360° Coverage : Berkshire Hathaway's 1966 Letter To Shareholders

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Berkshire Hathaway's 1966 Letter To Shareholders
Photo Credit: Forbes Business

Berkshire Hathaway's 1966 Letter To Shareholders

Mar 3 2014, 10:47am CST | by

I cast my peepers over Berkshire Hathaway’s 1966 shareholder letter this weekend, and based on my analysis, I am rating it a STRONG BUY/OUTPERFORM.  You can purchase the stock for under $20 per...

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33 weeks ago

Berkshire Hathaway's 1966 Letter To Shareholders

Mar 3 2014, 10:47am CST | by

I cast my peepers over Berkshire Hathaway’s 1966 shareholder letter this weekend, and based on my analysis, I am rating it a STRONG BUY/OUTPERFORM.  You can purchase the stock for under $20 per share as of 12/13/1966.

I know what you’re thinking.  ”Phil — a famous Benjamin Graham cracker like you — have you been smoking LSD?  Why would we buy a stock that is in outer space?  Just a couple of years ago it was selling for under $10.  Wait for it to come back down to earth, man.   After all, we’re safe as houses with Nifty-Fifty stocks like Polaroid and Sears.”

Ordinarily, I would agree with you.  But I am in possession of some inside information.  This stock is the lost Dutchman mine of Blackbeard’s Knights Templar.  Send in your box top and score all you can.  If you don’t, you’ll be bummed out.

Berkshire has recently come under the thumb of a  crew-cut whiz-kid named Warren Buffett, who hails from Omaha, Nebraska.  I have it on good authority that he ghost-wrote the annual letter.   Now I don’t know his motives — maybe he wants to become the “Textile King” and tool around in a Sedan Deville and bellbottoms.   But — maybe not.

What’s his bag?  Buffett runs an investment partnership that has posted some bodacious numbers.   This cat’s one groovy stock picker.  And look what he says right here in his letter: “…the Company has been searching for suitable acquisitions within, and conceivably without, the textile field.”  The company includes in its working capital “ …$5.4 million of marketable securities, composed of short-term municipal bonds, commercial paper, and common stock.

Then he lays it on us with a Beatle beat.  Buffett says, “
…it is the present intention of the directors to proceed toward the interim investment of a major portion of these funds in marketable common stocks . . . to participate in earnings derived outside of our textile business.”/>

Let me beam young Buffett a brainwave.  The rag business is nowheresville.  Take whatever earnings you can scrape together and allocate your capital elsewhere.  For example, have you considered insurance?  What about credit cards and newspapers and utilities and railroads?  Good Golly Miss Molly, even a candy company will do better than these ancient textile mills.

Berkshire has announced a very mellow dividend of ten cents per share.  Don’t Bogart that dividend, Warren!   Fat chance: I confidently predict this dividend will rise every year for decades to come.  You can write that one in Day-Glo.

Meanwhile…I’m thinking: Buffett might shutter his private investment partnership in a few years.  Then he could take the helm of Berkshire Hathaway full-time.  At that point, his psychedelic noodling will go straight to Berkshire’s bottom line.  If I’m right, one day his annual meeting could even become known as the ‘Hootenanny of Capitalism.’

* * *

[Note to Readers: I came up empty this week so I am recycling an old column from the archives.]

Source: Forbes Business


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