Berkshire Hathaway’s 2017 Letter
It’s clear that we acquired both great human assets and business assets in making the USF purchase. Betting on people can sometimes be more certain than betting on physical assets.
Ah, Buffett could not have put it so crystal clear. When we buy a company, we are buying its business model strength, business numbers, and most importantly, putting our trust in the management which is a human asset. Something that is not quantifiable on the balance sheet. If the mgmt quality is weak, dun expect good results. that is my view. mgmt needs to have energy, mission-focused, purpose-led, and has a strong desire to grow itself.
Berkshire backed into this business in 2000 when we acquired a majority interest in MidAmerican Energy (now named Berkshire Hathaway Energy). MidAmerican’s activities were then largely in the electric utility field, and I originally paid little
attention to HomeServices.
Reminds me of Hansen Technologies which is listed on ASX. Hansen is a global provider of customer care & billing software, and meter data management solutions for utilities, pay TV and telecommunications companies.
Berkshire collects 60.6b per year in premiums, selling insurance is almost like selling put. in the event things happen, then berkshire needs to pay out. It is also interesting to know what is long-tail in the industry. Briliant.
I think having a peace of mind is absolutely necessary to perform well in the stock market. In my 4 years of experience, my peace of mind was the key differentiator for my outperformance. Not my skills. Do not underestimate situations. There were moments where I was under undue stress despite doing my research so I totally agree with the last statement… “an unsettled mind will not make good decisions.”
For good reason, I regularly extol the accomplishments of our operating managers. They are truly All-Stars who run their businesses as if they were the only asset owned by their families. I also believe the mindset of our managers to be as shareholder-oriented as can be found in the universe of large publicly-owned companies. Most of our managers have no financial need to work. The joy of hitting business “home runs” means as much to them as their paycheck.
This is what I hope to do…. the joy of finding multi-bagger instead of forcing myself to do it because of financial needs.
