Extreme Contrasts

24 October 2006

Berkshire Hathaway’s closing share price for an A share topped $100,000 this week. Today, the stock has traded between $100,000 and $101,000 per A share. The company is clearly on track to have an outstanding year. Remember, when one buys Berkshire Hathaway the thought process is that you are buying small slices of the great list of businesses that Berkshire owns.

While we’re talking about businesses, how does a business make and sell 1,511,000 of something in three months and lose $5.8 billion? In other words, on every unit you sell, you are losing $3839 in either direct losses or write-downs associated with past decisions. At Ford, quality is job 1. The fact is that quality is the path from where they are to where they want to be—not in a quarter, but during the coming years. Their’s is a stressful, but interesting problem to solve if quality, value and US manufacturing catches your fancy.

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Making Life Better for Others

25 June 2006

Warren Buffett has announced plans to make substantial annual donations to five foundations. You can read the five letters at the Berkshire Hathaway site. You really should. You’ll gain some insight into how the really large sums of money change hands.

Rick Warren launched his P.E.A.C.E. plan. Beyond merely identifying his notion of the globe’s five (previously) insoluble problems, he’s thinking of the ways that technology and coordination can help the efforts of the many service initiatives around the world. In effect he’s identified the five really large problems in the world today.

Bill Gates has a 2-year plan that allows him to migrate from full-time duty at Microsoft to full-time focus on the efforts of the Bill and Melinda Gates Foundation. With today’s announcements by Warren Buffett, the Gates Foundation will have to find ways to double the amount of money they distribute annually by 2009.

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Omaha Weekend

6 May 2006

Lots of news has converged around Berkshire Hathaway and the annual meeting in Omaha today. Three key bits:

Yesterday’s closing numbers for Berkshire show that an “A” share carries a price of $88,710. Learn more about the company by reading here and here. Just to whet your appetite, the business press is reporting that Berkshire’s first quarter earnings show a 70% increase over the same quarter last year!

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Insane Greatness or Financial Engineering?

6 March 2006

What would you do if you held the reigns at a place that made an announcement like this one? What if less than 90 days later you had to amplify that decision?

Maybe your challenges run to something a bit different. Your engineers and designers came up with a new vehicle. Then, after all your promotion and advertising activity, you learn that the insurance folks have a little different impression of your new car. Sadly, it brings to mind your company’s past.

Clearly, both CEO’s have the toughest jobs in business. It’s time to do something revolutionary. It’s time to stop dithering and make some things happen. Selling nine million cars a year at GMC and with Ford seeking The Way Forward, you cannot shrink to greatness. Do something radical. Regain your prestige, but do it with insanely great products.

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Another Annual

3 March 2006

At roughly 9:00a.m. EST tomorrow, Berkshire Hathaway will post the annual report and letter to shareholders on the web site. Each year we remind readers that careful study of Warren Buffett’s letters and annual reports since 1977 may provide a better education than a couple of years in a top-notch business school. Others said it; we believe it.

Berkshire completed the acquisition of BusinessWire this week. You can read about that here and here.

The company’s results for 2005 will include some charges for the losses incurred for Hurricanes Katrina and Rita, other storms and other catastrophic losses. Remember, Berkshire is first and foremost an insurance company, though its list of holdings grows nearly every year. In the third quarter alone, Berkshire recorded almost $3 billion as an estimate against the ultimate losses recorded from Hurricane Katrina.

Yesterday, March 2, 2006, an “A” share of Berkshire closed at $87,000. Many believe that number might be well below the company’s intrinsic value. Let’s watch!

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