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Warren Buffett

Warren Buffett’s Generous Thanksgiving Gesture: A Legacy of Giving Back

(BRK.A), (BRK.B)

On November 21, renowned investor Warren E. Buffett made a significant philanthropic move by converting 1,600 A shares into 2,400,000 B shares. The purpose behind this strategic maneuver was to donate these B shares to four family foundations, continuing his longstanding tradition of charitable giving. The breakdown of the donations includes 1,500,000 shares to The Susan Thompson Buffett Foundation, and 300,000 shares each to The Sherwood Foundation, The Howard G. Buffett Foundation, and NoVo Foundation. These generous contributions have been officially delivered as of today.

In a heartfelt message to his fellow shareholders, Mr. Buffett reflected on the recurring nature of these donations, noting their similarity to those made during the previous Thanksgiving. These contributions supplement the lifetime pledges he made in 2006, outlining various conditions that are consistently met by the recipients, as detailed on berkshirehathaway.com.

Buffett, now 93 years old, expressed amazement at the fact that his three children are between 65 and 70 years old. Over the years, their respective foundations have disbursed substantial sums, often supporting different causes. One common belief shared by the Buffett family is a skepticism toward dynastic wealth, despite its legality and prevalence worldwide. They acknowledge that wealth, in itself, does not guarantee wisdom or virtue. Emphasizing their faith in the positive impact of capitalism, despite its flaws, they celebrate the opportunities the United States has afforded them.

Buffett’s three children serve as both executors of his current will and trustees of the charitable trust set to receive 99%-plus of his wealth upon his demise. Although unprepared for this responsibility in 2006, they are now fully equipped to manage this significant philanthropic legacy. The testamentary trust, designed to be self-liquidating after a decade, will operate with a lean staff and be funded, to the extent possible, by Berkshire shares.

In acknowledging the inevitability of human errors within large organizations, public or private, Buffett expressed confidence in Berkshire’s ability to recognize and rectify mistakes. He assured shareholders that the company is well-positioned with the right CEO and Board of Directors to ensure its enduring success.

Looking ahead, Buffett stressed the importance of maintaining Berkshire’s distinctive characteristics and behavior. While his substantial holdings will provide short-term support, he emphasized that Berkshire will ultimately earn the reputation it deserves. Anticipating changes in laws related to philanthropy, he emphasized the need for a broad charter for the testamentary trust and the importance of wise trustees guiding its operations.

In a move that reflects transparency and openness, Buffett outlined his posthumous plans, assuring that the disposition of his assets will be an open book. Rejecting elaborate trusts or foreign entities, he opted for a simple will that will be available for public inspection at the Douglas County Courthouse.

As Thanksgiving approaches, Buffett expressed gratitude for the opportunities life has afforded him and extended warm wishes to all shareholders, hoping for health and happiness for them and their families. This latest act of generosity continues to expand Warren Buffett’s legacy as not only a financial wizard but also a philanthropist committed to making a positive impact on the world.

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Warren Buffett

Warren Buffett Continues Stock Donations to Charities

(BRK.A), (BRK.B)

Warren Buffett has made a significant donation by converting a substantial number of his shares in Berkshire Hathaway. In a move aimed at contributing to the greater good, Buffett has converted 9,129 A shares into 13,693,500 B shares. The purpose behind this conversion is to donate 13,693,432 shares of Berkshire Hathaway’s “B” stock to five different foundations.

Among the beneficiaries, the Bill & Melinda Gates Foundation Trust will receive 10,453,008 shares, while the Susan Thompson Buffett Foundation will receive 1,045,300 shares. The Sherwood Foundation, Howard G. Buffett Foundation, and NoVo Foundation will each receive 731,708 shares. These generous donations were finalized and delivered June 21.

This significant act of philanthropy has altered the composition of Mr. Buffett’s ownership in Berkshire Hathaway. His holdings now consist of 218,287 A shares and 344 B shares. Upon making these donations, Mr. Buffett provided insightful comments regarding the mathematics behind his lifetime commitments to these five foundations.

He highlighted that the original schedule for annual grants was established on June 26, 2006, and has since been supplemented by significant additional grants to four of the five recipients. At the time the commitments were made, Mr. Buffett owned 474,998 Berkshire A shares, which were valued at approximately $43 billion. These shares represented over 98% of his net worth. It’s worth noting that he has converted A shares into B shares on previous occasions prior to making philanthropic contributions.

Over the course of the following 17 years, Mr. Buffett has refrained from buying or selling any A or B shares, and he has no intentions of doing so in the future. The five foundations have received Berkshire B shares, with an initial value of around $50 billion, surpassing Mr. Buffett’s entire net worth in 2006. It is important to mention that he holds no debts, and his remaining A shares are currently valued at approximately $112 billion, accounting for well over 99% of his net worth.

Mr. Buffett emphasized that there is nothing extraordinary behind Berkshire Hathaway’s success. It is the result of a combination of factors such as a long runway for growth, sound and straightforward decision-making, the favorable economic conditions in the United States, and the compounding effects of investments. This wealth has enabled him to make substantial contributions to philanthropic causes, as stated in his will, where he has designated that over 99% of his estate will be directed towards philanthropic endeavors.

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Warren Buffett

Warren Buffett Defends Stock Buybacks

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In his Berkshire Hathaway Chairman’s Letter that opens the Berkshire Hathway 2022 Annual Report, Warren Buffett took umbrage with politicians and other voices that attack corporate share repurchases. He wrote:

Gains from value-accretive repurchases, it should be emphasized, benefit all owners – in every respect. Imagine, if you will, three fully-informed shareholders of a local auto dealership, one of whom manages the business. Imagine, further, that one of the passive owners wishes to sell his interest back to the company at a price attractive to the two continuing shareholders. When completed, has this transaction harmed anyone? Is the manager somehow favored over the continuing passive owners? Has the public been hurt?

When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).

In 2022, Berkshire repurchased a modest 1.2% of the company’s outstanding shares.

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Lessons From Warren Buffett Value Investing Warren Buffett

Lessons From Warren Buffett: This Is the Best Investment a Young Person Can Make

As you develop an interest in investing it is natural to look around and wonder what is the best thing for you to invest in. Is it stocks, real estate, commodities, or foreign currencies? Warren Buffett has a very straight forward answer to that question, and it is one investment that he would happily make. It is investing in yourself. By that he means improving your capabilities.

“I think that the best investment you can have, for most people, is in your own abilities,” Warren Buffett noted at the 2005 Berkshire Hathaway Annual Meeting. “I would pay a student, in many cases, I would be glad to pay them one hundred thousand dollars, cash up front, for ten percent of all their future earnings. So, I’m willing to pay one hundred thousand dollars for ten percent of them, I’m valuing the whole person at a million dollars, just capital value standing there in front of me.”

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© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Warren Buffett

Warren Buffett Donates $759 Million to Charities

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It’s a very happy Thanksgiving at a number of charities that recently received large donations from Warren Buffett, who continues to give away his fortune in Berkshire Hathaway stock.

Buffett donated 2.4 million B shares of Berkshire Hathaway, with a value of roughly $759 million, to a number of charities, including 1.5 million shares to the Susan T. Buffett Foundation.

The Susan T. Buffett Foundation has offered scholarships to college students in Nebraska for over 50 years, and is named for his late first-wife.

Additional charities receiving donated shares include:

A total of 900,000 shares split between charities overseen by his children Howard, Susan and Peter: the Howard G. Buffett Foundation, the Sherwood Foundation and the Novo Foundation.

Since 2006, Warren Buffett has donated more than half of his Berkshire shares, with a value of over $46 billion at the time of the donations.

© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Warren Buffett

Buffett Donates Shares to Three Foundations

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Today, Warren E. Buffett has converted 9,608 A shares into 14,412,000 B shares in order to donate 14,414,136 shares of Berkshire Hathaway “B” stock to five foundations: 11,003,166 to the Bill & Melinda Gates Foundation Trust, 1,100,316 shares to the Susan Thompson Buffett Foundation and 770,218 shares to each of the Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation. The donations have been delivered today.

Mr. Buffett’s ownership of Berkshire now consists of 229,016 A shares and 276 B shares.

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Lessons From Warren Buffett Value Investing Warren Buffett

Lessons From Warren Buffett: You don’t Know Who is Swimming Naked Until…

Risk is not something that is always immediately apparent. In fact, it is not until markets plunge, a company goes belly up, or a catastrophic event happens that causes insurers to pay large claims, that the degree of risk truly becomes clear.

“You don’t find out who’s been swimming naked until the tide goes out,” Warren Buffett said at the 1994 Berkshire Hathaway Annual Meeting. “You don’t, you really don’t find out who’s been swimming naked until the wind blows at them.”

Buffett pointed out that the adage applies as much to bonds and reinsurance as it does to the stock market. Investors that chase return through low-rated bonds, or insurance companies that write risky policies, can look like geniuses until circumstances turn against them and expose their true risk, often with catastrophic results.

“Reinsurance business, by its nature, will be a business in which some very stupid things are done en masse periodically,” Buffett noted. “I mean, you can be doing dumb things and not know it in reinsurance, and then all of a sudden wake up and find out, you know, the money is gone.”

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© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Lessons From Warren Buffett Value Investing Warren Buffett

Lessons From Warren Buffett: Risk and Time Horizon are Inextricably Linked

Risk and the amount of time you intend to hold a stock are inextricably linked, according to Warren Buffett. That linkage is what makes day trading stocks so risky, as the shorter the holding period, the more likely that short term price movements will sink you.

“Well, we do define risk as the possibility of harm or injury. And in that respect we think it’s inextricably wound up in your time horizon for holding an asset,” Warren Buffett said at the 1994 Berkshire Hathaway Annual Meeting. “If you intend to buy XYZ Corporation at 11:30 this morning and sell it out before the close today, I mean, that is, in our view, that is a very risky transaction. Because we think 50 percent of the time you’re going to suffer some harm or injury. If you have a time horizon on a business, we think the risk of buying something like Coca-Cola at the price we bought it at a few years ago is essentially, is so close to nil, in terms of our perspective holding period. But if you asked me the risk of buying Coca-Cola this morning and you’re going to sell it tomorrow morning, I say that is a very risky transaction.”

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© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Lessons From Warren Buffett Value Investing Warren Buffett

Lessons From Warren Buffett: What Adversity Tells you About the Underlying Strength of a Business

How a company weathers adversity tells you interesting things about a business, according to Warren Buffett. Among the things it shows you is not only the resiliency of a company, but also how wide its moat truly is.

“If you see a business take a lot of adversity and still do well, that tells you something about the underlying strength of the business,” Warren Buffett said at the 2000 Berkshire Hathaway Annual Meeting. “So, occasionally, you will find that an interesting test of the strength of a business. Coca-Cola had some problems, you know, in Europe. But it comes back stronger than ever. They certainly had problems with New Coke, and they came back stronger than ever. So you do see that underlying strength. And that’s very impressive as a way of evaluating the depth and impenetrability of the moat that we talked about earlier.”

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© 2022 David Mazor

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Lessons From Warren Buffett: “Mr. Market” is There to Serve, Not Advise

Warren Buffett is fond of reminding investors about “Mr. Market,” Benjamin Graham’s personification of stock market fluctuations that he describes in Chapter 8 of The Intelligent Investor. Graham notes that sometimes the prices for stocks that Mr. Market quotes are reasonable, but sometimes “Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.”

This brings us to a key point that Warren Buffett is keen to emphasize. The market is there to serve you not instruct you.

“The beauty of stocks is they do sell at silly prices from time to time,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting. “Ben Graham writes about it in Chapter 8 of The Intelligent Investor. . . Chapter 8 says that in the market you’re going to have a partner named ‘Mr. Market,’ and the beauty of him as your partner is that he’s kind of a psychotic drunk, and he will do very weird things over time and your job is to remember that he’s there to serve you and not to advise you. And if you can keep that mental state, then all those thousands of prices that Mr. Market is offering you every day on every major business in the world, practically, that he is making lots of mistakes, and he makes them for all kinds of weird reasons. And all you have to do is occasionally oblige him when he offers to either buy or sell from you at the same price on any given day, any given security.”

As Graham wrote:

“If you are a prudent investor or a sensible businessman, will you let Mr. Market’s daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position. “

Buffett’s full explanation on the stock market and stock prices

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© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.