Buffett’s 2021 Annual Letter Highlights

Warren Buffett’s Annual Letter was released on Saturday, February 26, 2022. A couple of highlights and recurring themes:

1. Illustrating both his (and his team’s) talents, Berkshire’s overall gain since inception in 1965 is 3,641,613% vs the S&P500 at a “paltry” 30,209%.

2. Buffett reiterates that he and Charlie Munger “are not stock-pickers; we are business-pickers”. Or in other words, they are not trying to time the market in their business purchases. They buy business based on their “expectations about their long-term business performance…”

3. While not mentioning other companies that may be structured to avoid paying U.S. taxes, he makes a point to detail the significant amount of corporate tax Berkshire pays to the “U.S. Treasury”, now approaching $9 million PER DAY. He appears genuinely pleased to pay this much tax as in his words: “In fairness to our governmental partner, our shareholders should acknowledge – indeed trumpet – the fact that Berkshire’s prosperity has been fostered mightily because the company has operated in America.” (And repeats another rallying cry from previous letters: “Never bet against America”).

4. He details his satisfaction that one of his main businesses (“Giants”, as he calls them) has a great record of “societal accomplishment” (his way of expressing ESG I guess). It is great to see one of the world’s largest investors and pools of capital focused on this area.

5. Finally – my favourite – dissecting Berkshire’s public company portfolio…as potential lessons for other investors: Buffett concentrates his best ideas and holds for a very long time. Some stats on Berkshire’s public equity portfolio:

– % of Top 1 holding (Apple): ~44%
– % of Top 5 holdings: ~74%
– % of Top 10 holdings: ~86%

How many stocks do you or your managers hold? And how many can one group really know extremely well?

See the above and more here: https://www.berkshirehathaway.com/letters/2021ltr.pdf

(Illustration by Senor Salme – source: Barrons.com)


Recommended Posts