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 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

Sponsored financial news

Featured video

INTV

Why some retirement plan advisers think Fidelity is invading their turf

InvestmentNews editor Frederick P. Gabriel Jr. and reporter Greg Iacurci talk about this week's cover story that looks at whether Fidelity Investments is stepping on the toes of retirement plan advisers.

Latest news & opinion

SEC Chairman Jay Clayton outlines goals for a new fiduciary standard

Rule should provide clarity on role of adviser, enhanced investor protection and regulatory coordination.

Advisers bemoan LPL's technology platform change

Those in a private LinkedIn chat room were sounding off about fears the independent broker-dealer will require a move to ClientWorks before it is fully ready.

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

8 apps advisers love for getting stuff done

Smartphone apps that advisers are using in 2018 to run their business more efficiently.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print