流，加上隶属于强大母公司带来的固有优势，使BHE及其公用事业子公司能够显著降低其债务成本。这一经济现实对我们和客户都有利。

每天，我们的两家子公司以重要方式驱动美国经济：

• BNSF运输的城际货运量（以吨英里衡量）约占全部城际货运的15%，无论是通过卡车、铁路、水运、空运还是管道运输。事实上，我们运输的货物吨英里数超过任何其他公司，这使BNSF成为我们经济循环系统中最重要的动脉。
  BNSF（北伯林顿铁路公司）和所有铁路一样，以一种极其节能环保的方式运输货物——每加仑柴油就能将一吨货物运送约500英里。同样的任务若由卡车承担，将消耗大约四倍的燃料。

BHE（伯克希尔哈撒韦能源公司）的公用事业公司为11个州的受监管零售客户提供服务。没有哪家公用事业公司的覆盖范围比它更广。此外，我们也是可再生能源领域的领导者：从十年前的零起步，BHE现在拥有全国6%的风能和7%的太阳能发电能力。除了这些业务，BHE还拥有两条大型管道，输送着全国8%的天然气消耗量；最近在加拿大收购的电力传输业务；以及在英国和菲律宾的大型电力业务。这股势头还在持续：未来几十年，我们将继续在全球范围内收购和建设公用事业项目。

BHE能够进行这些投资，是因为它留存了全部收益。事实上，去年该公司留存的收益金额远高于美国任何其他电力公用事业公司。我们和我们的监管机构都认为，这种100%的留存政策是一项重要优势——几乎可以肯定，这将使BHE在未来许多年里区别于其他公用事业公司。

当BHE完成某些正在进行中的可再生能源项目时，其可再生能源组合将耗资150亿美元。此外，我们还有多个常规项目也在进行中，同样需要花费数十亿美元。只要这些承诺能带来合理的回报，我们就乐于做出——在这方面，我们对未来的监管抱有很大的信心。

我们的信心既源于过去的经验，也源于一个认知：社会将永远需要在交通和能源领域进行大规模投资。政府以确保持续向关键项目提供资金的方式对待资本提供者，这符合其自身利益。同时，我们以赢得监管机构及其所代表的人民认可的方式运营，这也符合我们自身的利益。

去年，我们在BHE圆满实现了这一目标，就像我们拥有它以来的每一年一样。我们的费率仍然很低，客户满意度很高，员工安全记录在行业内名列前茅。

然而，正如我之前提到的，BNSF在2014年的情况并不乐观，这一年，这家铁路公司让许多客户失望了。这个问题是在BNSF近年来创纪录的资本支出背景下发生的，这些支出远远超过了我们的主要竞争对手联合太平洋（Union Pacific）的支出。

以收入衡量，这两家铁路公司的规模大致相当，尽管我们运输的货物量（无论是按车皮数还是吨英里计算）要多得多。但去年我们的服务问题超过了联合太平洋，结果导致我们失去了市场份额。此外，联合太平洋的盈利也以创纪录的幅度超过了我们。显然，我们还有很多工作要做。

我们正在争分夺秒：正如我之前提到的，我们将在2015年投入60亿美元改善铁路运营。这大约相当于预计收入的26%（这个计算是行业内的衡量标准）。这种规模的支出在铁路行业几乎是闻所未闻的。对我们而言，这个比例与我们2009-2013年平均的18%以及联合太平洋近期预测的16-17%相比。我们巨大的投资将很快带来一个容量更大、服务更好的铁路系统。随之而来的应该是利润的提升。

以下是伯克希尔哈撒韦能源公司和BNSF的关键数据：

伯克希尔哈撒韦能源公司（持股89.9%）
盈利（单位：百万美元）

	2014	2013	2012
英国公用事业	$527	$362	$429
爱荷华州公用事业	298	230	236
内华达州公用事业	549	—	—
PacifiCorp（主要来自俄勒冈州和犹他州）	1,010	982	737
天然气管道（Northern Natural 和 Kern River）	379	385	383
HomeServices	139	139	82
其他（净额）	236	4	91
公司利息与税前经营利润	3,138	2,102	1,958
利息	427	296	314
所得税	616	170	172
净利润	$2,095	$1,636	$1,472
归属于伯克希尔的利润	$1,882	$1,470	$1,323

BNSF
收益（百万美元）

	2014	2013	2012
营业收入	$23,239	$22,014	$20,835
营业费用	16,237	15,357	14,835
利息与税前经营利润	7,002	6,657	6,000
利息（净额）	833	729	623
所得税	2,300	2,135	2,005
净利润	$3,869	$3,793	$3,372

制造、服务与零售业务

伯克希尔在这一部分的活动包罗万象。不过，我们来看看整个集团的资产负债表和利润表摘要。

资产负债表 2014年12月31日（百万美元）

资产		负债与权益
现金及现金等价物	$5,765	应付票据	$965
应收账款及应收票据	8,264	其他流动负债	9,734
存货	10,236	流动负债合计	10,699
其他流动资产	1,117
流动资产合计	25,382
		递延所得税	3,801
商誉及其他无形资产	28,107	长期债务及其他负债	4,269
固定资产	13,806	非控制性权益	492
其他资产	3,793	伯克希尔股东权益	51,827
	$71,088		$71,088

利润表（百万美元）

	2014	2013*	2012*
营业收入	$97,689	$93,472	$81,432
营业费用	90,788	87,208	75,734
利息费用	109	104	112
税前利润	6,792	6,160	5,586
所得税及非控制性权益	2,324	2,283	2,229
净利润	$4,468	$3,877	$3,357

• 2012年和2013年的利润已重述，排除了Marmon的租赁业务，该业务现已纳入金融与金融产品板块。

我们按美国通用会计准则编制的收入与费用数据见第49页。相比之下，上表中的营业费用为非GAAP口径，排除了某些购买法会计项目（主要是某些无形资产摊销）。我们以这种方式呈现数据，是因为查理和我认为，相较于GAAP数据，调整后的数字更能准确反映表中各业务真实的经营费用和利润。
我不会解释所有这些调整——有些微小而晦涩——但认真的投资者应当理解无形资产的差异性质。有些确实会随时间贬值，而另一些则完全不会损失价值。以软件为例，摊销费用是非常真实的支出。然而，对其他无形资产（如客户关系的摊销）进行计提，则源于购买会计规则，显然不能反映现实。美国通用会计准则并不区分这两种费用。也就是说，在计算收益时两者都被记为费用——尽管从投资者的角度看，它们有天壤之别。

在第49页我们展示的符合美国通用会计准则的数据中，11.5亿美元的摊销费用已被扣除。我们称其中大约20%为“真实的”，其余则不然。那些“不真实”的费用，在伯克希尔曾经并不存在，但由于我们进行了多次收购，现在已变得显著。随着我们收购更多公司，不真实的摊销费用几乎肯定会进一步上升。

第67页符合美国通用会计准则的表格显示了我们无形资产的当前状况。我们现在还有74亿美元待摊销，其中41亿美元将在未来五年内计提。当然，最终每一美元的不真实成本都会被完全冲销。到那时，即使真实收益持平，报告收益也会增加。

我们想强调，折旧费用是不同的：我们所报告的每一分钱折旧费用都是真实成本。而且，对于大多数其他公司来说也是如此。当CEO们吹嘘EBITDA是估值指南时，该给他们连上测谎仪。

当然，我们的公开收益报告将继续遵循美国通用会计准则。然而，若要接受现实，你应该记住将我们报告的大部分摊销费用加回。

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回到我们众多的制造、服务和零售业务，它们销售从棒棒糖到喷气式飞机的各种产品。该板块的一些企业，以无杠杆净有形资产收益衡量，拥有极好的经济特征，产生的税后利润从25%到远超过100%不等。其他一些企业则能产生12%到20%左右的可观回报。然而，少数几家回报非常低，这是我在资本配置工作中犯下的一些严重错误的结果。我并没有被误导：我只是错误地评估了公司或其所在行业的经济动态。幸运的是，我的失误通常涉及相对较小的收购。我们的大规模收购通常结果不错，在少数情况下甚至超出预期。尽管如此，我在购买企业或股票方面并没有犯完最后一个错误。并非所有事情都会按计划进行。

整体来看，这个群体中的公司是一组出色的企业。它们在2014年平均运用了240亿美元的净有形资产，尽管持有大量过剩现金且杠杆使用很少，但在这部分资本上获得了18.7%的税后回报。

当然，如果买入价格过高，经济特征极好的企业也可能是一笔糟糕的投资。对于大多数业务，我们支付了相对于净有形资产的巨额溢价，这一成本反映在我们显示的庞大商誉数字中。但总体而言，我们在该板块配置的资本获得了不错的回报。此外，这些企业的内在价值总和远高于其账面价值，而且这一溢价很可能进一步扩大。即便如此，保险和受监管行业板块的内在价值与账面价值之间的差距要大得多。真正的赢家就在那里。

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我们这个组里的公司太多了，没法一一评论。而且，它们的竞争对手——无论是现有的还是潜在的——都会读这份报告。在我们的一些业务中，如果别人知道了我们的具体数字，我们可能会处于不利地位。因此，对于某些规模不足以影响伯克希尔整体评估的业务，我们只披露法律要求的信息。不过，你可以在第97-100页找到许多业务的详细情况。

金融与金融产品

今年，我们将Marmon规模相当大的租赁业务——其产品包括铁路车厢、集装箱和起重机——归入这一部分。我们也重述了前两年的数据以反映这一变化。为什么这么做？过去Marmon有大量少数股权，我当时觉得把公司所有业务放在一起报告更容易理解。如今，我们几乎100%拥有Marmon，因此我认为，如果把Marmon的租赁业务放在这个标题下，你能更深入地了解我们的各项业务。（Marmon其他几十项业务的数据仍留在上一部分。）

我们的其他租赁和出租业务由CORT（家具）和XTRA（半挂车）运营。这些公司是行业领导者，随着美国经济走强，它们的盈利大幅增长。两家公司在新设备上的投资都比许多竞争对手多，这正在产生回报。

Kevin Clayton再次在Clayton Homes（美国最大的住宅建筑商）中交出了行业领先的成绩单。去年，Clayton售出了30,871套住宅，约占美国购买活动房屋总量的45%。2003年我们以17亿美元收购Clayton时，其市场份额仅为14%。

Clayton盈利的关键在于其130亿美元的按揭贷款组合。在2008年和2009年的金融恐慌期间，当整个行业的融资渠道枯竭时，Clayton因有伯克希尔的背书而能够继续放贷。事实上，在那段时间里，我们不仅为自己，也为竞争对手的零售销售提供了融资。

Clayton的许多借款人收入较低，FICO信用评分也一般。但得益于公司审慎的放贷实践，其贷款组合在经济衰退期间表现良好——这意味着我们的借款人中极高比例都保住了自己的房子。在很多情况下，我们这些蓝领借款人的信用风险被证明比他们收入更高的同胞们要低得多。

在Marmon的铁路车厢业务中，租赁费率在过去几年里大幅改善。不过，这项业务的性质决定了我们每年只有约20%的租约到期。因此，价格改善只能逐步渗透到我们的收入流中。但趋势是强劲的。我们拥有10.5万节车厢的车队中大部分是罐车，但其中只有8%用于运输原油。

关于我们的铁路运营，还有一个重要事实需要你了解：与其他许多出租方不同，我们自己制造罐车——好年份里大约生产6000辆。当我们将车辆从制造部门转移到租赁部门时，我们不确认任何利润。因此，我们的车队是以"低价"入账的。这一数字与"零售价"之间的差额，通过我们在车辆30年寿命期内享受的更低的年度折旧费用，缓慢地反映到盈利中。由于这个以及其他原因，Marmon的铁路车队实际价值远高于其账面列示的50亿美元。

以下是该板块的盈利回顾：

	2014	2013	2012
	（单位：百万美元）
Berkadia（我们占50%份额）	$122	$80	$35
Clayton	558	416	255
CORT	36	40	42
Marmon – 集装箱与起重机业务	238	226	246
Marmon – 铁路车厢业务	442	353	299
XTRA	147	125	106
净财务收入*	296	324	410
	$1,839	$1,564	$1,393

* 不包括资本利得或亏损

投资

下面列出我们年末市值最大的十五只普通股投资。

持股数**	公司	持股比例	2014年12月31日
			成本*	市值
			（单位：百万美元）
151,610,700	American Express Company（美国运通公司）	14.8	$ 1,287	$ 14,106
400,000,000	The Coca-Cola Company（可口可乐公司）	9.2	1,299	16,888
18,513,482	DaVita HealthCare Partners Inc.（达维塔医疗合作伙伴公司）	8.6	843	1,402
15,430,586	Deere & Company（迪尔公司）	4.5	1,253	1,365
24,617,939	DIRECTV（直播电视公司）	4.9	1,454	2,134
13,062,594	The Goldman Sachs Group, Inc.（高盛集团）	3.0	750	2,532
76,971,817	International Business Machines Corp.（国际商业机器公司，IBM）	7.8	13,157	12,349
24,669,778	Moody’s Corporation（穆迪公司）	12.1	248	2,364
20,060,390	Munich Re（慕尼黑再保险公司）	11.8	2,990	4,023
52,477,678	The Procter & Gamble Company（宝洁公司）	1.9	336	4,683 ***
22,169,930	Sanofi（赛诺菲）	1.7	1,721	2,032
96,890,665	U.S. Bancorp（美国合众银行）	5.4	3,033	4,355
43,387,980	USG Corporation（USG公司）	30.0	836	1,214
67,707,544	Wal-Mart Stores, Inc.（沃尔玛公司）	2.1	3,798	5,815
483,470,853	Wells Fargo & Company（富国银行）	9.4	11,871	26,504
	其他		10,180	15,704
	按市值计价的普通股合计		$55,056	$ 117,470

*这是我们实际买入成本，也是我们的计税基础；美国通用会计准则（GAAP）下的"成本"因某些情况下须按GAAP规则进行增减调整而略有不同。
**不包括伯克希尔子公司养老基金持有的股份。
***按出售合约以该金额持有。

伯克希尔有一项主要股权投资未列入上表：我们可在2021年9月之前随时以50亿美元买入7亿股美国银行（Bank of America）股票。年末这些股票价值125亿美元。我们很可能会在期权到期前买入这些股份。与此同时，你需要了解的是，美国银行实际上是我们的第四大股权投资——而且我们对其高度评价。

* * * * * * * * * * * *

细心的读者会注意到，去年出现在我们最大普通股投资列表中的Tesco（乐购），如今已不见踪影。我惭愧地承认，一位细心的投资者本该更早卖出Tesco股票。我在这项投资上拖拖拉拉，犯了个大错。
截至2012年底，我们持有4.15亿股乐购（Tesco）股票，这家公司当时和现在都是英国领先的食品零售商，在其他国家也是一家重要的杂货商。这笔投资的成本是23亿美元，市值也大致相当。

2013年，我对该公司当时的管理层有些不满，卖出了1.14亿股，实现利润4300万美元。我这种慢悠悠的卖出节奏后来付出了高昂代价。查理管这种拖拖拉拉的行为叫“吮手指”。（想想我们的延迟造成的损失，他这么说已经算客气了。）

2014年，乐购的问题逐月恶化。公司市场份额下滑，利润率收缩，会计问题浮出水面。在商业世界里，坏消息往往接二连三地出现：你看到厨房里有一只蟑螂，接下来的日子里，就会遇见它的亲戚们。

我们全年都在卖出乐购股票，现在已经清仓了。（值得一提的是，公司已经聘请了新管理层，我们祝他们顺利。）这笔投资的税后亏损为4.44亿美元，约占伯克希尔净资产的0.2%。过去50年里，我们只有过一次投资亏损，在卖出时损失了我们净资产的2%。还有两次损失了1%。这三次亏损都发生在1974-1975年间，当时我们卖出了已经非常便宜的股票，去买入我们觉得更便宜的。

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我们的投资业绩受益于一股巨大的顺风。在1964年至2014年期间，标普500指数从84点涨到2059点，加上股息再投资，实现了第2页所显示的总回报率11,196%。与此同时，美元的购买力惊人地下降了87%。这意味着，现在需要用1美元才能买到1965年（以消费者价格指数衡量）花13美分能买到的东西。

股票和美元这种截然不同的表现，给投资者传递了一个重要信息。回想一下我们2011年的年报，当时我们把投资定义为“现在将购买力转移给他人，并合乎情理地预期未来（在名义收益缴纳完税款后）能收回更多的购买力”。

过去50年得出的一个反常规但无可回避的结论是：投资于一个多样化的美国企业组合，远比投资于与美元挂钩的证券（例如国债）要安全得多。在此前的半个世纪——包括大萧条和两次世界大战——也是如此。投资者应该牢记这段历史。在下一个世纪，这种现象几乎肯定会以不同程度重演。

股票价格永远比现金等价物持有方式的波动大得多。然而，从长期来看，以货币计价的工具是风险更高的投资——风险高得多——远高于长期分期买入且只支付小额手续费的广泛分散的股票组合。这个教训商学院通常不教，在那里波动性几乎被普遍用作风险的替代指标。虽然这种教学方法方便授课，但它大错特错：波动性远非风险的代名词。将两者等同的流行公式会把学生、投资者和CEO们引入歧途。

当然，持有股票一天、一周或一年，确实比把钱留在现金等价物中风险大得多（无论是名义上还是购买力上）。这对某些投资者——比如投资银行——来说很关键，因为它们的存续可能因资产价格下跌而受到威胁，并且可能被迫在低迷市场中卖出证券。此外，任何可能有近中期资金需求的投资者，都应在国债或受保银行存款中留有适当金额。
然而，对于绝大多数投资者——他们能够并且应该以数十年的视野进行投资——股价下跌并不重要。他们的关注点应始终放在整个投资生涯中实现购买力的显著增长上。对他们而言，一个随时间逐步买入的多元化股票组合，其风险远低于美元计价证券。

然而，如果投资者反过来害怕价格波动，错误地将其视为风险衡量标准，那么讽刺的是，他们最终可能会做出一些非常冒险的事情。请回忆一下，六年前，那些权威人士哀叹股价下跌，建议投资"安全的"国库券或银行存单。听从这番布道的人，如今在他们原本预期能过上舒适退休生活的资金上，赚到的只是微薄利息。（当时标普500低于700点，现在大约2,100点。）如果不是因为对毫无意义的价格波动的恐惧，这些投资者本可以通过简单地买入一只成本极低的指数基金，就确保自己终身获得良好收入——该基金的股息会逐年上升，本金也会增长（当然，伴随着许多起伏）。

当然，投资者可能通过自身行为让股票投资变得高度危险。许多人正是如此。频繁交易、试图"择时"市场波动、分散化不足、向管理人和顾问支付高昂且不必要的费用、以及使用借来的资金——这些都会毁掉一个长期股票持有者本应享有的可观回报。事实上，借来的钱在投资者的工具箱里毫无容身之处：市场中任何事都可能随时发生。没有哪位顾问、经济学家或电视评论员——当然查理和我也不例外——能够告诉你混乱何时会降临。市场预测者会让你耳朵塞满话，却永远无法填满你的钱包。

犯下上述投资罪行的并不限于"小散户"。大型机构投资者作为一个整体，长期以来一直跑输那些只是简单持仓几十年的朴素指数基金投资者。一个主要原因是费用：许多机构向顾问支付巨额费用，而这些顾问反过来又推荐收取高额管理费的经理人。那是一个傻瓜的游戏。

当然，也有少数非常优秀的投资经理——尽管短期内很难判断出色的业绩是源于运气还是天赋。然而，大多数顾问擅长的不是创造高回报，而是创造高费用。事实上，他们的核心竞争力是销售技巧。与其听信他们的海妖之歌，大大小小的投资者不如去读一读Jack Bogle的《常识投资小书》。

几十年前，本·格雷厄姆（Ben Graham）用莎士比亚的一句话准确指出了投资失败的根源："亲爱的布鲁图斯，错不在我们的星宿，而在于我们自己。"

年度股东大会

年度股东大会将于5月2日星期六在世纪互联中心（CenturyLink Center）举行。去年与会人数达39,000人，创下纪录。今年我们庆祝金禧纪念，预计人数会进一步增加。早上7点开门时请到场。

伯克希尔才华横溢的Carrie Sova将再次负责组织工作。Carrie六年前24岁时加入我们，担任秘书。四年前，我请她负责股东大会——一项需要多种技能的艰巨任务——她欣然接受。Carrie镇定自若、足智多谋，善于激发与她共事的数百名同事的最佳表现。她得到了我们整个总部团队的支持，大家都乐于参与，让这个周末对股东们既有趣又有收获。
是的，我们还会在股东来访期间向他们推销我们的产品。事实上，今年我们将大幅延长购物时间：5月1日（周五）中午至下午5点，以及会议当天早上7点至下午4点，世纪联（CenturyLink）中心都会营业。所以，请让查理露出笑容，尽情购物吧。

周六早上早起。6点20分，两头各重约一吨的德克萨斯长角牛——诺曼和杰克——将沿着第十街走向世纪联中心。它们背上坐着我们贾斯汀靴业（Justin Boot）的两位高管，他们身兼牛仔之职。牛后面跟着四匹挽马，拉着一辆富国银行（Wells Fargo）的驿马车。伯克希尔已经销售飞机、火车和汽车。现在把牛和驿马车加入产品组合，应该能巩固我们作为美国全能运输公司的名声。

周六早上7点30分左右，我们将举办第四届国际扔报纸挑战赛。目标仍是克莱顿之家（Clayton Home）的门廊，距离投掷线正好35英尺。我十多岁时——短暂体验过一次诚实劳动——扔过大约50万份报纸。所以我自认为技术不错。来挑战我吧！羞辱我吧！让我出丑吧！任何能比我扔得更靠近门槛的人，我都请吃一个迪利棒（Dilly Bar）。报纸将有36至42页，你必须自己折叠（不许用橡皮筋）。我会给12岁及以下扔得最好的参赛者颁发特别奖。评委是黛布·博萨内克（Deb Bosanek）。

早上8点30分，将放映一部新的伯克希尔电影。一小时后，开始问答环节，中间在世纪联中心摊位休息吃午餐，持续至下午3点30分。短暂休息后，查理和我在下午3点45分召开年度会议。这项业务会议通常只持续半小时左右。

你们的购物场所是毗邻会议厅、面积达194,300平方英尺的大厅，那里将出售伯克希尔数十家子公司的产品。如果周五没买够，周六趁查理讲话时溜出去，尽情抢购我们的便宜货。也去看看BNSF铁路公司（BNSF）的精彩模型展。虽然我84岁了，它仍然让我兴奋不已。

去年你们作为购物者尽了全力，我们大多数业务都创下了销售纪录。周六九小时内，我们卖出了1,385双贾斯汀靴子（平均每23秒一双）、13,440磅喜诗糖果（See's candy）、7,276双韦尔斯·拉蒙特（Wells Lamont）工作手套和10,000瓶亨氏番茄酱（Heinz ketchup）。亨氏推出了新的芥末酱产品，所以今年芥末酱和番茄酱都有售。（两种都买！）现在我们周五也营业，预计每个专区都会再创新纪录。

我们的跑鞋公司布鲁克斯（Brooks）将再次在会议上推出特别纪念款跑鞋。买一双后，第二天穿着它参加我们的第三届“伯克希尔5公里跑”——早上8点从世纪联中心起跑。参赛详情将包含在随会议证件一同寄出的《访客指南》中。参赛者将与许多伯克希尔的管理层、董事和同事并肩奔跑。（不过查理和我会睡懒觉。）

购物区设有一个GEICO展位，由来自全国各地的多位顶级顾问坐镇。请驻足获取报价。在大多数情况下，GEICO可以给您股东折扣（通常为8%）。这一特别优惠在我们运营的51个司法管辖区中有44个允许。（补充一点：如果您符合其他折扣条件，例如某些群体的折扣，此折扣不能叠加。）请带上您现有保险的详细信息，看看我们的价格。我们可以为很多人省下真金白银。
务必去逛一逛Bookworm书店。那里将陈列约35种书籍和DVD，其中包含几本新书。去年，许多股东购买了Max Olson汇编的伯克希尔1965年以来的致股东信合集，他现已出版了一个更新版，专为本次年会准备。我们还预计会销售一本纪念我们成立五十周年的平价书。目前这本书还在编纂中，但我预计它会包含大量历史资料，包括19世纪的文件。

随本报告附上的股东委托书材料中有一份附件，说明了如何获取参加年会及其他活动所需的入场凭证。航空公司有时会在伯克希尔周末期间抬价。如果你从远方赶来，不妨比较一下飞到堪萨斯城与飞到奥马哈的成本。两地之间驾车大约两个半小时，或许飞堪萨斯城能为你省下不少钱，尤其是如果你原本打算在奥马哈租车的话。一对夫妇最多能省下1,000美元甚至更多。把这笔钱花在我们身上吧。

在内布拉斯加家具城（位于Dodge与Pacific之间的72街，占地77英亩），我们将再次推出“伯克希尔周末”折扣价。去年年会前后一周，该店创下了40,481,817美元的营业额（内布拉斯加家具城奥马哈店平均每周营业额约900万美元）。

要在内布拉斯加家具城享受伯克希尔折扣，你必须在4月28日星期二至5月4日星期一（含）期间购物，并出示你的入场凭证。这一时段的特价甚至适用于几个著名制造商的产品，这些制造商通常有铁律禁止打折，但本着我们股东周末的精神，他们为你破了例。我们感谢他们的配合。内布拉斯加家具城的营业时间为：周一至周五上午10点至晚上9点，周六上午10点至晚上9:30，周日上午10点至晚上8点。周六下午5:30至晚上8点，内布拉斯加家具城会举办野餐会，邀请各位参加。

在波仙珠宝，我们将再次举办两场仅限股东参加的活动。第一场是鸡尾酒招待会，时间为5月1日星期五下午6点至晚上9点。第二场是主盛会，时间为5月3日星期日上午9点至下午4点。周六我们会一直营业到下午6点。近年来，我们这三天的总营业额远超整个12月——而12月通常是珠宝商的黄金月份。

整个周末波仙珠宝都会人潮汹涌。因此，为了方便你购物，股东价格将从4月27日星期一持续到5月9日星期六。在此期间，请出示你的入场凭证或能证明你是伯克希尔股东的交易单，以表明股东身份。

周日，在波仙珠宝外的商场里，来自达拉斯的杰出魔术师Norman Beck将让围观者眼花缭乱。此外，我们还有两位世界顶尖桥牌高手Bob Hamman和Sharon Osberg，他们将在周日下午与我们的股东打桥牌。可别跟他们赌钱。

我的朋友Ariel Hsing周日也会来到商场，在乒乓球台前迎接挑战者。我认识她时她才九岁，那时我就已经一分都赢不了她。如今她是普林斯顿大学大二学生，曾代表美国参加2012年奥运会。如果你不介意丢脸的话，下午1点开始来跟她过过招吧。我和比尔·盖茨会先上场，试着消耗一下她的体力。
Gorat's和Piccolo's餐厅将于5月3日（周日）再次专为伯克希尔股东开放。两家餐厅均营业至晚上10点，Gorat's下午1点开门，Piccolo's下午4点开门。这两家是我最爱的餐厅，周日晚上我会分别去用餐。提醒：预订Gorat's请于4月1日（当天及之后）致电402-551-3733；预订Piccolo's请致电402-346-2865。在Piccolo's，记得点一份巨型根汁汽水冰淇淋作为甜品——只有娘娘腔才点小份的。

今年股东问答环节仍由三位财经记者主导，他们将向我和查理提出股东通过电子邮件提交的问题。记者及邮箱如下：Carol Loomis（去年刚从Fortune（《财富》）杂志退休，此前任职六十年，仍堪称商业与金融事务专家），邮箱 loomisbrk@gmail.com；CNBC（美国消费者新闻与商业频道）的Becky Quick，邮箱 BerkshireQuestions@cnbc.com；以及The New York Times（《纽约时报》）的Andrew Ross Sorkin，邮箱 arsorkin@nytimes.com。

每位记者将从收到的提问中选出六个他们觉得最有趣、最重要的问题。记者们告诉我，如果您的提问简洁、不要拖到最后才提交、与伯克希尔相关，且每封邮件不超过两个问题，被选中的机会最大。（如果您的提问被选中，并希望被提及姓名，请在邮件中注明。）

我们还将设立由三位追踪伯克希尔的分析师组成的小组。今年保险领域专家是Dowling & Partners的Gary Ransom。非保险业务相关问题由Ruane, Cunniff & Goldfarb的Jonathan Brandt和Morningstar（晨星）的Gregg Warren负责。我们希望分析师和记者们提出的问题能增进股东对其投资的理解与认知。

查理和我对即将到来的问题毫不知情。有些注定很难——这正是我们喜欢的。总计我们预计至少有54个问题：每位分析师和记者各6个，现场观众18个（去年总共62个）。现场提问者将通过抽签选出，抽签将于年会当天上午8点15分进行，共计11次。主会场及主要分会场设置的11个麦克风各对应一次抽签。

说到股东获取信息，请允许我重申：查理和我认为，所有股东应同步获取伯克希尔发布的新信息，并有充足时间进行分析。正因如此，我们选择在周五晚或周六早发布财务数据，年会也始终安排在周六。我们不会与大型机构投资者或分析师单独沟通，而是像对待所有其他股东一样对待他们。

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年会期间，成千上万的奥马哈居民和企业为我们提供巨大帮助，确保您玩得尽兴。今年由于参会人数有望创纪录，我们担心酒店房间紧张。为解决这一问题，Airbnb（爱彼迎）正特别努力征集年会期间的房源，预计能提供多种住宿选择。Airbnb的服务尤其适合那些只打算在奥马哈住一晚的股东——去年部分酒店要求客人至少住满三晚，费用不菲。预算紧张的股东不妨查看Airbnb网站。

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我有充分的理由定期赞扬我们的运营经理们。他们堪称全明星，经营企业如同这是他们家族拥有的唯一资产。我相信，在大型上市公司群体中，我们经理的思维方式也是最以股东为导向的。他们中的大多数人并无经济上的工作需求。打出商业"本垒打"所带来的喜悦，与 paycheck（薪金）对他们而言同等重要。

同样重要的是与我并肩作战在公司总部的24位同事。这个小团队高效地应对着SEC（美国证券交易委员会）及其他监管机构的众多要求，提交一份24,100页的联邦所得税申报表，监督3,400份州税申报表的提交，回应无数股东和媒体的询问，发布年度报告，筹备全国规模最大的股东大会，协调董事会各项活动——清单之长，不胜枚举。

他们以令人难以置信的高效和愉悦的态度处理所有这些事务，让我的生活轻松愉快。他们的努力远不止于伯克希尔的相关工作：去年，他们接待了从200所申请院校中选出的40所大学，这些学校派学生来奥马哈与我进行问答日。他们还处理我收到的各种请求，安排我的行程，甚至为我准备午餐——汉堡和薯条（当然，要蘸亨氏番茄酱）。没有哪位CEO能比这更幸福了；我确实每天都感觉像踏着舞步去上班。

去年，在年度报告中，我们放弃了实行48年的"不登照片"政策——谁说我不够灵活？——并刊登了一张我们了不起的总部团队在圣诞午餐时拍摄的照片。我没有提前告知大家将要公开亮相，所以他们并没有穿得特别正式。今年情况不同：在对面页上，你会看到大家知道会有人关注时的样子。但无论穿着如何，他们的表现都令人惊叹。

5月2日来见见他们吧，来享受我们这场"资本家的伍德斯托克"。

2015年2月27日

沃伦·E·巴菲特

董事会主席

伯克希尔·哈撒韦公司

收购标准

我们热切期待企业主或其代表向我们介绍符合以下所有标准的企业：

(1) 大规模收购（税后利润至少7500万美元，除非该业务能纳入我们现有部门），
(2) 有持续且明确的盈利能力（我们对未来预测不感兴趣，"困境反转型"交易同样不考虑），
(3) 企业净资产收益率良好，且负债很少或没有负债，
(4) 存在现有管理层（我们无法提供管理层），
(5) 业务简单（如果涉及太多技术，我们无法理解），
(6) 给出报价（在价格不明的情况下，我们不想浪费自己的时间或卖家的时间，甚至连初步讨论也不愿进行）。

公司规模越大，我们兴趣越浓：我们希望在50亿至200亿美元的范围内进行收购。但是，我们不接受关于在普通股票市场上进行购买的建议。

我们不会进行敌意收购。我们可以承诺完全保密，并会在通常五分钟内给出是否感兴趣的快速答复。我们更倾向于现金收购，但如果我们在内在商业价值上得到的与付出的相当，也会考虑发行股票。我们不参与竞拍。

查理和我经常收到一些完全不符合我们标准的收购建议：我们发现，如果你放出消息说要买柯利牧羊犬，很多人会打电话来想卖给你他们的可卡犬。一首乡村歌曲的歌词恰如其分地表达了我们对新业务、困境反转或拍卖式销售的感受："电话铃不响，那一定是我在找你。"

自然图像

身穿正装的人员在室内合影，画面中无可见的文字或符号

伯克希尔——过去、现在与未来

开端

1964年5月6日，当时由Seabury Stanton掌管的伯克希尔·哈撒韦公司向股东发出一封信，提出以每股11.375美元的价格回购22.5万股股票。这封信我早有预料，但价格让我意外。

当时伯克希尔共有1,583,680股流通股。其中约7%由巴菲特合伙公司（简称"BPL"）持有——这家投资实体由我管理，我的几乎所有净资产都在里面。就在要约收购信寄出前不久，Stanton问过我BPL愿意以什么价格卖出持股。我回答11.50美元，他说"好，成交。"随后伯克希尔的信来了，出价少了八分之一点（注：美股最小报价单位）。Stanton这种小动作让我恼火，我没有接受要约。

那是一个极其愚蠢的决定。

当时的伯克希尔是一家深陷困境的北方纺织企业。它所在的行业正在走下坡路——无论是比喻意义上还是字面意义上——而伯克希尔因种种原因无法改变航向。

这个行业的问题早已广为人知。伯克希尔董事会1954年7月29日的会议记录就摆出了残酷的事实："新英格兰地区的纺织业四十年前就开始衰败。战争期间这个趋势暂时停止了。现在趋势必将持续，直到供需平衡。"

那次董事会大约一年后，伯克希尔精细纺纱联合公司（Berkshire Fine Spinning Associates）与哈撒韦制造公司（Hathaway Manufacturing）——两家公司都可追溯到19世纪——合并，采用了我们今天这个名字。合并后的公司拥有14家工厂和10,000名员工，成为新英格兰纺织业的巨头。然而，两家管理层眼中的合并协议，很快就演变成了一份自杀契约。合并后的七年里，伯克希尔整体亏损，净资产缩水了37%。

与此同时，公司关闭了九家工厂，有时用清算所得来回购股份。这种模式引起了我的注意。

我在1962年12月买入了BPL的第一批伯克希尔股票，预期会有更多工厂关闭和更多回购。当时股价7.50美元，远低于每股营运资金10.25美元和每股账面价值20.20美元。以那个价格买入股票，就像捡起一支只剩一口的雪茄烟蒂。烟头可能又丑又湿，但那一口是免费的。然而，一旦享受完那片刻的快感，就别指望更多了。

此后伯克希尔果然按剧本走：很快又关闭了两家工厂，并在1964年5月那次行动中，打算用关厂所得回购股份。Stanton出的价格比我们的原始买入价高出50%。看，我的免费一口正在那里等着我呢——之后我就可以另寻别的烟蒂了。

可是，我因为Stanton的抠门而恼火，拒绝了他的要约，反而开始大举买入更多伯克希尔股票。

到1965年4月，BPL持有392,633股（当时流通股为1,017,547股），并在5月初的董事会上正式接管了公司。由于Stanton和我孩子气的行为——说到底，八分之一点对我们俩谁又算得了什么？——他丢了工作，而我发现自己把BPL超过25%的资本投进了一家我知之甚少的烂生意。我就像那只追上了汽车却不知如何是好的狗。

由于伯克希尔的经营亏损和股份回购，其1964财年末的净资产已从1955年合并时的5,500万美元降至2,200万美元。纺织业务占用了全部这2,200万美元：公司没有多余现金，还欠银行250万美元。（伯克希尔1964年年报全文见第130-142页。）
有一阵子我走运了：伯克希尔紧接着就享受了两年的良好经营条件。更棒的是，那些年的利润还免缴所得税，因为它拥有巨额的亏损结转，那是前些年灾难性业绩造成的。

然后蜜月结束了。在1966年之后的18年里，我们与纺织业务不屈不挠地斗争，全都徒劳无功。但顽固——还是愚蠢？——总有个限度。1985年，我终于认输，关闭了工厂。

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我第一个错误是把巴菲特合伙有限公司（BPL）的大量资源投入到一家垂死企业，但我没有因此气馁，反而迅速把这个错误放大了。事实上，我的第二个错误远比第一个严重，最终成为我职业生涯代价最高的一个。

1967年初，我让伯克希尔支付了860万美元，收购了国民赔偿公司（National Indemnity Company，简称NICO），这是一家位于奥马哈的小型但有前景的保险公司。（交易中还包含一家规模极小的姊妹公司。）保险正在我的拿手领域：我理解并喜欢这个行业。

NICO的所有者Jack Ringwalt是我的老友，他想把公司卖给我——我个人。他的出价绝对不是针对伯克希尔的。那么，我为什么为了伯克希尔而买下NICO，而不是为了BPL呢？我有48年时间思考这个问题，至今没想出好答案。我只是犯了一个巨大的错误。

如果当时是BPL买下它，我和我的合伙人将100%拥有一家优秀的企业，这家企业注定会成为日后伯克希尔公司的基石。而且，我们的增长就不会被近二十年来困在纺织业务中的无收益资金所阻碍。最后，我们后续的收购将由我和我的合伙人完全拥有，而不是由伯克希尔的遗留股东拥有39%的股份——我们对这些股东并无义务。尽管这些事实就摆在我眼前，我还是选择将100%的优秀企业（NICO）嫁给了只拥有61%股份的糟糕企业（伯克希尔·哈撒韦），这个决定最终导致大约1000亿美元从BPL合伙人那里转移到了一群陌生人手中。

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再坦白一次，然后我会转向更愉快的话题：你能相信吗，1975年我买下了Waumbec Mills，另一家新英格兰纺织公司？当然，基于我们获得的资产以及与伯克希尔现有纺织业务的预期协同效应，买入价格算得上"便宜货"。然而——想不到吧——Waumbec是个灾难，那家工厂没过几年就不得不关门。

现在说点好消息：北方的纺织业终于灭绝了。如果你听说有人看到我在新英格兰地区闲逛，大可不必惊慌。

查理把我拉回正轨

我在管理小规模资金时，雪茄烟蒂策略非常管用。20世纪50年代，我获得的几十次免费"烟蒂"抽，让那个年代成为我一生中相对和绝对投资业绩最好的十年，没有之一。

即便如此，我对雪茄烟蒂还是做过几次例外，最重要的就是GEICO（政府雇员保险公司）。多亏1951年与Lorimer Davidson的一次交谈——他后来成为该公司的CEO，是个非常好的人——我了解到GEICO是一家非常出色的企业，于是迅速将我9800美元净资产的65%投进了它的股票。不过，早些年我的大部分收益来自那些以低价交易的一般公司的投资。本·格雷厄姆教过我这种技巧，而且它很管用。

但这种方法的一个主要弱点逐渐显现：雪茄烟蒂投资只能扩展到一定程度。在大量资金面前，它永远无法很好地运作。
此外，尽管以低价买入的边际企业作为短期投资可能颇具吸引力，但它们并非构建大型持久企业的正确基石。选择婚姻伴侣显然比约会需要更严格的标准。（需要指出的是，伯克希尔本来会是一个令人非常满意的“约会对象”：如果我们当初接受了 Seabury Stanton 每股 \$11.375 的收购要约，BPL 在伯克希尔投资上的加权年回报率大约会是 40%。）

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是查理·芒格让我改掉了捡烟蒂的习惯，并为打造一个既能规模巨大又能带来满意利润的企业指明了方向。查理从小在我现在住的地方几百英尺外长大，年轻时也和我一样，在我祖父的杂货店里工作过。不过，直到1959年我才见到查理，那时他早已离开奥马哈，定居洛杉矶。我当时28岁，他35岁。介绍我们认识的那位奥马哈医生预言我们一定会合得来——事实也的确如此。

如果你参加过我们的股东大会，就会知道查理博学多才、记忆力惊人，而且有些固执己见。我自己也不是个优柔寡断的人，我们有时也会有分歧。然而56年来，我们从没有吵过架。当我们意见相左时，查理通常会这样结束对话：“沃伦，你再想想，你会同意我的，因为你很聪明，而我是对的。”

你们大多数人不知道的是，建筑是查理的爱好之一。尽管他的职业生涯始于执业律师（当时他的时间按每小时15美元计费），查理在30多岁时通过设计并建造洛杉矶附近的五个公寓项目赚到了真正的第一桶金。同时，他还设计了如今他居住的房子——大约55年后的今天依然如此。（和我一样，查理如果对自己所处的环境满意，就很难被挪动。）近年来，查理在斯坦福大学和密歇根大学设计了大型宿舍综合体，如今已91岁高龄，仍在着手另一个重大项目。

不过在我看来，查理最重要的建筑杰作是设计出了如今的伯克希尔。他给我的蓝图很简单：忘掉你所学到的用美妙的价格买入普通的企业；相反，要用合理的价格买入美妙的企业。

改变我的行为并非易事（问问我的家人就知道了）。在没有查理参与的情况下，我也取得了相当不错的成功，那我为什么要听一个一天商学院都没上过的律师的话呢（而——咳咳——我上过三个商学院）？但查理从不厌倦向我重复他关于商业和投资的格言，而且他的逻辑无可辩驳。因此，伯克希尔是按照查理的蓝图建成的。我的角色是总承包商，而伯克希尔子公司的CEO们作为分包商做着实际工作。

1972年是伯克希尔的转折点（尽管我偶尔也会故态复萌——还记得我1975年收购Waumbec的事吧）。那时我们有机会为蓝筹印花公司收购喜诗糖果，而查理、我和伯克希尔都是蓝筹印花的主要股东，后来这家公司并入了伯克希尔。

喜诗糖果是一家传奇的西海岸盒装巧克力制造商和零售商，当时每年税前利润约400万美元，而只动用了800万美元的有形净资产。此外，该公司拥有一笔没有出现在资产负债表上的巨大资产：一个广泛而持久的竞争优势，赋予了它显著的定价权。随着时间的推移，这个优势几乎必然会让喜诗的盈利大幅增长。更妙的是，这些增长只需要少量的增量投资就能实现。换句话说，喜诗糖果有望在未来几十年里源源不断地产生现金。
控制喜诗糖果的那个家族要价3,000万美元，查理说得对，它值那个价。但我只愿出2,500万美元，而且即便这个价格，我也谈不上有多热情（出价是净资产三倍，让我倒吸一口凉气）。我这种盲目的谨慎差点搞砸一笔绝佳收购。幸运的是，卖方最终接受了我们2,500万美元的出价。

迄今为止，喜诗糖果已实现税前利润19亿美元，而为了支撑其增长，额外投入的资本仅需4,000万美元。因此，喜诗能向伯克希尔输送巨额资金，帮助我们去收购其他企业，而这些企业本身又产生了大量可供分配利润（想象一下兔子繁殖）。此外，通过观察喜诗的运作，我受到了一场关于强大品牌价值的商业教育，这让我对许多其他有利可图的投资大开眼界。

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即便有了查理的蓝图，自Waumbec之后我还是犯了很多错误。最可怕的是Dexter（德克斯特）鞋业。我们在1993年收购这家公司时，它业绩辉煌，在我眼里绝不像一支"雪茄烟蒂"。然而，由于海外竞争，它的竞争优势很快便消失殆尽。而我根本没预见到这一点。

结果，伯克希尔为Dexter支付了4.33亿美元，而它的价值几乎立即归零。然而，美国通用会计准则根本不足以记录我这一错误的严重程度。事实是，我给了Dexter的卖方伯克希尔的股票，而非现金，而我用于收购的这些股份如今价值约57亿美元。论财务灾难，这个案例绝对能在吉尼斯世界纪录里占有一席之地。

此后我还犯了好几个错误，同样是用伯克希尔的股份去收购那些利润注定只能勉力维持的企业。这类错误是致命的。用一家优秀企业（伯克希尔无疑就是）的股票去换取一个平庸企业的所有权，会不可挽回地摧毁价值。

当伯克希尔持股的公司也犯下这种错误时（有时错误发生在我担任董事期间），我们同样遭受了财务损失。CEO们常常无视一个基本现实：你在收购中付出的股票的内在价值，绝不能大于你收到的企业的内在价值。我从来没有见过哪一位投资银行家在向潜在收购方的董事会推销换股交易时，量化这个至关重要的数学问题。相反，银行家的重点总是描述当前收购中"惯常"支付的市场溢价——用这种方式评估收购的吸引力愚蠢至极——或者描述交易能否提升收购方的每股收益（这本身远不能作为决策依据）。为了追求那个心仪的每股数字，气喘吁吁的CEO和他的"帮手们"往往会编造出天花乱坠的"协同效应"（在我多年担任19家公司董事的经历中，我从没听人提过"反协同"这个词，但在交易完成之后，我见过大量这样的反协同）。美国董事会上很少对收购进行事后复盘，将现实与当初的预测诚实对比。这种做法本应成为常态。

我可以向你们保证，在我离世很久之后，伯克希尔的CEO和董事会也将在任何收购中发行股份之前仔细计算内在价值。用一张百元大钞换八张十元钞票，是不可能致富的（哪怕你的顾问给你递上一份昂贵的"公平性"意见书，为你背书这笔交换）。
整体而言，伯克希尔的收购成果不错——其中几笔大的收购非常成功。我们在有价证券上的投资也是如此。后者在我们的资产负债表上始终按市价计价，因此任何收益——包括未实现收益——都会立即反映在我们的净资产中。但我们对企业的直接收购从未在资产负债表上向上重估，即使这些企业能以高于账面价值数十亿美元的价格出售。伯克希尔子公司未入账的增值已经变得非常巨大，过去十年中这些增值尤其快速。

听从查理的忠告获益良多。

今日的伯克希尔

伯克希尔现在是一个庞大的集团，并且不断试图进一步扩张。

应该承认，集团公司在投资者中名声很糟。而且它们完全活该。我先解释一下它们为何失宠，然后再说明为什么集团形式给伯克希尔带来了巨大而持久的优势。

自从我进入商界以来，集团曾经历了几段极度风靡的时期，其中最愚蠢的一段发生在20世纪60年代末。当时集团CEO们的套路很简单：凭借个人魅力、宣传推广或可疑的会计手法——通常是三者并用——这些经理人将一家初出茅庐的集团的股票推高到，比方说，20倍市盈率，然后尽快增发股票去收购另一家仅以10倍左右市盈率出售的企业。他们立即对收购采用"权益结合法"会计处理——被收购企业的业务没有发生一丁点变化——每股收益却自动增加，他们便用这增长来证明自己的管理天赋。接下来他们向投资者解释，这种天赋足以维持乃至提升收购方的市盈率倍数。最后，他们承诺会无限重复这一流程，从而创造不断增长的每股收益。

随着20世纪60年代的流逝，华尔街对这种障眼法的迷恋愈演愈烈。当可疑的操作被用来制造每股收益增长时，华尔街的那些常客们总是乐于放下怀疑，尤其是当这些杂耍般的操作促成的并购能为投资银行家带来巨额费用时。审计师们则心甘情愿地在集团的会计账目上洒圣水，有时甚至还建言献策，如何让数字更好看。对许多人来说，滚滚而来的轻松之财冲走了道德敏感。

由于扩张中的集团的每股收益增长来自对市盈率差异的利用，其CEO必须寻找那些以低市盈率出售的企业。当然，这些企业通常是品质平庸、长期前景不佳的。这种"摸底"的动机通常会导致集团收购的基础业务越来越垃圾。投资者对此并不在意：他们指望的是交易速度和权益结合法来增加收益。

由此引发的并购风暴得到了追捧它的媒体的煽风点火。像ITT、利顿工业、海湾西方工业公司和LTV这样的公司被捧上了天，它们的CEO成为名人。（这些曾经赫赫有名的集团如今早已不复存在。正如约吉·贝拉所说："每个拿破仑都会遇到他的水门事件。"）

那时，各种会计把戏——其中许多荒谬到透明——都被原谅或忽视了。实际上，让一位会计奇才掌舵一个扩张中的集团被视为巨大的加分项：在这种情况下，股东们可以确信，无论企业的经营现实变得多么糟糕，报告利润永远不会令人失望。
20世纪60年代末，我参加了一场会议，会上一位热衷于收购的CEO吹嘘自己的"大胆、富有想象力的会计手法"。在场的大多数分析师都赞许地点头，以为自己找到了一位无论经营结果如何都能确保实现预测的经理人。

然而，午夜钟声终究敲响，一切变回了南瓜和老鼠。事实再次证明，基于连续高价发行股票的商业模式——就像传销模式一样——确实能重新分配财富，但绝不可能创造财富。尽管如此，这两种现象在我国仍周期性繁荣——它们是每个推销员的梦想——尽管它们往往披着精心伪装的外衣。结局总是相同的：金钱从轻信者流向欺诈者。而且与传销不同，股票中被窃取的金额可能触目惊心。

在BPL和伯克希尔，我们从未投资过那些一门心思只想发行股票的公司。这种行为是最可靠的指标之一，表明管理层热衷炒作、会计薄弱、股价过高，而且——往往——直截了当的不诚实。

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那么，查理和我究竟为什么觉得伯克希尔的综合企业结构如此有吸引力？简单来说：如果综合企业结构被明智地运用，它是最大化长期资本增长的理想架构。

资本主义的一个备受赞誉的优点，是它能高效配置资金。论据是：市场会将投资引向有前途的企业，远离注定衰败的企业。这是真的：尽管有其过度之处，市场驱动的资本配置通常远远优于任何其他方式。

然而，资本的理性流动常常遇到障碍。正如1954年那场伯克希尔会议记录所揭示的，纺织行业中本该显而易见的资本退出，因为管理层的幻想和私利而被拖延了几十年。事实上，我自己也过久地推迟了淘汰我们过时的纺织厂。

一位将资本投在夕阳业务中的CEO，很少会主动将巨额资本大规模重新配置到不相关的活动中。这样的举动通常需要解雇长期同事，并承认错误。而且，即便这位CEO有意愿去做，他也未必是你能指望来处理重新配置任务的人选。

在股东层面，当个人投资者试图在企业和行业之间重新配置资本时，税收和摩擦成本对他们影响巨大。即使是免税的机构投资者，在转移资本时也面临重大成本，因为他们通常需要中介来完成这项工作。于是，许多胃口昂贵的嘴巴吵着要吃饭——其中包括投资银行家、会计师、顾问、律师，以及杠杆收购操盘手这类资本重新配置者。搬运金钱的人可不便宜。

相比之下，像伯克希尔这样的综合企业，完全有条件以最低成本理性地配置资本。当然，形式本身不能保证成功：我们犯过很多错误，还会犯更多。然而，我们的结构优势是强大的。

在伯克希尔，我们可以——在不产生税收或太多其他成本的情况下——将巨额资金从增量投资机会有限的企业，转移到更有前景的领域。此外，我们不受因终身从事某一行业而产生的历史偏见所束缚，也不受那些对维持现状有既得利益的同行的压力。这一点很重要：如果由马来控制投资决策，就不会有汽车工业了。
我们还有另一个重大优势——能够购买优质企业的一部分，也就是普通股。大多数管理层无法采取这种行动。纵观历史，这一战略替代方案已被证明非常有用；广泛的选择总能优化决策。股市每天向我们提供的企业（当然是小份额的）常常比我们同时能买到的整个企业更具吸引力。此外，我们从有价证券中获得的收益帮助我们完成了一些大型收购，否则我们的财力根本无法实现。

实际上，世界是伯克希尔的牡蛎——这个世界提供的机会远远超出大多数公司实际能触及的范围。当然，我们只限于那些我们能评估经济前景的企业。这是一个严重的局限：查理和我不知道许多公司十年后会是什么样子。但这个局限比那些只在一个行业里打转的管理者要小得多。此外，我们能盈利的规模远超那些受制于单一行业有限潜力的企业。

我先前提到过，喜诗糖果相对于其微薄的资本需求产生了巨大的盈利。当然，我们很希望能明智地运用这些资金来扩大糖果业务。但我们多次尝试基本都徒劳无功。因此，在不产生税务低效或摩擦成本的情况下，我们利用喜诗产生的多余资金帮助收购其他企业。如果喜诗仍然是一家独立公司，其盈利就必须分配给投资者重新部署，这过程中往往会因高额税收而大幅缩水，而且几乎总会产生显著的摩擦成本和代理成本。

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伯克希尔还有另一个多年来日益重要的优势：我们现在是众多优秀企业的所有者和经理人的首选归宿。

拥有成功企业的家族在考虑出售时面临多种选择。通常，最佳决定是什么都不做。生活中有比拥有一家自己精通且盈利的企业更糟糕的事。但按兵不动很少得到华尔街的推荐。（别问理发师你需不需要理发。）

当家族的一部分人想出售而另一部分人想继续经营时，上市常常是明智之举。但当所有者想完全套现时，他们通常考虑两条路。

第一条是卖给某个垂涎欲滴、想从两家公司合并中榨取"协同效应"的竞争对手。这种买家总是盘算着大量裁掉卖方的员工——正是这些员工帮助主人建立了企业。然而，一位有心的主人（这样的人有很多）通常不希望他长期共事的伙伴们悲伤地唱起那首老乡村歌曲："她得了金矿，我得了烂屁眼。"

卖家的第二种选择是华尔街买家。多年来，这些购买者准确地自称"杠杆收购公司"。当这个词在1990年代初名声变臭时——还记得RJR和《门口的野蛮人》吗？——这些买家急忙改名为"私募股权"。

名字可能变了，但仅此而已：几乎所有私募股权收购中，股权被大幅减少，债务被堆积如山。实际上，私募股权买家向卖家提供的价格部分取决于买家评估能对被收购公司施加的最大债务额。
后来，如果事情顺利，权益开始积累，杠杆收购公司往往会寻求用新借款进行再杠杆化。然后他们通常将部分收益用于支付巨额股息，导致权益急剧下降，有时甚至变为负数。

事实上，“权益”对许多私募股权买家来说是个脏词；他们喜欢的是债务。而且，由于目前债务非常便宜，这些买家经常能支付高价。随后，这家企业将被转售，通常卖给另一个杠杆收购者。实际上，企业变成了一件商品。

伯克希尔为希望出售的企业主提供了第三种选择：一个永久的家，公司的员工和文化将被保留（尽管偶尔也需要更换管理层）。除此之外，我们收购的任何企业都会显著增强其财务实力和增长能力。它与银行和华尔街分析师打交道的日子也永远结束了。

有些卖家并不关心这些事。但是，当卖家在意时，伯克希尔并没有太多竞争对手。

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有时专家建议伯克希尔分拆某些业务。这些建议毫无意义。我们的公司作为伯克希尔的一部分比作为独立实体更有价值。原因之一是我们能够在企业之间或向新项目即时转移资金，且无需纳税。此外，如果运营被分开，某些成本会全部或部分重复。最明显的例子：伯克希尔为其单一的董事会承担极低的成本；如果我们数十家子公司被分拆出去，董事会的总成本将会飙升。监管和行政开支也会如此。

最后，由于我们拥有子公司B，子公司A有时能获得重要的税收效率。例如，我们公用事业可获得的某些税收抵免目前之所以能够实现，仅仅是因为我们在伯克希尔的其他业务产生了大量应税收入。这使得Berkshire Hathaway Energy（伯克希尔·哈撒韦能源公司）在开发风电和太阳能项目方面比大多数公用事业公司具有显著优势。

投资银行家按交易收费，他们不断敦促收购方为公开持有的企业支付高于市场价20%至50%的溢价。银行家告诉买家，溢价是合理的，因为这是“控制价值”，而且一旦收购方的CEO掌权，将会发生美妙的事情。（哪个渴望收购的经理会质疑这种说法呢？）

几年后，银行家们板着脸再次出现，同样热切地敦促分拆早先收购的业务，以“释放股东价值”。当然，分拆会剥夺母公司的所谓“控制价值”，却没有任何补偿。银行家解释说，分拆后的公司将蓬勃发展，因为其管理层将更具企业家精神，摆脱了母公司令人窒息的官僚体制。（我们之前遇到的那位才华横溢的CEO也就不过如此了。）

如果剥离方后来希望重新收购分拆的业务，银行家很可能再次敦促它为此特权支付一笔可观的“控制”溢价。（银行界这种心理“灵活性”催生了一句老话：费用往往导致交易，而不是交易导致费用。）

当然，有可能有一天监管机构会要求伯克希尔进行分拆或出售。伯克希尔在1979年就进行过这样的分拆，当时针对银行控股公司的新法规迫使我们剥离了在伊利诺伊州罗克福德（Rockford）拥有的一家银行。
自愿分拆对我们来说毫无意义：我们会丧失控制权价值、资本配置灵活性，以及在某些情况下的重要税收优势。目前出色地管理我们子公司的CEO们，如果去运营一家分拆出去的企业，很难像现在这样高效，因为他们目前享有伯克希尔所有权带来的运营和财务优势。而且，母公司和分拆业务一旦分离，很可能会比合并时产生略高的成本。

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在离开分拆这个话题之前，我们来看看前面提到的一家综合企业集团——LTV（Ling-Temco-Vought公司）——给我们带来的教训。我这里就简要概括一下，不过喜欢精彩金融故事的人，不妨读读1982年10月号《D Magazine》上那篇关于Jimmy Ling的文章。自己上网搜一搜吧。

通过一系列眼花缭乱的企业操作，Ling把LTV的销售额从1965年仅仅3600万美元，一路带到两年后跃居《财富》500强第14位。需要指出的是，Ling从未展现过任何管理才能。但Charlie很久以前就告诉我，永远不要低估一个高估自己的人。在这一方面，Ling无人能及。

Ling的战略，他称之为“项目重新部署”，就是收购一家大公司，然后将其各个部门部分分拆出去。在LTV 1966年的年报中，他解释了接下来会产生的魔力：“最重要的是，收购必须通过2加2等于5（或6）这个公式的考验。”媒体、公众和华尔街都喜欢这种论调。

1967年，Ling收购了Wilson & Co.，这是一家大型肉类加工企业，同时也在高尔夫器材和制药领域有业务。随后不久，他将母公司拆分成三家业务公司：威尔逊公司（Wilson & Co.）（肉类加工）、威尔逊体育用品（Wilson Sporting Goods）和威尔逊制药（Wilson Pharmaceuticals），每家都计划部分分拆。这些公司很快在华尔街有了绰号：“肉丸”、“高尔夫球”和“傻球”。

此后不久，事情就很清楚了：就像伊卡洛斯一样，Ling飞得离太阳太近了。到20世纪70年代初，Ling的帝国开始融化，他自己也被从LTV分拆了出去……也就是，被解雇了。

金融市场会周期性地脱离现实——这一点你可以放心。还会有更多Jimmy Ling式的人物出现。他们看起来、说起来都很权威。媒体会抓住他们的每一句话。银行家会争抢他们的生意。他们所说的话近来确实“管用”了。他们的早期追随者会觉得自己非常聪明。我们的建议是：不管他们说什么，永远别忘了2+2总是等于4。当有人告诉你这个数学太老套的时候——捂紧你的钱包，去度个假，过几年再回来以便宜价格买股票。

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如今，伯克希尔拥有：（1）无与伦比的业务集合，其中大多数目前享有良好的经济前景；（2）一批卓越的管理者，他们几乎无一例外地对自己经营的子公司和伯克希尔都格外忠诚；（3）异常多元化的收益、一流的财务实力以及海量的流动性——我们在任何情况下都会维持这些；（4）在众多考虑出售业务的企业主和管理者中，伯克希尔是首选；（5）与上一点相关，我们拥有一种与大多数大公司截然不同的文化，这是我们花了50年时间培育的，如今已坚如磐石。

这些优势为我们提供了绝佳的基石，可以在此之上继续建设。

伯克希尔的未来50年

现在让我们看看前方的道路。请记住，如果50年前我试图预测未来，我的一些预测会远远偏离目标。带着这个警告，我来告诉你们，如果今天我的家人问我伯克希尔的未来，我会对他们说什么。
- 首先也是最根本的一点，我相信对于耐心的伯克希尔股东而言，永久性资本损失的风险，在所有单一公司投资中是最低的。这是因为，我们每股内在业务价值几乎肯定会随着时间的推移而增长。

不过，这个乐观的预测有一个重要的警示：如果投资者买入伯克希尔股票的价格异常高——比如接近账面价值的两倍，而伯克希尔股票偶尔确实达到过这个价位——那么投资者可能需要很多年才能实现盈利。换句话说，一笔明智的投资，如果以过高的价格买入，就可能蜕变成一场鲁莽的投机。伯克希尔也不能免于这一真理。

然而，如果投资者买入伯克希尔的价格，略高于公司回购自己股票的价格水平，那么在一段合理的时间内应该能产生收益。伯克希尔的董事们只会在他们认为远低于内在价值的价格上批准回购。（在我们看来，这是回购的一项基本标准，但其他管理层常常忽视这一点。）

对于那些计划买入后一两年内就卖出的投资者，无论买入价格如何，我都无法提供任何保证。在这类短时间里，整个股票市场的波动，对于你投资结果的决定作用，可能远比你的伯克希尔股票内在价值的变化更重要。正如本·格雷厄姆几十年前所说：“短期来看，市场是一台投票机；长期来看，它是一台称重机。”有时，投资者——业余人士和专业人士都一样——的投票决定近乎疯狂。

由于我不知道任何可靠的方法来预测市场走势，我建议你只有在预期持有伯克希尔股票至少五年的情况下才购买。那些寻求短期利润的人应该到别处看看。

另一个警告：伯克希尔股票不应借钱购买。自1965年以来，我们的股票曾三次从高点下跌约50%。总有一天，类似幅度的下跌会再次发生，而且没人知道会是什么时候。伯克希尔几乎肯定会是投资者的一个令人满意的持有标的。但对于使用杠杆的投机者来说，它很可能是一个灾难性的选择。

• 我相信，任何导致伯克希尔遭遇财务问题的事件，其概率基本为零。我们永远会为千年一遇的洪水做好准备；事实上，如果洪水真的发生了，我们还会向那些没有准备的人出售救生衣。在2008-2009年的金融危机中，伯克希尔扮演了重要的“第一响应者”角色，而自那以后，我们的资产负债表实力和盈利潜力都翻了一倍多。你们的公司是美国商业的直布罗陀岩，并将继续保持这一地位。

财务上的持久力要求一家公司在所有情况下都保持三种优势：(1) 庞大且可靠的盈利流；(2) 巨额的流动资产；以及 (3) 没有重大的近期现金需求。忽视最后一项必要条件是导致公司遭遇意外问题的常见原因：太多时候，盈利公司的首席执行官们觉得，无论到期债务有多大，他们总能顺利续期。在2008-2009年，许多管理层才意识到这种心态有多么危险。

以下是我们将如何始终确保这三项关键要素的做法。首先，我们的盈利流规模巨大，且来自多元化的业务。我们的股东现在拥有许多具备持久竞争优势的大公司，未来我们还会收购更多这样的公司。这种多元化确保了伯克希尔的持续盈利能力，即使一场巨灾导致了远超以往任何经验的保险损失，也不在话下。
接下来是现金。在经营健康的公司里，现金有时被视为应当尽量压减的东西——一种拖累净资产收益率这类指标的"非生产性资产"。然而，现金之于企业，就如同氧气之于个人：平时从未想起，一旦缺失便念念不忘。

2008年的美国企业就是活生生的案例。那年9月，许多长期繁荣的公司突然担心未来几天支票会不会跳票。一夜之间，它们的"财务氧气"消失了。

在伯克希尔，我们的"呼吸"从未中断。事实上，在9月下旬到10月初的三周里，我们向美国企业提供了156亿美元的新鲜资金。

我们能这么做，是因为我们始终持有至少200亿美元（通常远高于此）的现金等价物。我们所说的现金等价物，指的是美国短期国债，而不是其他号称能提供流动性、确实也能提供流动性——但在真正需要的时候却做不到的现金替代品。票据到期时，只有现金才是法定货币。出门别忘带。

最后——回到我们的第三点——我们绝不会采用那些可能导致突然需要大笔资金的经营或投资做法。这意味着我们不会让伯克希尔暴露于大规模短期债务到期，也不会签订可能要求追加巨额抵押品的衍生品合约或其他商业安排。

数年前，我们参与了一些我们认为定价严重错误且只有少量抵押要求的衍生品合约。这些后来被证明利润颇丰。但近来，新签订的衍生品合约要求全额抵押。这让我们对衍生品彻底失去了兴趣，无论它们可能提供多大的盈利潜力。我们已经有很多年没有签署这类合约了，除了在我们的公用事业公司里出于经营目的需要的少数几笔。

此外，我们不会签发赋予保单持有人任意赎回权的保险合同。许多人寿保险产品包含赎回条款，使其在极端恐慌时期容易遭遇"挤兑"。但这类合同在我们身处的财产险领域并不存在。如果我们的保费规模缩减，浮存金也会下降——但速度会非常缓慢。

我们这种可能在有些人看来过于保守的做法，原因在于：人们偶尔会恐慌是完全可以预测的，但什么时候恐慌则完全无法预测。尽管几乎所有日子都相对平静，但明天永远充满不确定性。（我在1941年12月6日和2001年9月10日都未曾感到特别的忧虑。）如果你无法预测明天会发生什么，就必须为一切可能做好准备。

一位64岁、计划65岁退休的CEO，在评估某一年只有极小概率发生的风险时，可能有自己独特的算盘。实际上，他99%的时间可能都是"对的"。但这种概率对我们毫无吸引力。我们绝不会用你托付给我们的资金玩金融俄罗斯轮盘赌，哪怕这把比喻性的枪有100个弹膛、只装一颗子弹。在我们看来，为了追逐你想要的而拿你需要的去冒险，简直是疯了。

——尽管我们保守，但我认为我们每年都能增强伯克希尔的每股基础盈利能力。这并不意味着经营利润每年都会增长——远非如此。美国经济有潮起潮落——不过大部分时间在涨潮——当经济走弱时，我们的当期盈利也会走弱。但我们会继续实现内生增长，进行补强式收购，并进入新领域。因此，我相信伯克希尔每年都能为其基础盈利能力增添砝码。
有些年份收益会非常可观，有些年份则微不足道。市场、竞争和运气将决定机会何时降临。无论如何，凭借我们现有的一系列优质企业以及未来将要收购的新公司，伯克希尔将继续稳步前进。而且，在大多数年份，我国的经济还将为企业提供强劲的顺风。我们很幸运能拥有美国这片主场。

——坏消息是，伯克希尔的长期收益——按百分比而非美元衡量——不可能再像过去50年那样辉煌。数字已经变得太大了。我认为伯克希尔的业绩会优于美国公司的平均水平，但我们的优势（如果有的话）也不会太大。

最终——很可能是在未来十到二十年内——伯克希尔的盈利和资本规模将达到一个水平，使得管理层无法明智地将所有公司盈利用于再投资。那时，我们的董事将需要决定，最合适的超额收益分配方式是分红、股份回购，还是两者兼用。如果伯克希尔股价低于内在商业价值，大规模回购几乎肯定是最佳选择。你们可以放心，董事们会做出正确决策。

——没有哪家公司会比伯克希尔更以股东为导向。30多年来，我们每年都会重申我们的《股东原则》（见第117页），而且始终以这句话开头：“虽然我们的组织形式是公司，但我们的态度是合伙关系。”这份与你们的契约已刻在石头上。

我们拥有一个知识渊博、以商业为导向的董事会，随时准备履行这一合伙承诺。没有人是为了钱才担任这个职务：在一个几乎绝无仅有的安排中，我们的董事只领取象征性的报酬。他们的回报来自持有伯克希尔股票，以及作为一家重要企业良好管理者的成就感。

他们及其家族持有的股票——在很多情况下价值非常可观——都是在市场上购买而来的（并非通过期权或赠予获得）。此外，与其他几乎所有大型上市公司不同，我们没有购买董事及高管责任保险。在伯克希尔，董事与你们感同身受。

为了进一步确保文化的延续，我已建议我的儿子霍华德接替我担任非执行董事长。我之所以提出这一愿望，唯一的理由是为了在万一聘用错了CEO、需要董事长果断行动时，变革能更顺利地进行。我可以向你们保证，伯克希尔出现这种问题的概率非常低——可能和任何上市公司一样低。然而，在我担任过董事的19家上市公司中，我亲眼看到，如果平庸的CEO同时兼任董事长，要替换他有多么困难。（事情通常最终能办成，但几乎总是太晚了。）

如果当选，霍华德将不领取任何报酬，并且除了所有董事必须履行的职责之外，他不会在职位上花费额外时间。他仅仅是一个安全阀——任何董事如果对CEO有顾虑，并希望知道其他董事是否也有同样疑虑，都可以去找他。如果多位董事都感到担忧，霍华德的董事长身份将使得问题能够被迅速且恰当地处理。
- 选对CEO至关重要，这也是伯克希尔董事会花大量时间讨论的议题。管理伯克希尔首要任务是资本配置，外加选拔和留住杰出的经理人来掌舵我们的运营子公司。当然，这项工作还涉及在必要时更换子公司的CEO。这些职责要求伯克希尔的CEO理性、冷静且果断，对商业有广泛理解，并深谙人性。同样重要的是，他要知道自己的局限。（正如IBM的老汤姆·沃森所言：“我不是天才，但我在有些方面很聪明，而且我坚守在这些方面。”）

品格至关重要：伯克希尔的CEO必须为公司“全身心投入”，而非为自己。（我使用男性代词是为了避免行文别扭，但性别绝不应成为谁当CEO的决定因素。）他难免会赚到远超个人所需的金钱。但关键在于，既非自负也非贪婪驱使他去追求与那些薪酬最奢华的同行看齐的报酬，即使他的成就远超过那些人。CEO的行为对下属经理人有巨大影响：如果经理人清楚意识到股东利益对他而言至高无上，那么除了少数例外，他们也会接受这种思维方式。

我的继任者还需要另一项特殊能力：抵御企业衰败的ABC——傲慢、官僚和自满。当这些企业癌细胞扩散时，即使最强大的公司也会动摇。证明这一点的例子不胜枚举，但为了保全友谊，我只从久远的过去翻出一些案例。

在它们的鼎盛时期，通用汽车、IBM、西尔斯·罗巴克和美国钢铁雄踞各大行业之巅。它们看似坚不可摧。但我上面痛斥的那种破坏性行为最终使它们跌入深渊，其CEO和董事不久之前还认为绝无可能。它们昔日的财务实力和历史盈利记录最终被证明不堪一击。

随着伯克希尔日益壮大，只有一位警惕而坚定的CEO才能抵御这些削弱力量。他绝不能忘记查理的恳求：“告诉我我会死在哪里，这样我就永远不会去那里。”如果我们失去非经济价值观，伯克希尔的许多经济价值也会随之崩塌。“上层基调”将是维护伯克希尔独特文化的关键。

幸运的是，未来CEO取得成功所需的结构已牢固就位。伯克希尔现行的这种非同寻常的授权体系，正是官僚主义的最佳解药。从运营角度看，伯克希尔并非一家巨型公司，而是一个大型公司的集合体。在总部，我们从未设立过委员会，也从未要求子公司提交预算（尽管许多子公司将其作为重要的内部工具）。我们没有法务部门，也没有其他公司视为标配的部门：人力资源、公共关系、投资者关系、战略、收购，凡是你能想到的。

当然，我们确实有活跃的审计职能——没理由当个该死的傻瓜。但不同寻常的是，我们信任我们的经理人，让他们带着强烈的受托责任意识去运营业务。毕竟，在我们收购他们的企业之前，他们正是这样做的。此外，除了偶尔的例外，我们的信任带来的结果，比源源不断的指令、没完没了的审查和层层官僚架构要好得多。查理和我努力以换位思考下我们自己希望被对待的方式，与经理人互动。
- 我们的董事们认为，未来的CEO应来自内部候选人，伯克希尔·哈撒韦（Berkshire Hathaway）董事会已对他们相当熟悉。董事们还认为，新任CEO应相对年轻，以便能长期任职。如果CEO的平均任期能超过十年，伯克希尔将运营得最好。（老狗学不会新把戏。）而且他们也不太可能在65岁退休（你注意到了吗？）。

在伯克希尔的业务收购和大型定制投资行动中，重要的是我们的对手方既要熟悉伯克希尔的CEO，又要对他感到放心。建立这种信任和巩固关系需要时间。但回报可能非常巨大。

董事会和我都相信，我们现在有了合适的人选来接替我担任CEO——一位在我去世或卸任后即可接手工作的继任者。在某些重要方面，这个人将比我做得更好。

• 投资始终对伯克希尔至关重要，并将由几位专业人士管理。他们将向CEO汇报，因为他们的投资决策，广义上需要与伯克希尔的运营和收购计划协调。但总的来说，我们的投资经理将享有很大的自主权。在这个领域，我们未来几十年也处于良好状态。Todd Combs和Ted Weschler，各自在伯克希尔投资团队工作了数年，各方面都是一流的，在评估收购方面能特别帮助CEO。

总而言之，在Charlie和我离开后，伯克希尔处于最佳位置。我们有合适的人选——合适的董事、经理以及这些经理的潜在继任者。此外，我们的文化已深深植根于他们之中。我们的系统也是可再生的。在很大程度上，好的和坏的文化都会自我选择以延续下去。出于非常充分的理由，具有与我们类似价值观的企业所有者和运营经理将继续被伯克希尔吸引，将其视为独一无二且永久的家园。

• 如果我不向另一个使伯克希尔与众不同的关键群体致敬，那将是失职：我们的股东。伯克希尔确实拥有与任何其他巨型公司都不同的所有者群体。这一事实在去年的股东大会上得到了充分证明，股东们提出了一项代理投票决议：

决议：鉴于公司资金过多，而且与Warren不同，所有者并非亿万富翁，董事会应考虑支付有意义的年度股息。

提出该决议的股东从未出现在会议上，因此他的动议并未正式提出。不过，代理投票已统计完毕，结果发人深省。

毫不奇怪，A类股——由相对较少的股东持有，每人拥有大量经济利益——以89比1的票数否决了股息问题。

值得注意的是B类股股东的投票。他们人数有数十万——甚至可能达到一百万——他们投了660,759,855票反对，13,927,026票赞成，比例约为47比1。

我们的董事建议投反对票，但公司没有以其他方式试图影响股东。尽管如此，98%的投票股份实际上是在说：“不要给我们发股息，而是将所有收益再投资。”我们的合伙人——无论大小——与我们的管理哲学如此同步，既非凡又令人欣慰。

我很幸运能有你们作为合伙人。

Warren E. Buffett

副董事长的思考——过去与未来

致伯克希尔·哈撒韦（Berkshire Hathaway Inc.）股东：

我密切关注了伯克希尔在Warren Buffett领导下取得非凡成功的50年历史。现在，似乎应当由我独立补充来自他的任何庆祝性评论。我将尝试做五件事。
（1）描述是什么管理体系与政策，让一家规模小、注定无法挽救的大宗纺织品企业蜕变为如今强大的伯克希尔，
（2）解释这套管理体系与政策是如何形成的，
（3）在一定程度上说明伯克希尔为何如此成功，
（4）预测若巴菲特不久后离开，异常优异的表现是否还能持续，以及
（5）思考伯克希尔过去50年的卓越成就，其经验是否在其他地方也有借鉴意义。

巴菲特执掌下的伯克希尔管理体系与政策（以下合称“伯克希尔体系”）早在早期就已确定，具体如下：

（1）伯克希尔将是一家多元化的综合企业，只会回避那些它无法做出有效预测的业务。
（2）其顶层公司几乎所有的业务都通过独立注册的子公司进行，这些子公司的CEO享有极为充分的自主经营权。
（3）综合企业总部几乎空无一物，只有一间小型办公室，内设董事长、首席财务官及少数几名助理，这些助理主要协助首席财务官处理审计、内部控制等事务。
（4）伯克希尔的子公司中，必须始终包含财产险保险公司。这些保险公司作为一个整体，预期在适时产生可靠的承保利润的同时，还能产生可观的“浮存金”（来自未付保险负债）用于投资。
（5）整个体系内不会有显著的全系统人事制度、股票期权制度、其他激励制度或退休制度等，因为各子公司都有自己的制度，且往往各不相同。
（6）伯克希尔的董事长只为自己保留少数几项活动：

（i）他几乎管理所有证券投资，这些投资通常放在伯克希尔的财产险保险公司名下。
（ii）他负责挑选所有重要子公司的CEO，并决定他们的薪酬，同时从每位CEO那里获取一份保密的继任者建议，以防突然需要。
（iii）在子公司提升自身竞争优势后，他负责配置这些子公司不再需要的多余现金，最理想的配置方式是用这些现金收购新的子公司。
（iv）他随时准备响应任何子公司CEO几乎任何形式的联系需求，同时几乎不要求额外的联系。
（v）他会撰写一封篇幅长、逻辑清晰且实用的信函，纳入年度报告；这封信的设计以他作为被动股东时希望看到的内容为准，同时他会在年度股东大会上花数小时回答提问。
（vi）他努力成为文化的典范，这种文化将在很长一段时间内，无论他离开前还是离开后，对客户、股东及其他在位者都大有裨益。
（vii）他的首要任务是留出大量时间用于安静阅读和思考，尤其是那些能促进他坚定学习的内容，无论他年纪多大；以及
（viii）他还会花大量时间热忱地赞赏他人所取得的成就。
(7) 新子公司通常用现金收购，而非新发行股票。
(8) 只要每留存一美元盈余能为股东创造超过一美元的市场价值，伯克希尔就不会派发股息。
(9) 收购新子公司时，伯克希尔会力求为一家董事长能相当理解的好企业支付公平价格。伯克希尔还希望有一位优秀的CEO在位，预期他能长期留任，并在无需总部帮助的情况下管理得当。
(10) 选择子公司CEO时，伯克希尔会力求确保其可信赖、有技能、有精力，并且热爱其所处的业务和环境。
(11) 作为优先行为准则，伯克希尔几乎从不出售子公司。
(12) 伯克希尔几乎从不将子公司的CEO调任至另一家不相关的子公司。
(13) 伯克希尔绝不会仅仅因为年龄而强迫子公司CEO退休。
(14) 伯克希尔的未偿债务很少，因为它力求维持：(i) 在所有条件下几乎完美的信用可靠性，以及(ii) 现金和信贷的易获得性，以便在出现不寻常机会时进行部署。
(15) 伯克希尔始终对大型企业的潜在卖家保持友好态度。此类业务要约将得到迅速关注。如果该要约未促成交易，除董事长和伯克希尔的一两名人员外，无人会知晓此要约。而且他们绝不会对外人提及。

伯克希尔系统的各项要素及其整体规模都相当不同寻常。据我所知，没有哪家大型公司具备其中一半的要素。

伯克希尔是如何形成这种与常规截然不同的公司个性的呢？

嗯，巴菲特即使在年仅34岁时，就已控制了伯克希尔约45%的股份，并受到所有其他大股东完全信任。他可以随心所欲地建立任何系统。他确实这样做了，创造了伯克希尔系统。

几乎每个要素都是巴菲特精心选择的，因为他相信，在他领导下，这些要素有助于最大化伯克希尔的成就。他并非试图为其他公司创建一套放之四海而皆准的系统。事实上，伯克希尔的子公司并不被要求在其自身运营中使用伯克希尔系统。有些子公司采用不同系统也经营得很成功。

巴菲特在设计伯克希尔系统时，目标是什么？

嗯，多年来，我诊断出几个重要主题：

(1) 他特别希望持续最大化系统中最重要人物的理性、技能和奉献精神，首先是他自己。
(2) 他希望处处实现双赢结果——例如，通过付出忠诚来赢得忠诚。
(3) 他希望通过那些通常会在位足够长以承担决策后果的决策者，做出最大化长期结果的决策。
(4) 他希望尽可能减少总部庞大官僚机构几乎不可避免带来的不良影响。
(5) 他希望像本·格雷厄姆教授那样，亲自为传播所获得的智慧做出贡献。

当巴菲特发展伯克希尔系统时，他是否预见到了随之而来的所有好处？没有。巴菲特通过实践演化偶然发现了一些好处。但是，当他看到有益的结果时，他强化了其成因。

为什么巴菲特领导下的伯克希尔表现如此出色？

我想到的只有四个主要因素：

(1) 巴菲特的建设性特质，
(2) 伯克希尔系统的建设性特质，
(3) 好运，以及
(4) 一些股东和其他崇拜者（包括一些媒体人士）那种奇怪且强烈的、有感染力的忠诚。

我相信这四个因素都存在且起到了帮助作用。但重担是由建设性特质、奇怪的忠诚以及它们之间的相互作用共同承担的。
尤其值得一提的，是巴菲特决定只专注于少数几类活动，并把最大精力倾注其中，而且一干就是50年——这本身就是一记"超级合奏"（lollapalooza）。巴菲特成功的道理，和罗杰·费德勒打好网球的道理一模一样。

事实上，巴菲特采用的方法，跟著名篮球教练约翰·伍登的致胜之道如出一辙。伍登教练在学会把几乎全部上场时间分配给最优秀的七名球员之后，赢球变得最为稳定。这样一来，对手每场比赛面对的始终是对方最好的球员，而不是第二好的。而且，由于上场时间增加，这些最好的球员进步得比正常情况下更快。

巴菲特比伍登还"伍登"得多——在他的案例中，技艺的施展集中在一个人身上（而非七个人），并且随着50年岁月流淌，他年岁越长，技能反而越发精进，不像篮球运动员那样会衰退。

此外，通过把大量权力和权威赋予那些通常长期任职的重要子公司CEO，巴菲特也在他们身上创造了强大的伍登式效应。这种效应既提升了CEO们的本领，也提升了子公司的成就。

随后，由于伯克希尔体系给予众多子公司及其CEO梦寐以求的自主权，同时伯克希尔本身也日益成功、声名远播，这些成果反过来吸引了更多、更好的子公司加入伯克希尔，也吸引了更优秀的CEO。

而更好的子公司和CEO，反倒需要总部的关注更少——这就形成了常说的"良性循环"。

伯克希尔始终把意外险保险公司作为重要子公司，效果如何？好得出奇。伯克希尔的野心大得离谱，即便如此，它还是得到了想要的一切。

意外险保险公司通常会把价值大致相当于股东权益的资产投资于普通股，伯克希尔的保险子公司也是如此。而在过去50年里，标普500指数每年税前回报约为10%，构成了强劲的顺风。

在巴菲特时代的头几十年里，伯克希尔保险子公司持有的普通股大幅跑赢指数，正如巴菲特所料。后来，当伯克希尔股票持仓规模过大、再加上所得税考量，使得跑赢指数的部分收益变得微不足道（或许并非永久），其他更有利的优势又出现了。阿吉特·杰恩从零创建了庞大的再保险业务，既产生了巨额的"浮存金"，也带来了大额的承销利润。GEICO整体并入伯克希尔，此后GEICO的市场份额翻了四倍。伯克希尔其他保险业务也大幅改善，主要靠的是声誉优势、承销纪律、找到并守住良好的细分市场，以及招募和留住了杰出人才。

再后来，随着伯克希尔近乎独一无二且极其可靠的公司特质以及超大规模广为人知，其保险子公司获得并抓住了许多别人无法获取的有吸引力的机会，去购买私募发行的证券。这些证券大部分有固定期限，并且交出了出色的成绩。

伯克希尔在保险领域的卓越成果并非理所应当。通常情况下，意外险业务即便管理得再好，也只能产生平庸的业绩，而这样的业绩没什么大用。伯克希尔更好的成果大得惊人，以至于我相信，即使巴菲特现在带着他的智慧重返年轻，从一个小起点重新开始，也无法复制这样的成功。

伯克希尔是否因为是一家分散的综合性企业集团而受损？没有。业务范围的扩大反而有效增加了它的机会。而其他企业常见的负面效应，则被巴菲特的技能一一化解。

为什么伯克希尔喜欢用现金而不是用自己的股票来收购公司？嗯，因为很难用伯克希尔的股票换到与伯克希尔股票同等价值的东西。
为什么伯克希尔在保险业以外的公司收购能为股东带来如此好的结果，而其他收购方通常却让股东吃亏？

嗯，伯克希尔在设计上就拥有方法论优势，再加上它遇到的机遇本身也比别人好。它从来没有一个顶着压力必须买买买的"收购部"。它也从不依赖那些天生偏好交易的"帮手"的建议。巴菲特本人也一直克制着自欺欺人的倾向，明明比大多数企业高管更懂什么行得通、什么行不通——这得益于他长期作为被动投资者的经验——却总是把自己的专长说得轻描淡写。最后，即使伯克希尔的机遇远好于其他大多数人，巴菲特也常常展现出近乎非人的耐心，很少出手。举个例子，在他掌控伯克希尔的头十年里，他看到一家企业（纺织）走向死亡，两家新企业加入，净增仅一家。

巴菲特治下的伯克希尔犯过哪些大错？嗯，虽然"作为之错"很常见，但几乎所有重大错误都是"不作为之错"，比如当年没买沃尔玛的股票——那本是一件板上钉钉的大好事。不作为之错分量极重。如果伯克希尔能抓住那几个它当时不够聪明、没能看准是"几乎确定无疑"的机会，现在的净资产至少能多出500亿美元。

我清单上的倒数第二项任务是：预测如果巴菲特很快离开，伯克希尔是否还能继续保持异常优异的业绩。

答案是：能。伯克希尔的子公司已经积累了强大的业务势头，这种势头植根于持久的竞争优势。

此外，旗下的铁路和公用事业子公司现在提供了大量有吸引力的机会，可以大规模投资新的固定资产。而且许多子公司正在不断进行明智的"补强型"收购。

只要伯克希尔的整个体系大体维持不变，目前积聚的势能和机遇是如此之强，以至于伯克希尔几乎肯定能在很长很长时间里保持优于一般公司的表现——即便：(1) 巴菲特明天就离开；(2) 他的继任者只是能力平平的人；(3) 伯克希尔再也不收购任何大企业。

但是，在"巴菲特很快离开"这个假设下，他的继任者不会"只是能力平平的人"。比如 Ajit Jain 和 Greg Abel，他们是久经考验的干将，用"世界级"来形容恐怕都算低估了。我会用"世界领先"这个词。在某些重要方面，他们两人都是比巴菲特更好的企业管理者。

而且我相信，无论别人出什么价，Jain 和 Abel 都不会 (1) 离开伯克希尔，也不会 (2) 对伯克希尔的体系做太多改变。

我也不认为巴菲特的离开会导致理想的新收购就此终结。如今伯克希尔的体量如此庞大，且股东积极主义时代已经来临，我觉得一些理想的收购机会还会出现，伯克希尔账上那600亿美元现金也会建设性地减少。

我的最后一项任务是思考：伯克希尔过去50年的辉煌业绩，是否能为其他地方提供有用的借鉴？

答案显然是肯定的。在巴菲特执掌的早期，伯克希尔面临一项重大任务：把一小笔资金变成一家庞大而有用的公司。它是靠避免官僚主义、长期依赖一位善于思考的领导人——他不断进步，并不断吸引像他一样的人加入——来解决这个问题的。

相比之下，典型的巨型企业体系则是：总部充斥着官僚主义，CEO们一茬接一茬，大约59岁上位，之后几乎不停下来安静思考，很快又被固定的退休年龄赶下台。
我认为伯克希尔的这套体系应该在更多地方被尝试运用，而官僚体制最糟糕的那些特质，更应该被当作它们所酷似的癌症来对待——绝大多数时候都该如此。乔治·马歇尔树立了一个消除官僚弊病的好榜样：他赢得国会授权，在选拔将领时可以无视资历优先，从而助力打赢了第二次世界大战。

此致，

查尔斯·T·芒格