2015 Shareholder Letter
Buffett's 2015 letter discusses Kraft Heinz impairment, the shift from securities to operating businesses, and explains why book value increasingly understates intrinsic value.
2015 Shareholder Letter
Date: February 27, 2016 Author: Warren Buffett Company: Berkshire Hathaway
Overview
2015 per-share book value increased 6.4% (S&P 1.4%), with book value reaching $155,501 — a 19.2% compound annual return over 51 years.
Key Points
Why Book Value Understates Intrinsic Value
"During the first half of those years, Berkshire's net worth was roughly equal to the number that really counts: the intrinsic value of the business."
The similarity existed because most resources were deployed in marketable securities regularly revalued to quoted prices.
By the early 1990s, focus shifted to "outright ownership of businesses" — but the accounting rules only write down "losers," never revaluing "winners" upward.
Kraft Heinz
Kraft Foods merger with Heinz created significant value but also facing challenges.
Famous Quotes
"A disconnect occurred because the accounting rules that apply to controlled companies are materially different from those used in valuing marketable securities."
Related
- letter-2014 — Previous year
- letter-2016 — Following year
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