The project involves writing a commentary on Warren E. Buffett?s Berkshire shareholder letter. Shareholder letters (1977 ? 2014) will be randomly selected and assigned to students.(I will do the shareholder letter in 1993) You can download shareholder letters from https://www.berkshirehathaway.com/letters/letters.html
1. Analyse the general structure of the shareholder letter and comment on Buffett?s strategy for handling fund manager ? investor relationship.
Analyse the general structure of the shareholder letter.
? Clearly and succinctly provided an overview of the sections into which Buffett divides the shareholder letter, identifying the broad categories into which the various subheadings fit.
Comment on Buffettts strategy for managing investor relations
? Clearly identifies the major areas of interest for the investors and how Buffett addresses those areas of interest. Summarize the strategy and techniques used by Buffett to interact with shareholders.
2. Comment on Buffett?s investment portfolio selection. You may make reference to the concepts we have identified in class. You may apply a historical view to analysing Buffett?s investment decisions (Were they good decisions? Why?).
Analyse the holdings of BH with respect to concepts learned in class.
? Describe the features of Berkshire Hathaways investment portfolio, including the types of industries invested in, the level of control (full or partial) acquired and any other kinds of assets held by the fund (bonds, derivatives, etc). Links to the course material are also identified, these include identifying the types of companies invested in ? their ability to generate residual earnings growth, how they maintain a hold on this comparative advantage and what kind of cash flow characteristics those companies have.
Analyse Buffetts Investment Decisions
? Examine the performance of one or more of Berkshire Hathaways recent acquisitions. These answers not only examined the current value compared to the purchase price, but also looked at the returns generated through time from the investment and whether the stated motivations for initially making the investment came to fruition.
3. Criticise Buffett?s shortcomings/ignorance in his shareholder letter. Try to improve his fund manager ? investor relationship management by adding/changing part of shareholder letter.
Criticize Buffetts shortcomings in the shareholder letter
? Provide clear and insightful views on the shortcomings of Buffetts letter and provided concrete examples of how such shortcomings could be improved.
4. Comment on and explain financial tables/statements in shareholder letter. Visualise this data when applicable. Why did Buffett choose to present these tables/numbers? What is significant about them?
Comment on the significance of the financial statements used.
? Identify and visualize the tables presented by Buffett and why the tables was important and identified what information Buffett was able to convey using that table. Provide an innovative and creative presentation of financial data in a way that was able to distill the essence of the information being conveyed. This could include showing bar charts of companies purchase price compared to current, or graphs indicating the growth in the S&P 500 as compared to the growth in the value of Berkshire Hathaway. These graphs were clearly labelled, with x and y axis labels, scales, headings and legends.
5. Analyse the relationship between a successful fund manager and his invested companies with reference to the shareholder letter.
Analyse the relationship between successful fund manager and invested companies.
? Clearly explained the relationship between Warran Buffettt and the companies he has invested in. Document the management practices of companies which are wholly owned by Berkshire Hathaway and if there are any differences for companies which are only partially owned (eg Coke). These answers identified whether managers were retained or retrenched, and whether Buffettt looked for companies to purchase which were well managed or poorly managed.
6. Does Buffett say anything about his investment philosophy? How would you encapsulate that message?
? Encapsulate the investment philosophy described by Warren Buffett into a concise statement of wisdom. Identify suggestions from Warren Buffett about the actions he has taken in that year or the rationale applied to decisions and deduce from that some guidance on the overall investment philosophy. These pieces of wisdom vary widely, but can include sentiment about the risk of assets, the exposure to volatility in interest or exchange rates, or their exposure to macroeconomic risk and their ability to benefit from changes in the global environment.
Each individual will need to submit a report of no more than 6 A4 pages including appendices, figures and references. It is suggested that any figures/tables are mixed with your discussion section. However, you must remain within the page limit above.
Please use 10 point font and standard page margins as when you open word.
Please note that page limits are strict and material in excess of these limits will not be marked. These limits do not include the cover page. All work will have to be submitted through TurnitIn as per university policy. Please ensure to indicate any ?quotations? in ?? marks.
To aid in structuring the report, please see the marking guide below. Students should understand that this is an indicative marking guide so you should not be restricted to the following criteria.
1. Appropriate content and range of ideas.
2. Understanding of the context in which the report is written (both historical and relationships between the parties).
4. Reflection/Evaluation of the strategies employed.
5. Initiative in responding to the assessment questions in an imaginative and independent way.