Warren Buffett and Berkshire Hathaway 1982

Warren reports 1982 earnings to be $46.37 million compared to earnings of $62.60 million for 1981...Earnings from operations only are $31.50 million for 1982 and $39.42 million for 1981...Warren's great investment selection continues to be the reason for the operating earnings number one category to be Net Investment Income...

Warren discusses the percentage of earnings as a percent of net worth...He talks about the percentage of earnings to net worth and how it has dropped...Warren also discusses the accounting issues of owning partial companies...Berkshire has stock holdings of many companies that are not wholly owned...Warren discusses the imperfections of the accounting system, when you own less than a majority of a company or a wholly owned company...He gives his view on when you own twenty percent or more of a company (and when you own less) and how that impacts earnings...

Warren has a table in the annual report that shows the last three years of insurance underwriting...Insurance underwriting has grown no more than six percent (in any of the last three years)...

The largest earnings categories are:

Insurance Group-Includes Insurance Underwriting and Net Investment Income-Insurance

Underwriting lost money in 1982...The loss was $11.35 million...

Net Investment Income $ 35.7 million

See's Candies $ 6.9 million

Blue Chip - Parent $ 2.5 million
Wesco Financial - Parent $ 2.2 million

Mutual Savings & Loan $ 1.52 million

Holdings of $45 million or more by market value of non controlling common stocks:
GEICO, an insurance company $309 million...
R. J. Reynolds Company $159 million...

General Foods $84 million...
The Washington Post $103 million...

Time, Inc $80 million...

Crum & Foster $49 million...

Handy & Harman $47 million...

Warren Buffett and Berkshire Hathaway 1981

Warren reports 1981 earnings to be $62.60 million compared to earnings of $53.12 million for 1980...Earnings from operations only are $39.42 million for 1981 and $41.92 million for 1980...Warren's great investment selection continues to be the reason for the operating earnings number one category to be Net Investment Income...The Illinois National Bank, which Berkshire purchased in 1969 had to be spun off in 1980 (because of the Bank Holding Company Act of 1969)...So now there are now no Illinois National Bank's earnings...

Warren discusses the high interest rates of the long term bond yielding 16%...The long term tax exempt bond is currently earning 14%...He explains with these less risky fixed income securities and these high rates makes common stocks and businesses worth less...

The largest earnings categories are:
Insurance Group-Includes Insurance Underwriting and Net Investment Income-
Insurance Underwriting was only $.80 million (this ranks underwriting the seventh in this years operating earnings for Berkshire)
Net Investment Income $32.4 million
See's Candies $ 6.2 million
Blue Chip - Parent $2.1 million

Wesco Financial - Parent $1.59 million
Mutual Savings & Loan $ 1.54 million

Holdings of $30 million or more by market value of non controlling common stocks:

GEICO, an insurance company $200 million...

R. J. Reynolds Company $83 million...
General Foods $67 million...

The Washington Post $58 million...
Handy & Harman $36 million...
SAFECO Insurance $31 million...

Warren Buffett and Berkshire Hathaway 1980

Warren reports 1980 earnings to be $53.12 million compared to earnings of $42.82 million for 1979...Earnings from operations only are $41.92 million for 1980 and $35.99 million for 1979...
Insurance companies since 1979 must begin reporting their securitites at market value on their balance sheets...In the past the reporting was the lower of either their cost or market value...This would result in a large increase in net worth and book value for Berkshire, because of the large amount of unrealized gains...Warren's great investment selection, of course, was the reason behind these large unrealized gains...
The Illinois National Bank, which Berkshire purchased in 1969 had to be spun off in 1980 (because of the Bank Holding Company Act of 1969)...So in the future this bank's earnings would not be a part of Berskire's earnings...Berskire completed the exchange of 41,086 shares of Rockford Bancorp, which owns 97.7% of Illinois National Bank for a like number of Berkshire Hathaway shares...Warren talks about Gregg Abegg the founder of Illinois National Bank passing away on July 2nd, 1980...Warren tells of him being a great leader, banker, and friend...Warren says Gregg worked harder after Berkshire bought the bank than before Berkshire owned it and Warren said he would miss him...

Warren discusses a company repurchasing its stock and the advantages the company has, especially if the company is purchasing its shares at a low price...Warren also discusses his ideas on being a long term investor and the importance of being a long term investor...

The largest earnings categories are:

Insurance Group-Includes Insurance Underwriting and Net Investment Income-

Insurance Underwriting $3.6 million

Net Investment Income $20.1 million

Illinois National Bank $4.7 million

See's Candies $ 4.2 million

Blue Chip - Parent $3.1 million

Mutual Savings & Loan $ 2.0 million

Holdings of $40 million or more by market value:
GEICO, an insurance company...

General Foods, a food company and food processor...

Handy & Harman, a specialized metals company...

SAFECO, an insurance company...
The Washington Post, a large newpaper organization...