BERKSHIRE HATHAWAY INC.
To the Shareholders of Berkshire Hathaway Inc.:
Our gain in net worth during 2006 was $16.9 billion, which increased the per-share book value of
both our Class A and Class B stock by 18.4%. Over the last 42 years (that is, since present management
took over) book value has grown from $19 to $70,281, a rate of 21.4% compounded annually.*
We believe that $16.9 billion is a record for a one-year gain in net worth – more than has ever
been booked by any American business, leaving aside boosts that have occurred because of mergers (e.g.,
AOL’s purchase of Time Warner). Of course, Exxon Mobil and other companies earn far more than
Berkshire, but their earnings largely go to dividends and/or repurchases, rather than to building net worth.
All that said, a confession about our 2006 gain is in order. Our most important business,
insurance, benefited from a large dose of luck: Mother Nature, bless her heart, went on vacation. After
hammering us with hurricanes in 2004 and 2005 – storms that caused us to lose a bundle on super-cat
insurance – she just vanished. Last year, the red ink from this activity turned black – very black.
In addition, the great majority of our 73 businesses did outstandingly well in 2006. Let me focus
for a moment on one of our largest operations, GEICO. What management accomplished there was simply
As I’ve told you before, Tony Nicely, GEICO’s CEO, went to work at the company 45 years ago,
two months after turning 18. He became CEO in 1992, and from then on the company’s growth exploded.
In addition, Tony has delivered staggering productivity gains in recent years. Between yearend 2003 and
yearend 2006, the number of GEICO policies increased from 5.7 million to 8.1 million, a jump of 42%.
Yet during that same period, the company’s employees (measured on a fulltime-equivalent basis) fell 3.5%.
So productivity grew 47%. And GEICO didn’t start fat.
That remarkable gain has allowed GEICO to ma
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Actually, the big miners were mixed. BHP Billiton climbed 37c to $27.43 while rival Rio Tinto dropped 20c to $74.80.
Brewer Lion Nathan put on 12c to $8.47 after the company acquired the Inner Circle Rum brand for an undisclosed sum, further expanding its spirits and ready-to-drink operations.
Fashion house Just Group climbed 36c to $4.15 after the company announced an off-market share buyback and a 9 per cent lift in first-half net profit to $39.7 million.
Telstra edged 6c higher to $4.22 after it announced plans to raise up to €1 billion through the sale of long-term debt in the Eurobond market.
Origin dropped 65c to $8.65.
Uranium and base metals hopeful Western Metals, which has BHP as a partner, was yet again the most traded stock on the market with 125.3 million shares changing hands worth $34.6 million. It started strongly and soon hit 32c but eventually closed down 2c at 25c.
Mobile phone virtual network operator CommidiTel attracted punters, who traded 57 million shares between 2.3c and 2.6c. It finished at 2.4c, up 0.1c but looking for its record last week of 3c.