Berkshire Hathaway Inc. (BRK.B): 6 Quotes From Buffett’s Annual Letter That Nobody Else Is Talking About

Published on March 19, 2013 at 12:02 pm by The Motley Fool in Hedge Funds

With another installment of Warren Buffett’s annual letter to Berkshire Hathaway Inc. (NYSE:BRK.B) shareholders hitting the Internet recently, plenty of stories have been published highlighting the most quotable passages from the letter. News articles abounded with the best examples of Buffett’s traditional wisdom and wit (Here’s a good example). But now, let’s take a look at six other quotes from the letter that didn’t make anybody else’s “best of” list.

Berkshire Hathaway Inc. (NYSE:BRK.A)

Thanks Gecko! You too, Tony.

“The credit for GEICO’s extraordinary performance goes to Tony Nicely and his 27,000 associates. And to that cast, we should add our Gecko. Neither rain nor storm nor gloom of night can stop him; the little lizard just soldiers on, telling Americans how they can save big money by going to GEICO.com.”

On page 4, Warren Buffett gives a 14-word shout-out to GEICO boss Tony Nicely and his employees for their hard work, and then a 38-word paean to the GEICO Gecko. Granted, the Gecko really is the face of the company. I wouldn’t know Tony Nicely if I ran into him on the street and he was wearing a name tag that said “Hello, My Name Is Tony Nicely.” Meanwhile, even my kids would instantly recognize and jump up and down pointing out a minimum wage-earning teenager wearing a Gecko costume at a minor league baseball game. So, credit where credit is due.

As a GEICO customer, I’m always disappointed when I call customer service and the representative on the phone doesn’t have a charming British accent like the Gecko. Giving accent training classes to the people who answer the phones could be one more way that the number one reptilian employee helps to solidify GEICO’s brand image.

Take that, State Farm!

“For example, State Farm, by far the country’s largest insurer and a well-managed company besides, incurred an underwriting loss in eight of the eleven years ending in 2011. (Their financials for 2012 are not yet available.)”

On page 7, Buffett takes a break from a detailed “inside baseball” discussion of how insurance companies work to trash-talk rival insurer State Farm’s record on underwriting losses. I believe this is the only specific mention of a competitor by name in the letter. Congratulations, State Farm!

Bow down!

“If you meet Ajit [Jain] at the annual meeting, bow deeply.”

On page 8, Warren Buffett basically says (and I’m paraphrasing), “Bow down before your new master!” But maybe I’m reading too much into that quote and its implications for the CEO succession question. When the leadership transition comes, I’m guessing it won’t be General Zod style, although that would be undoubtedly memorable.

At any rate, my gut says that Ajit Jain will be the successor. My brain says that he’s a likely choice too. But my heart says Kabletown CEO Jack Donaghy. I miss you already, Mr. Donaghy.

Some of you kids were “oops babies”

“I have made plenty of mistakes in acquisitions and will make more.”

On page 19, amid a discussion on dividend theory, Buffett admits that some of his corporate children were perhaps conceived by mistake, but he won’t ever tell us which of those kids are his least favorites. You know all the subsidiary CEOs are reading this and wondering if he’s talking about them. I’m looking at you, Pampered Chef.

You want fries with that mu shu pork?

“Phil [Fisher] explained that you can successfully run a restaurant that serves hamburgers or, alternatively, one that features Chinese food. But you can’t switch capriciously between the two and retain the fans of either.”

On page 21, Warren Buffett says something that immediately raises my skepticism. There is a restaurant in my hometown that sometimes leaves take-out menus on my door handle, and they do indeed feature a full menu of both hamburgers and Chinese food (and subs and Buffalo Wings too). I’ve been getting these menus for years, and they have expanded to three locations, so I take that as evidence that the restaurant is doing a fine job of successfully running a hamburger and Chinese food business with repeat customers.

Admittedly, I’ve never ordered take-out from there.

Fast company

“Ted Weschler has run the marathon in 3:01. Jim Weber, Brooks’ dynamic CEO, is another speedster with a 3:31 best. Todd Combs specializes in the triathlon, but has been clocked at 22 minutes in the 5K. That, however, is just the beginning: Our directors are also fleet of foot (that is, some of our directors are). Steve Burke has run an amazing 2:39 Boston marathon. (It’s a family thing; his wife, Gretchen, finished the New York marathon in 3:25.) Charlotte Guyman’s best is 3:37, and Sue Decker crossed the tape in New York in 3:36.”

People who constantly post their running times and daily workout distances on Facebook always find their way into my “Hide posts from this person” bin. I don’t check Facebook to feel bad about my own lack of exercise. I check Facebook for pictures of my friends’ babies, graphics and quotes that reaffirm my own political views, and re-posts of cat pictures with funny captions.

Anyway, having said that, on page 22, Buffett runs down the marathon times of his top employees and directors, and I immediately vow to vote against all of them if I ever save up enough money to buy an A share with voting rights.

The article 6 Quotes From Buffett’s Annual Letter That Nobody Else Is Talking About originally appeared on Fool.com and is written by Mike Steele.

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Berkshire Hathaway Inc. (BRK.B): 6 Quotes From Buffett’s Annual Letter That Nobody Else Is Talking About

Published on March 19, 2013 at 12:02 pm by The Motley Fool in Hedge Funds

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