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For certain stocks, Buffett has no intention to sell, however, those are still considered “available for sale” stocks.

Buffet’s tax lesson on dividends – “For a non-insurance company – which describes Berkshire Hathaway, the parent – the federal tax rate is
effectively 101⁄2 cents per $1 of dividends received. Furthermore, a non-insurance company that owns more than 20% of an investee owes taxes of only 7 cents per $1 of dividends. That rate applies, for example, to the substantial dividends we receive from our 27% ownership of Kraft Heinz, all of it held by the parent company.”

Buffett compared results of HFs vs. S&P 500 over the past 9 years. On average S&P 500 won.

Berkshire added the sixth “powerhouse”, which is Precision Castparts Corp for manufacturer aerospace components.

Haha I liked this quote – “utility was the only business that would automatically earn more money by redecorating the boss’s office”.

When technology changes “destroyed” some industries, what to do? Buffett suggested a better safety net for those “who are willing to work but find their specific talents judged of small value because of market forces. “. Well said I think.

Buffett added a new column for the “market” value of Berkshire’s share. This is important as “cost-based carrying value” was never revalued up. Thus, over time “the gap between Berkshire’s intrinsic value and its book value has materially widened”.

“a business with terrific economics can be a bad investment if it is bought for too high a price”.

Buffett recognized the investment failure in Tesco, and said he should have exited earlier.

Berkshire purchased both preferred shares and common shares of Heinz, partnering with 3G Capital. Buffett touted the partnership as a new model of investing, and says the difference between Berkshire and private equity firms is that “Berkshire never intends to sell a share of the company”.

“Games are won by players who focus on the playing field – not by those
whose eyes are glued to the scoreboard.” – focus less on current prices.

Buffett also sent a warning to the pension systems/policies of public entities.

Future or revolving liabilities are less “costly” to Berkshire – “the true value of this liability is dramatically less than the accounting liability”. Thus, the book value is more valuable than it seems.

However, this is not the norm for the insurance industry –

There is very little “Berkshire-quality” float existing in the insurance world. In 37 of the 45 years ending in 2011, the industry’s premiums have been inadequate to cover claims plus expenses.

Hurricane Sandy cost GEICO 3 times more than Katrina. Isn’t climate change the biggest long-term threat to insurance companies? And we may influence nature, but it’s a threat we can’t directly control now.

“As long as a newspaper was the only one in its community, its profits were certain to be extraordinary; whether it was managed well or poorly made little difference.”

Berkshire started repurchases in 2010, at 1.1x p/b max.

Housing was still weak in 2011. There were a short-term boost in 2010 due to federal homebuyer tax credit ($8,000 for first-time buyers).

Two major investments were made – BofA and IBM.

Intrinsic value – “a third, more subjective, element to an intrinsic value calculation that can be either positive or negative: the efficacy with which retained earnings will be deployed in the future”

In another word, CEO’s intention can make a huge difference.

Leverage – “Borrowers then learn that credit is like oxygen. When either is abundant, its presence goes unnoticed. When either is missing, that’s all that is noticed.”

And due to this cautiousness on leverage & the habit of not-to-maxmize-yield, “during the episodes of financial chaos that occasionally erupt in our economy, we will be equipped both financially and emotionally to play offense while others scramble for survival”.

What a time – Chinese language edition of Poor Charlie’s Almanack is available to purchase at the annual shareholder meeting.

Need to “face up immediately to bad news”.