Berkshire Letter by Warren Buffett – 1992 (Part 1)
Jan 11th, 2007 by Martin Lee
Berkshire Hathaway seldom issues out shares. On 1st October 1964, there were 1,137,778 shares outstanding. On March 1993, that number has increased to 1,152,547 shares.
This is due to Warren Buffett’s firm policy about issuing shares of Berkshire only when they receive as much value as they give. Bershire’s size should only be increased when doing so increases the wealth of its owners.
The long term goal of Berkshire is to increase its per-share intrinsic value at a 15% annual rate.
This objective cannot be attained in a smooth manner because a high proportion of Berkshire’s net worth is represented by common stocks. Generally accepted accounting principles(GAAP) accounting rules require that these securities be valued at their market prices (less an adjustment for tax on any net unrealized appreciation).
Frequent changes in equity prices will ensure a great deal of fluctuations in their annual results. This is especially so when you compare it to the typical industrial company.
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