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Under the Radar -- Warren Buffett's Annual Letter

We always enjoy reading Warren Buffett’s annual letter to his Berkshire Hathaway shareholders. He modestly noted in his February 25, 2017 letter that over the past 52 years under his management the per-share book value of Berkshire Hathaway has grown from $19 to $172,108, a rate of 19% compounded annually. A huge contributor to that impressive performance was this little noted fact: In 52 years of operation the book value of the company has declined only TWICE, in 2001 -6.2% and 2008 -9.6%.

Buffett likes to compare the growth in his company’s book value to the performance returns of the S&P 500 since he is running a 100% equities portfolio. For most of the 70’s, 80’s, and 90’s his company routinely beat the S&P 500. But look at the last five years.

 Total Return of S&P 500

Year
Per-Share Book
Value of Berkshire
Total Return of S&P 500
201214.4
16.0
201318.232.4
20148.313.7
20156.41.4
201610.712.0

It has been a tough few years for the Oracle of Omaha.

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