No apologies necessary from Buffett: Munger

The Oracle of Omaha doesn't owe shareholders an apology for falling short of a performance goal at his Berkshire Hathaway Inc., Vice Chairman Charles Munger said

May 4, 2014 @ 8:42 am

warren buffett, charles munger, berkshire hathaway, performance
+ Zoom
(Bloomberg News)

Warren Buffett doesn't owe shareholders an apology for falling short of a performance goal at his Berkshire Hathaway Inc. (BRK/A), Vice Chairman Charles Munger said at the company's annual meeting.

Mr. Munger said Mr. Buffett set a high bar with a target of boosting Berkshire's net worth more than the advance of the Standard & Poor's 500 Index over a five-year period. Berkshire fell short in the stretch that ended Dec. 31, and Mr. Buffett said in a March report to shareholders that performance should instead be measured over the course of stock-market cycles.

“Warren has set a ridiculously tough standard,” Mr. Munger said Saturday in Omaha, Neb. “If this is failure, I want more of it.”

(See also: Buffett rakes in $123 million as firms boost dividends)

Book value, the measure of assets minus liabilities that Mr. Buffett highlights, rose to $134,973 a share at the end of December, 91% more than where it stood five years earlier. The S&P 500 (SPX) returned about 128% during that period, including dividends, as stocks rallied from their financial-crisis lows. The Berkshire number is an after-tax figure, whereas the index results are before taxes.

Book value at Berkshire rose 2.6% in the first quarter to $138,426 a share. The S&P 500 posted a total return of 1.8% in the period.

While Mr. Buffett said Saturday that he didn't change the yardstick by which he measures Berkshire's performance, the shift away from a five-year target raises questions about transparency, Meyer Shields, an analyst at Keefe, Bruyette & Woods Inc., said in a note to clients.

“In the years leading up to 2013, Mr. Buffett's letter focused only on five-year relative performance,” Mr. Shields wrote. “The words 'stock market cycle' didn't appear even once.”

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Ed Slott: Tax strategies to help clients take advantage of market declines

When the markets decline or are volatile, it is an opportunity to put a few retirement savings strategies to work, according to Ed Slott, founder of Ed Slott's Elite IRA Advisor Group.

Latest news & opinion

Alternative strategies boomed after crisis, but haven't been tested

Because the S&P 500 has outperformed, convincing clients they need protection is a hard sell.

7 ways advisers fixed clients' biggest financial dilemmas

Sometimes it takes creativity, along with knowledge and outside help, to get a client out of a jam.

LPL Financial buys NPH, a broker-dealer network with 3,200 advisers

The deal, part of which is based on the advisers and revenue that eventually will move from NPH, could potentially cost LPL $448 million.

3 things advisers should make sure their clients' children take to college

Advisers can help clients avoid scary and painful situations with kids age 18 and older.

Private equity investors zero in on the RIA business

P-E proves to be ready and willing to invest in RIAs, but many will be looking to sell in three to seven years.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print