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Author: TheSandman Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 213813  
Subject: Berkshire Hathaway - Frequently Asked Questions Date: 5/2/2007 1:17 PM
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The BERKSHIRE HATHAWAY FAQ Page

“The market, like the Lord, helps those who help themselves. But unlike the Lord, the market does not forgive those who know not what they do." -Warren Buffett


BERKSHIRE HATHAWAY - The Official Home Page
http://www.berkshirehathaway.com/


BERKSHIRE HATHAWAY - Owner's Manual: A GREAT source of information to help you understand Berkshire's business, goals, philosophy and limitations. A must read. http://www.berkshirehathaway.com/owners.html


BERKSHIRE HATHAWAY - Shareholder Letters
http://www.berkshirehathaway.com/letters/letters.html

Hard Copy Of The Chairman's Letters
A three volume set of compilations of letters is available upon written request accompanied by a payment of $35.00 to cover production, postage and handling costs. Requests should be submitted to the Company at 3555 Farnam St., Suite 1440, Omaha, NE 68131. (You may want to confirm the current price prior to sending a check)


I Frequently Asked Questions

** Questions Concerning Berkshire Hathaway And Its Stock **

1. What is the difference between A shares and B shares of Berkshire Hathaway?

(NYSE: BRK.A, BRK.B)

"Berkshire Hathaway Inc. has two classes of common stock designated Class A and Class B. A share of Class B common stock has the rights of 1/30th of a share of Class A common stock with these exceptions: First, a Class B share has 1/200th of the voting rights of a Class A share (rather than 1/30th of the vote). Second, the Class B shares are not eligible to participate in the Berkshire Hathaway Inc. shareholder designated contributions program. Additionally, each share of a Class A common stock is convertible at any time, at the holder's option, into 30 shares of Class B common stock. This conversion privilege does not extend in the opposite direction. That is, holders of Class B shares are not able to convert them into Class A shares. Both Class A & B shareholders are entitled to attend the Berkshire Hathaway Annual Meeting which is held the first Monday in May."

In my opinion, most of the time, the demand for the B will be such that it will trade at about 1/30th of the price of the A. However, from time to time, a different supply-demand situation will prevail and the B will sell at some discount. In my opinion, again, when the B is at a discount of more than say, 2%, it offers a better buy than the A. When the two are at parity, however, anyone wishing to buy 30 or more B should consider buying A instead. http://www.berkshirehathaway.com/compab.html

2. Will Berkshire Hathaway ever pay a dividend?

"We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely." (Source: Berkshire Hathaway's Owner's Manual)

3. Why doesn't Berkshire Hathaway split its stock?

"We often are asked why Berkshire does not split its stock. The assumption behind this question usually appears to be that a split would be a pro-shareholder action. We disagree. Let me tell you why.

One of our goals is to have Berkshire Hathaway stock sell at a price rationally related to its intrinsic business value. (But note “rationally related”, not “identical”: if well-regarded companies are generally selling in the market at large discounts from value, Berkshire might well be priced similarly.) The key to a rational stock price is rational shareholders, both current and prospective.

If the holders of a company's stock and/or the prospective buyers attracted to it are prone to make irrational or emotion- based decisions, some pretty silly stock prices are going to appear periodically. Manic-depressive personalities produce manic-depressive valuations. Such aberrations may help us in buying and selling the stocks of other companies. But we think it is in both your interest and ours to minimize their occurrence in the market for Berkshire.

To obtain only high quality shareholders is no cinch. Mrs. Astor could select her 400, but anyone can buy any stock. Entering members of a shareholder “club” cannot be screened for intellectual capacity, emotional stability, moral sensitivity or acceptable dress. Shareholder eugenics, therefore, might appear to be a hopeless undertaking.

In large part, however, we feel that high quality ownership can be attracted and maintained if we consistently communicate our business and ownership philosophy - along with no other conflicting messages - and then let self selection follow its course. For example, self selection will draw a far different crowd to a musical event advertised as an opera than one advertised as a rock concert even though anyone can buy a ticket to either.

Through our policies and communications - our “advertisements” - we try to attract investors who will understand our operations, attitudes and expectations. (And, fully as important, we try to dissuade those who won't.) We want those who think of themselves as business owners and invest in companies with the intention of staying a long time. And, we want those who keep their eyes focused on business results, not market prices.

Were we to split the stock or take other actions focusing on stock price rather than business value, we would attract an entering class of buyers inferior to the exiting class of sellers. At $1300, there are very few investors who can't afford a Berkshire share. Would a potential one-share purchaser be better off if we split 100 for 1 so he could buy 100 shares? Those who think so and who would buy the stock because of the split or in anticipation of one would definitely downgrade the quality of our present shareholder group. (Could we really improve our shareholder group by trading some of our present clear-thinking members for impressionable new ones who, preferring paper to value, feel wealthier with nine $10 bills than with one $100 bill?) People who buy for non-value reasons are likely to sell for non-value reasons. Their presence in the picture will accentuate erratic price swings unrelated to underlying business developments.

Splitting the stock would increase that cost (transfer costs), downgrade the quality of our shareholder population, and encourage a market price less consistently related to intrinsic business value. We see no offsetting advantages."
(Source: 1983 Berkshire Hathaway Annual Report)

4. At what point would Berkshire initiate a share repurchase program?

"There is only one combination of facts that makes it advisable for a company to repurchase its shares: First, the company has available funds -- cash plus sensible borrowing capacity -- beyond the near-term needs of the business and, second, finds its stock selling in the market below its intrinsic value, conservatively-calculated. To this we add a caveat: Shareholders should have been supplied all the information they need for estimating that value. Otherwise, insiders could take advantage of their uninformed partners and buy out their interests at a fraction of true worth. We have, on rare occasions, seen that happen. Usually, of course, chicanery is employed to drive stock prices up, not down.

We will not repurchase shares unless we believe Berkshire stock is selling well below intrinsic value, conservatively calculated. Nor will we attempt to talk the stock up or down. (Neither publicly or privately have I ever told anyone to buy or sell Berkshire shares.) Instead we will give all shareholders -- and potential shareholders -- the same valuation-related information we would wish to have if our positions were reversed." (Source: 1999 Berkshire Hathaway Annual Report)

5. What would happen to Berkshire Hathaway if Warren Buffett and Charlie Munger were no longer able to manage the company?

On my death, Berkshire's ownership picture will change but not in a disruptive way: None of my stock will have to be sold to take care of the cash bequests I have made or for taxes. Other assets of mine will take care of these requirements. All Berkshire shares will be left to foundations that will likely receive the stock in roughly equal installments over a dozen or so years.
At my death, the Buffett family will not be involved in managing the business but, as very substantial shareholders, will help in picking and overseeing the managers who do. Just who those managers will be, of course, depends on the date of my death. But I can anticipate what the management structure will be: Essentially my job will be split into two parts, with one executive becoming responsible for investments and another, who will be CEO, for operations. If the acquisition of new businesses is in prospect, the two will cooperate in making the decisions needed, subject, of course, to board approval. We will continue to have an extraordinarily shareholder-minded board, one whose interests are solidly aligned with yours.
Were we to need the management structure I have just described on an immediate basis, our directors know who I would recommend for both posts. All candidates currently work for Berkshire and are people in whom I have total confidence.
I will continue to keep the directors posted on the succession issue. Since Berkshire stock will make up virtually my entire estate and will account for a similar portion of the assets of various foundations for a considerable period after my death, you can be sure that the directors and I have thought through the succession question carefully and that we are well prepared. You can be equally sure that the principles we have employed to date in running Berkshire will continue to guide the managers who succeed me and that our unusually strong and well-defined culture will remain intact.
Lest we end on a morbid note, I also want to assure you that I have never felt better. I love running Berkshire, and if enjoying life promotes longevity, Methuselah's record is in jeopardy. (Source: Berkshire Hathaway's Owner's Manual)

6. Did Warren Buffett say that he will give his Berkshire shares to the Bill & Melinda Gates Foundation?

Warren Buffett has pledged to gradually give 85% of his Berkshire stock to five foundations. Here is a link to his letters to these foundations. http://www.berkshirehathaway.com/donate/webdonat.html

(From the 2006 Annual Report) In my will I've stipulated that the proceeds from all Berkshire shares I still own at death are to be used for philanthropic purposes within ten years after my estate is closed. Because my affairs are not
complicated, it should take three years at most for this closing to occur. Adding this 13-year period to my expected lifespan of about 12 years (though, naturally, I'm aiming for more) means that proceeds from all of my Berkshire shares will likely be distributed for societal purposes over the next 25 years or so.

I've set this schedule because I want the money to be spent relatively promptly by people I know to be capable, vigorous and motivated. These managerial attributes sometimes wane as institutions –
particularly those that are exempt from market forces – age. Today, there are terrific people in charge at the five foundations. So at my death, why should they not move with dispatch to judiciously spend the
money that remains? (2006 Annual Report)

7. Will the inevitable sale of Berkshire shares (by the charitable foundations) depress the price of the stock?

A few shareholders have expressed concern that sales of Berkshire by the foundations receiving shares will depress the stock. These fears are unwarranted. The annual trading volume of many stocks exceeds 100% of the outstanding shares, but nevertheless these stocks usually sell at prices approximating their intrinsic value. Berkshire also tends to sell at an appropriate price, but with annual volume that is only 15% of shares outstanding. At most, sales by the foundations receiving my shares will add three percentage points to annual trading volume, which will still leave Berkshire with a turnover ratio that is the lowest around. (2006 Annual Report)

8. Does Berkshire have a policy concerning the issuance of common stock?

"We have a firm policy about issuing shares of Berkshire, doing so only when we receive as much value as we give. Equal value, however, has not been easy to obtain, since we have always valued our shares highly. So be it: We wish to increase Berkshire's size only when doing that also increases the wealth of its owners."(1992 Berkshire Hathaway Annual Report)

"We will issue common stock only when we receive as much in business value as we give. This rule applies to all forms of issuance not only mergers or public stock offerings, but stock-for-debt swaps, stock options, and convertible securities as well. We will not sell small portions of your company and that is what the issuance of shares amounts to on a basis inconsistent with the value of the entire enterprise." (Source: Berkshire Hathaway's Owner's Manual)

9. Can I expect Berkshire to achieve smooth earnings growth?

"We will continue to experience considerable volatility in our annual results. That's assured by the general volatility of the stock market, by the concentration of our equity holdings in just a few companies, and by certain business decisions we have made, most especially our move to commit large resources to super-catastrophe insurance. We not only accept this volatility but welcome it: A tolerance for short-term swings improves our long-term prospects. In baseball lingo, our performance yardstick is slugging percentage, not batting average. (Source: 1992 Berkshire Annual Report)

(with regard to the insurance business)
"We will get hit from time to time with large losses. Charlie and I, however, are quite willing to accept relatively volatile results in exchange for better long-term earnings than we would otherwise have had. In other words, we prefer a lumpy 15% to a smooth 12%. Since most managers opt for smoothness, we are left with a competitive advantage that we try to maximize. We do, though, monitor our aggregate exposure in order to keep our "worst case" at a level that leaves us comfortable. (Source: 1995 Berkshire Annual Report)

10. Why did Berkshire create "B" shares?

We are making this move, though, for other reasons - having to do with the appearance of expense-laden unit trusts purporting to be low-priced "clones" of Berkshire and sure to be aggressively marketed. The idea behind these vehicles is not new: In recent years, a number of people have told me about their wish to create an "all-Berkshire" investment fund to be sold at a low dollar price. But until recently, the promoters of these investments heard out my objections and backed off.

I did not discourage these people because I prefer large investors over small. Were it possible, Charlie and I would love to turn $1,000 into $3,000 for multitudes of people who would find that gain an important answer to their immediate problems.

In order to quickly triple small stakes, however, we would have to just as quickly turn our present market capitalization of $43 billion into $129 billion (roughly the market cap of General Electric, America's most highly valued company). We can't come close to doing that. The very best we hope for is - on average - to double Berkshire's per-share intrinsic value every five years, and we may well fall far short of that goal.

In the end, Charlie and I do not care whether our shareholders own Berkshire in large or small amounts. What we wish for are shareholders of any size who are knowledgeable about our operations, share our objectives and long-term perspective, and are aware of our limitations, most particularly those imposed by our large capital base.

The unit trusts that have recently surfaced fly in the face of these goals. They would be sold by brokers working for big commissions, would impose other burdensome costs on their shareholders, and would be marketed en masse to unsophisticated buyers, apt to be seduced by our past record and beguiled by the publicity Berkshire and I have received in recent years. The sure outcome: a multitude of investors destined to be disappointed.

Through our creation of the B stock - a low-denomination product far superior to Berkshire-only trusts - we hope to make the clones unmerchandisable. (Source: 1995 Berkshire Hathaway Annual Report)



** Questions Concerning Warren Buffett and Investing **

1. What is Berkshire's investment strategy?


"Our equity-investing strategy remains little changed from what it was fifteen years ago, when we said in the 1977 annual report: "We select our marketable equity securities in much the way we would evaluate a business for acquisition in its entirety. We want the business to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price." We have seen cause to make only one change in this creed: Because of both market conditions and our size, we now substitute "an attractive price" for "a very attractive price." (Source: 1992 Berkshire Annual Report)

"To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses - How to Value a Business, and How to Think About Market Prices."

"Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards - so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio's market value." (Source: 1996 Berkshire Annual Report)

2. Annual Letter descriptions of various purchases over the years:

http://www.sandmansplace.com/Buffett_Investing.html

3. When do you sell a stock?

"The best thing to do is buy a stock that you don't ever want to sell. That's what we're trying to do. And that's true when we buy an entire business. We bought all of GEICO, we bought all of See's Candies, Buffalo News. We're not buying those to resell. What we're trying to do is buy a business we'll be happy with if we own it for the rest of our lives, and we expect to with those. We would sell if we needed money for other things. We may sell if we believe the valuations in different markets are somewhat out of whack. But that can be a mistake. The real thing to do with a great business is just hang on for dear life."

Charlie Munger: The sales that do happen--the ideal way--is when you've found something you like immensely better.

4. What are "look-through earnings"?

"We attempt to offset the shortcomings of conventional accounting by regularly reporting "look-through" earnings (though, for special and nonrecurring reasons, we occasionally omit them). The look-through numbers include Berkshire's own reported operating earnings, excluding capital gains and purchase-accounting adjustments (an explanation of which occurs later in this message) plus Berkshire's share of the undistributed earnings of our major investees -- amounts that are not included in Berkshire's figures under conventional accounting. From these undistributed earnings of our investees we subtract the tax we would have owed had the earnings been paid to us as dividends. We also exclude capital gains, purchase-accounting adjustments and extraordinary charges or credits from the investee numbers.

We have found over time that the undistributed earnings of our investees, in aggregate, have been fully as beneficial to Berkshire as if they had been distributed to us (and therefore had been included in the earnings we officially report). This pleasant result has occurred because most of our investees are engaged in truly outstanding businesses that can often employ incremental capital to great advantage, either by putting it to work in their businesses or by repurchasing their shares. Obviously, every capital decision that our investees have made has not benefitted us as shareholders, but overall we have garnered far more than a dollar of value for each dollar they have retained. We consequently regard look-through earnings as realistically portraying our yearly gain from operations." (Source: Berkshire Hathaway's Owner's Manual)

5. What does the term "Intrinsic Value" mean, and why doesn't Mr. Buffett give us his estimate?

"Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life. The calculation of intrinsic value, though, is not so simple. As our definition suggests, intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised. Two people looking at the same set of facts, moreover - and this would apply even to Charlie and me - will almost inevitably come up with at least slightly different intrinsic value figures. That is one reason we never give you our estimates of intrinsic value. What our annual reports do supply, though, are the facts that we ourselves use to calculate this value." (Source: Berkshire Hathaway's Owner's Manual)

6. Why does Berkshire have such a focused portfolio?

"The great personal fortunes in this country weren't built on a portfolio of 50 companies. They were built by someone who identified one wonderful business. Coca-Cola's a great example. A lot of fortunes have been built on that. And there aren't 50 Coca-Colas. There aren't 20. If there were, it'd be fine - you could own a lot, diversify like crazy among that group and get results that were the equal of owning the really wonderful ones. But you're not going to find [that many].

And the truth is you don't need to. A really wonderful business is very well protected against the vicissitudes of the economy and competition over time. And I'm talking about businesses that are resistant to effective competition. Three of those will be better than 100 average businesses. (Warren Buffett)

"All intelligent investing is value investing - to acquire more than you are paying for. Investing is where you find a few great companies and then sit on your ass." (Charlie Munger - 2000 Shareholder Meeting)

7. What is meant by "Margin of Safety"?

"Second, and equally important, we insist on a margin of safety in our purchase price. If we calculate the value of a common stock to be only slightly higher than its price, we're not interested in buying. We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success." (Source: 1992 Berkshire Annual Report)

"If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety. So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you'd need. If you're driving a truck across a bridge that says it holds 10,000 pounds and you've got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it covers, you may feel okay, but if it's over the Grand Canyon, you may feel you want a little larger margin of safety..."
- Warren Buffett, 1997 Berkshire Hathaway Annual Meeting

8. Did Warren talk about "Aesop's investment axiom"?

Leaving aside tax factors, the formula we use for evaluating stocks and businesses is identical. Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn't smart enough to know it was 600 B.C.).

The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was "a bird in the hand is worth two in the bush." To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)? If you can answer these three questions, you will know the maximum value of the bush ¾ and the maximum number of the birds you now possess that should be offered for it. And, of course, don't literally think birds. Think dollars.

Aesop's investment axiom, thus expanded and converted into dollars, is immutable. It applies to outlays for farms, oil royalties, bonds, stocks, lottery tickets, and manufacturing plants. And neither the advent of the steam engine, the harnessing of electricity nor the creation of the automobile changed the formula one iota ¾ nor will the Internet. Just insert the correct numbers, and you can rank the attractiveness of all possible uses of capital throughout the universe.

Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years. 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. Growth is simply a component ¾ usually a plus, sometimes a minus ¾ in the value equation.

Alas, though Aesop's proposition and the third variable ¾ that is, interest rates ¾ are simple, plugging in numbers for the other two variables is a difficult task. Using precise numbers is, in fact, foolish; working with a range of possibilities is the better approach.

Usually, the range must be so wide that no useful conclusion can be reached. Occasionally, though, even very conservative estimates about the future emergence of birds reveal that the price quoted is startlingly low in relation to value. (Let's call this phenomenon the IBT ¾ Inefficient Bush Theory.) To be sure, an investor needs some general understanding of business economics as well as the ability to think independently to reach a well-founded positive conclusion. But the investor does not need brilliance nor blinding insights. (Source: 2000 Berkshire Annual Report)

9. It has been said that Lou Simpson may be asked to succeed Warren Buffett in managing Berkshire's investment portfolio. Does Mr. Simpson have a similar investment philosophy as Warren's?

"In the selection of common stocks, we continue to be guided by the same five criteria that we detailed in our 1986 Annual Report:

* Think independently
* Invest in high-return businesses run for the shareholders
* Pay only a reasonable price, even for an excellent business
* Invest for the long term
* Do not diversify excessively"
(Source: Lou Simpson - GEICO's 1994 Annual Report)

10. If Not Lou.... then who?

I have told you that Berkshire has three outstanding candidates to replace me as CEO and that the Board knows exactly who should take over if I should die tonight. Each of the three is much younger than
I. The directors believe it's important that my successor have the prospect of a long tenure.

Frankly, we are not as well-prepared on the investment side of our business. There's a history here: At one time, Charlie was my potential replacement for investing, and more recently Lou Simpson has
filled that slot. Lou is a top-notch investor with an outstanding long-term record of managing GEICO's equity portfolio. But he is only six years younger than I. If I were to die soon, he would fill in magnificently for a short period. For the long-term, though, we need a different answer.

At our October board meeting, we discussed that subject fully. And we emerged with a plan, which I will carry out with the help of Charlie and Lou.

Under this plan, I intend to hire a younger man or woman with the potential to manage a very large portfolio, who we hope will succeed me as Berkshire's chief investment officer when the need for someone to do that arises. As part of the selection process, we may in fact take on several candidates. (Source: 2006 Berkshire Hathaway Annual Report)

** Questions Concerning The Insurance Business **

1. What is float?


"Let's discuss "float" and how to measure its cost. Unless you understand this subject, it will be impossible for you to make an informed judgment about Berkshire's intrinsic value.

To begin with, float is money we hold but don't own. In an insurance operation, float arises because premiums are received before losses are paid, an interval that sometimes extends over many years. During that time, the insurer invests the money. Typically, this pleasant activity carries with it a downside: The premiums that an insurer takes in usually do not cover the losses and expenses it eventually must pay. That leaves it running an "underwriting loss," which is the cost of float. An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. But the business is a lemon if its cost of float is higher than market rates for money.

A caution is appropriate here: Because loss costs must be estimated, insurers have enormous latitude in figuring their underwriting results, and that makes it very difficult for investors to calculate a company's true cost of float. Estimating errors, usually innocent but sometimes not, can be huge. The consequences of these miscalculations flow directly into earnings. An experienced observer can usually detect large-scale errors in reserving, but the general public can typically do no more than accept what's presented, and at times I have been amazed by the numbers that big-name auditors have implicitly blessed.

As for Berkshire, Charlie and I attempt to be conservative in presenting its underwriting results to you, because we have found that virtually all surprises in insurance are unpleasant ones."
(Source: 1997 Berkshire Hathaway Annual Report)

2. What is this "Combined Ratio" that you guys are always talking about?

The combined ratio represents total insurance costs (losses incurred plus expenses) compared to revenue from premiums: A ratio below 100 indicates an underwriting profit, and one above 100 indicates a loss. The higher the ratio, the worse the year. When the investment income that an insurer earns from holding policyholders' funds ("the float") is taken into account, a combined ratio in the 106 - 110 range typically produces an overall break-even result, exclusive of earnings on the funds provided by shareholders." (Source: 1992 Berkshire Annual Report)

3. What is Supercat Insurance?

"In this operation [super-cat insurance], we sell policies that insurance and reinsurance companies purchase in order to limit their losses when mega-catastrophes strike. Berkshire is the preferred market for sophisticated buyers: When the 'big one' hits, the financial strength of super-cat writers will be tested, and Berkshire has no peer in this respect."
(Source: 1997 Berkshire Hathaway Annual Report)

4. Was General RE a mistake?

"Gen Re has a terrific record over time. Even if you'd told me what Gen Re's figures would be [before we acquired it], we'd still have done the deal." (Warren Buffett - 2000 Shareholder Meeting)

"But the main attraction of the merger is synergy, a word that heretofore has never been used in listing the reasons for a Berkshire acquisition. In this transaction, however, there are at least four areas of powerful synergy, which Charles Munger, Berkshire's Vice Chairman, and I believe justify the premium price that Berkshire is paying. "
http://www.berkshirehathaway.com/news/jun1998.html

5. More Questions Concerning The Insurance Business
http://www.sandmansplace.com/Insurance_Business.html



II Berkshire Hathaway Sites

1. Berkshire Hathaway's Owner's Manual
http://www.berkshirehathaway.com/owners.html

2. Berkshire Hathaway's shareholder letters
http://www.berkshirehathaway.com/letters/letters.html

3. Links to Berkshire Subsidiary Companies
http://www.berkshirehathaway.com./subs/sublinks.html

4. Berkshire Hathaway News Releases
http://www.berkshirehathaway.com/news/2007news.html



III Other Great Sites For Berkshire Information

1. Sandman's Place (A much more comprehensive version of this FAQ page)
http://sandmansplace.com/

2. Berkshire Hathaway Intrinsivaluator - by John Kish
http://creativeacademics.com/finance/IV.html

3. Whitney Tilson - Tilson Funds
http://www.tilsonfunds.com/motley_berkshire.php3

4. The Toronto Investment Club - by Jim Chuong
http://www.ticonline.com/

5. Richard Losch - President of Losch Management Company
http://loschmanagement.com/Berkshire%20Hathaway/berkshire_hathaway.htm

6. Richard Losch (rclosch) - Berkshire's Current Stock Holdings
http://loschmanagement.com/Berkshire%20Hathaway/Berkshire%20Holdings/berkshire_holdings.htm

7. Focus Investing - by Rich Rockwood
http://www.focusinvestor.com/index.htm

8. Value Investing - by Rich Rockwood
http://www.geocities.com/WallStreet/Exchange/5144/index.html

9. SteadyGains: Breaking News About Buffett And Berkshire
http://www.steadygains.com/

10. BRK News - by FutileFrance
http://www.egroups.com/group/brknews

11. Warren Buffett Bibliography & News - by FutileFrance
http://www.ifrance.com/futile/

12. Berkshire Hathaway Sept. 16, 1998 - Special (GEN RE) Meeting Notes
http://www.geocities.com/rrockw/docs/BrkSept98.htm

13. Omaha World-Herald
http://www.omaha.com/

14. Yellow BRK Club - by Marlin
http://www.geocities.com/marlinls.geo/

15. Berkshire Hathaway Shareholders
http://groups.msn.com/BerkshireHathawayShareholders/_whatsnew.msnw



IV Berkshire Hathaway Financial Data

1. EDGAR
http://www.sec.gov/cgi-bin/srch-edgar?Berkshire+AND+Hathaway+OR+NBH


V Recommended Reading

1. Tilson Capital Partners Book Recommendations
http://www.tilsonfunds.com/recommended_reading.php3

2. Focus Investor's Book Recommendations
http://www.focusinvestor.com/bookreview.htm

3. The Toronto Investment Club Book Recommendations
http://www.ticonline.com/books.html

5. Books Recommended By Warren Buffett And Charlie Munger
http://www.ticonline.com/books2.html

6. Amazon.com Recommended Reading
http://astore.amazon.com/valuinveworl-20/103-6390729-5525430

7. Outstanding Investor Digest:
"I'd advise you to subscribe. I read each issue religiously. Anyone interested in investing who doesn't subscribe is making a big mistake." WARREN BUFFETT http://www.oid.com/



VI Annual Meeting Information

The Annual Meeting dates & information can be found here:
http://www.berkshirehathaway.com/

"There and Back Again" - By WBuffettJr
http://boards.fool.com/Message.asp?mid=22441150

TMFSelena's Annual Meeting Travelogue http://boards.fool.com/Message.asp?id=1070060006352000

TMFSelena's Description Of The "Company Movie"
http://www.fool.com/boringport/2000/boringport000508.htm



VII Noteworthy Posts on The Motley Fool's Berkshire Hathaway Message Board

1. This is a List Of Recommended Posts From The Motley Fool Berkshire Board
http://boards.fool.com/Messages.asp?bid=101158&sort=recommendations

2. Informative posts going back to 1997
http://www.sandmansplace.com/Sandman_Favorite_Posts.html



VIII ARTICLES OF INTEREST

1. Mr. Buffett on the Stock Market (November 22, 1999)
http://money.cnn.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm

2. Warren Buffett On The Stock Market (December 10, 2001)
http://money.cnn.com/magazines/fortune/fortune_archive/2001/12/10/314691/index.htm

3. The Warren Buffett You Don't Know
http://www.businessweek.com/1999/99_27/b3636001.htm

4. Is Warren Buffet's Heir Apparent A San Diegan?
http://www.sandiegometro.com/2000/aug/money.html

5. Coin-Flipping & Graham-and-Doddsville
http://www.investorhome.com/coinflip.htm

6. Three little words (Margin of Safety)
http://www.forbes.com/forbes/1998/0406/6107052a.html

7. Kindred Spirits (The Class of '49)
http://www.forbes.com//forbes/1999/1018/6410134a.html

8. The Best Investor You've Never Heard Of (Joseph Rosenfield - a longtime pal of Warren Buffett)
http://www.money.com/money/depts/investing/fundamentalist/archive/000601.html

9. The Bill & Warren Show
http://money.cnn.com/magazines/fortune/fortune_archive/1998/07/20/245683/index.htm

10. Gates On Buffett (February 5, 1996)
http://money.cnn.com/magazines/fortune/fortune_archive/1996/02/05/207334/index.htm

11. Charlie Rose - An Exclusive Hour with Warren Buffett and Bill and Melinda Gates
http://video.google.com/videoplay?docid=515260011274566220

12. The World According to "Poor Charlie"
http://www.kiplinger.com/features/archives/2005/11/munger.html

13. The Value Machine Warren Buffett's Berkshire Hathaway is on a buying binge. You were expecting stocks? (Carol J. Loomis February 19, 2001)
http://money.cnn.com/magazines/fortune/fortune_archive/2001/02/19/296860/index.htm

14. Warren Buffett gives away his fortune (Carol J. Loomis June 25, 2006)
http://money.cnn.com/2006/06/25/magazines/fortune/charity1.fortune/

15. Bill & Melinda Gates Foundation
http://www.gatesfoundation.org/default.htm



IX Dale Wettlaufer (TMF Ralegh) Notes

1. Berkshire Hathaway - A Great 7 Part Series
http://www.fool.com/BoringPort/1998/BoringPort981202.htm

The Benefits of Float (Part 2)
http://www.fool.com/BoringPort/1998/BoringPort981204.htm

Specialty Insurance & Berkshire (Part 3)
http://www.fool.com/BoringPort/1998/BoringPort981207.htm

Super Castostrophe Insurance (Part 4)
http://www.fool.com/BoringPort/1998/BoringPort981209.htm

The GenRe Merger (Part 5)
http://www.fool.com/BoringPort/1998/BoringPort981214.htm

The Berkshire Retailers (Part 6)
http://www.fool.com/BoringPort/1998/BoringPort981221.htm

See's & FlightSafety (Part 7)
http://www.fool.com/BoringPort/1998/BoringPort981223.htm

Bore to Buy Berkshire Hathaway -- 12/28/98
http://www.fool.com/BoringPort/1998/BoringPort981228.htm

2. Return on Invested Capital (ROIC) - 6 Part Series
http://www.fool.com/BoringPort/1998/BoringPort981014.htm

3. How ROIC Builds Value
http://www.fool.com/BoringPort/1998/BoringPort981016.htm

4. Return on Equity(ROE) - 3 Part Series(Starts in Middle of Page)
http://www.fool.com/EveningNews/1998/EveningNews980821.htm

5. Equities as Bonds
http://www.fool.com/boringport/1999/boringport990428.htm

6. Adding to Berkshire
http://www.fool.com/boringport/1999/boringport990526.htm

7. GenRe and the Cost of Float
http://www.fool.com/boringport/1999/boringport990818.htm

8. Tough Year for P&C Insurers
http://www.fool.com/EveningNews/foth/1998/foth981110.htm

9. Thoughts On Berkshire & The S&P500 index
http://boards.fool.com/Message.asp?id=1030002000248000&sort=postdate

10. Charlie Munger: Warren's Right-Hand Man
http://www.fool.com/specials/1999/sp990429Berkshire003.htm



X Whitney Tilson Notes

**Tilson Article Archive** (GREAT Articles)
http://www.tilsonfunds.com/all_time_favorite_articles.php3


1. Notes From the Berkshire Hathaway Annual Meeting
http://www.fool.com/boringport/2000/boringport000501.htm

2. Sustainable Competitive Advantage
http://www.fool.com/boringport/2000/boringport000228.htm

3. Buffett's Prescient Market Calls
http://www.fool.com/boringport/1999/boringport991122.htm

4. Charlie Munger Speaks - Notes from the Wesco Annual Meeting
http://www.fool.com/boringport/2000/boringport00051500.htm

5. The Last Bull on Berkshire?
http://www.fool.com/boringport/2000/boringport000214.htm

6. Berkshire Hathaway's Improving Results
http://www.fool.com/boringport/2000/boringport000828.htm

7. Explaining Berkshire's Losses
http://www.fool.com/boringport/2000/boringport000905.htm

8. Traits of Successful Money Managers
http://www.fool.com/news/foth/2001/foth010717.htm

9. Applying Behavioral Finance to Value Investing
http://www.tilsonfunds.com/TilsonBehavioralFinance.pdf

10. Great Quotes (Wise Words On Investing)
http://www.tilsonfunds.com/wisewords.html


**ONE FINAL NOTE**

Caution: Always remember to apply a strong filter to everything that you read on an internet discussion board. If you find something of interest, consider it a good lead for your own investigation.... rather than a replacement for your own homework.


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

The Official Berkshire Hathaway Message Board FAQ

Last Revised by: TheSandman (5/2/07)


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