It's Here! Berkshire Hathaway's 2000 Annual Report
Buffett explains his acquisitions.
A quick note to Morningstar.com readers:
We're big fans of Warren Buffett, the chairman of Berkshire, and we know many of you are, too. Here are some of the highlights of this year's report:
* Buffett explains the reasoning behind Berkshire's 2000 acquisitions, including the purchases of Johns Manville, Benjamin Moore Paint, and Shaw Industries.
* The insurance units had a poor year, at least by Berkshire standards. Buffett admits that Geico, one of Berkshire's insurance companies, invested too much in advertising this past year. Also hurting Geico's results, says Buffett, are big competitors like State Farm, which refuse to jack up prices.
* As for Berkshire's holdings of individual stocks and bonds, Buffett had this to say: "In 2000, we sold nearly all our Freddie Mac (FRE) and Fannie Mae (FNM) shares, established 15% positions in several mid-sized companies, bought the high-yield bonds of a few issuers (very few--the category is not labeled junk without reason) and added to our holdings of high-grade, mortgage-backed securities. There are no "bargains" among our current holdings: We're content with what we own but far from excited by it."
* As is his wont, Buffett points out what he sees as wrong-headedness within the investment community: "Market commentators and investment managers who glibly refer to "growth" and "value" styles as contrasting approaches to investment are displaying their ignorance, not their sophistication."
* Finally, Buffett looks back on the dot-com craze--the one he consistently pooh-poohed--and sums it all up: "It was as if some virus, racing wildly among investment professionals as well as amateurs, induced hallucinations in which the values of stocks in certain sectors became decoupled from the values of the businesses that underlay them."
Haywood Kelly, CFA has a position in the following securities mentioned above: BRK.B. Find out about Morningstar’s editorial policies.