The Berkshire Hathaway 1974 annual report was printed with a royal blue cover...Operating results were not satisfactory...Again Warren hedges and says 1975 is not encouraging... Berkshire's stock would go from $93 in 1973 to $40 in 1974...The stock market was tumbling...However, Berkshire had a 10.3% return on equity...This was the lowest return on equity since 1970...This string of shareholder increases could be traced back all the way back to 1956...
The banking division of Illinois National Bank and Trust of Rockford is one of the most profitable banks in the nation...Eugene Abegg does an outstanding job running the bank...With loan totals of $68 million, the bank only had losses of $24,000 or .04%...The bank remains very liquid...
The insurance division had a rough year...The insurance division in the past had produced satisfactory or above results...Inflation, inadequate insurance rates, and other insurance companies not reserving enough against losses help produce unsatisfactory results in the division...Warren mentions the other insurance companies not charging the correct rates and under reserving against losses will hurt the competition's capital position...Because Berkshire is a strong capital company in the future they (Berkshire) will take use this to take advantage of the competition...Warren also discusses the impact interest rate increases and decreases has on bond prices in Berkshires portfolio...
The textile division had three good quarters and a rough fourth quarter...This would carry over into 1975...The textile industry is becoming increasing more difficult to make money...
Warren mentions (not by name) that his stock purchases in the future will increase substantially...The purchase of Washington Post stock continues in 1974...
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