Annual Letters
We hope we don’t get into too many more businesses with such
tough economic characteristics. But, as we have stated before:
(1) our textile businesses are very important employers in their
communities, (2) management has been straightforward in reporting
on problems and energetic in attacking them, (3) labor has been
cooperative and understanding... See more
tough economic characteristics. But, as we have stated before:
(1) our textile businesses are very important employers in their
communities, (2) management has been straightforward in reporting
on problems and energetic in attacking them, (3) labor has been
cooperative and understanding... See more
Chairman's Letter - 1978
investment beyond monetary, clear communication with management, employees are on board, not loosing money so maintain and hold the investment
This may say something about our forecasting abilities,
the nature of the textile industry, or both.
the nature of the textile industry, or both.
Chairman's Letter - 1977
CPI figures indicate rates overall were only 3% higher
in January 1979 than a year ago. But the items that make up loss
costs - auto repair and medical care costs - were up over 9%.
How different than yearend 1976 when rates had advanced over 22%
in the preceding twelve months, but costs were up 8%.
in January 1979 than a year ago. But the items that make up loss
costs - auto repair and medical care costs - were up over 9%.
How different than yearend 1976 when rates had advanced over 22%
in the preceding twelve months, but costs were up 8%.
Chairman's Letter - 1978
industry dynamics out of ones control will impact profits
With hard work and some imagination
Chairman's Letter - 1977
conviction even when feedback could lower it
Earnings of $1.3 million in 1978, while much improved from
1977, still represent a low return on the $17 million of capital
employed in this business. Textile plant and equipment are on
the books for a very small fraction of what it would cost to
replace such equipment today. And, despite the age of the
equipment, much of it is functionally similar... See more
1977, still represent a low return on the $17 million of capital
employed in this business. Textile plant and equipment are on
the books for a very small fraction of what it would cost to
replace such equipment today. And, despite the age of the
equipment, much of it is functionally similar... See more
Chairman's Letter - 1978
in capital intensive commodity markets, margins will be near zero as the steady state supply > demand you have no product moats and any edge you might find to improve product (or margins) will be copied by the market hard to return capital
We select our marketable equity securities in much the same
way we would evaluate a business for acquisition in its entirety.
We want the business to be (1) one that we can understand, (2)
with favorable long-term prospects, (3) operated by honest and
competent people, and (4) available at a very attractive price.
We ordinarily make no attempt to... See more
way we would evaluate a business for acquisition in its entirety.
We want the business to be (1) one that we can understand, (2)
with favorable long-term prospects, (3) operated by honest and
competent people, and (4) available at a very attractive price.
We ordinarily make no attempt to... See more
Chairman's Letter - 1977
be around things you can understand, think in decades, be around good and honest people, don’t pay too much
It is very easy to fool yourself regarding underwriting
results in reinsurance (particularly in casualty lines involving
long delays in settlement), and we believe this situation
prevails with many of our competitors
results in reinsurance (particularly in casualty lines involving
long delays in settlement), and we believe this situation
prevails with many of our competitors
Chairman's Letter - 1978
results can look very good at the headline, which makes it very easy to fool oneself. this can distort market rates if all individuals within a market develop a self-delusion around the same metrics
need to stay disciplined
Associated’s business has not grown, and it consistently has
faced adverse demographic and retailing trends. But Ben’s
combination of merchandising, real estate and cost-containment
skills has produced an outstanding record of profitability, with
returns on capital necessarily employed in the business often in
the 20% after-tax area.
faced adverse demographic and retailing trends. But Ben’s
combination of merchandising, real estate and cost-containment
skills has produced an outstanding record of profitability, with
returns on capital necessarily employed in the business often in
the 20% after-tax area.
Chairman's Letter - 1978
cash flow business with no growth — run by family type for ever
We are not at all unhappy when our wholly-owned businesses
retain all of their earnings if they can utilize internally those
funds at attractive rates. Why should we feel differently about
retention of earnings by companies in which we hold small equity
interests, but where the record indicates even better prospects
for profitable employment of... See more
retain all of their earnings if they can utilize internally those
funds at attractive rates. Why should we feel differently about
retention of earnings by companies in which we hold small equity
interests, but where the record indicates even better prospects
for profitable employment of... See more
Chairman's Letter - 1978
if there are opportunities for high ROI investment at attractive costs, then earnings should be used to plow into the business — but if capital requirements are low for a business or track record of poor allocation of capital (low profitability) then earnings should be distributed as dividends or share repurchases