SEC EDGAR Filing·1 MAR 2010
Hold Expensive Cash So You Can Be the Buyer in a Crisis
Liquidity is a strategic weapon disguised as a boring balance sheet item — its real return shows up only when everyone else runs out.
Source document — Berkshire Hathaway Inc. — 2009 Annual Shareholder Letter · SEC EDGAR · EX-99.1 · BERKSHIRE HATHAWAY INC · EX-99.1 · filed 2010-03-01 · Accession 0001193125-10-044776
Excerpt · In Warren Buffett's own words
Our gain in net worth during 2009 was $21.8 billion, which increased the per-share book value of both our Class A and Class B stock by 19.8%. Over the last 45 years (that is, since present management took over) book value has grown from $19 to $84,487, a rate of 20.3% compounded annually.
We will never become dependent on the kindness of strangers. Too-big-to-fail is not a fallback position at Berkshire. Instead, we will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity. Moreover, that liquidity will be constantly refreshed by a gusher of earnings from our many and diverse businesses. When the financial system went into cardiac arrest in September 2008, Berkshire was a supplier of liquidity and capital to the system, not a supplicant. At the very peak of the crisis, we poured $15.5 billion into a business world that could otherwise look only to the federal government for help. Of that, $9 billion went to bolster capital at three highly-regarded and previously-secure American businesses that needed — without delay — our tangible vote of confidence. The remaining $6.5 billion satisfied our commitment to help fund the purchase of Wrigley, a deal that was completed without pause while, elsewhere, panic reigned.
We pay a steep price to maintain our premier financial strength. The $20 billion-plus of cash-equivalent assets that we customarily hold is earning a pittance at present. But we sleep well.
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How this surfaced
- Source type
- SEC EDGAR Filing
- Case / record
- SEC EDGAR · EX-99.1
- Citation
- BERKSHIRE HATHAWAY INC · EX-99.1 · filed 2010-03-01 · Accession 0001193125-10-044776
- Date authored
- March 1, 2010
- License
- Public domain
- Original
- View the primary source →
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