Investing
It is not easy to buy a good insurance
business, but our experience has been that it is easier to buy
one than create one. However, we will continue to try both
approaches, since the rewards for success in this field can be
exceptional.
business, but our experience has been that it is easier to buy
one than create one. However, we will continue to try both
approaches, since the rewards for success in this field can be
exceptional.
Chairman's Letter - 1978
attractive markets should keep being attacked with various approaches
Capital Cities possesses both extraordinary properties and
extraordinary management. And these management skills extend
equally to operations and employment of corporate capital. To
purchase, directly, properties such as Capital Cities owns would
cost in the area of twice our cost of purchase via the stock
market, and direct ownership would offer... See more
extraordinary management. And these management skills extend
equally to operations and employment of corporate capital. To
purchase, directly, properties such as Capital Cities owns would
cost in the area of twice our cost of purchase via the stock
market, and direct ownership would offer... See more
Chairman's Letter - 1977
if a business has good assets and good management, then it makes sense to park money with them rather than try to buy the asset
buying the asset would give control and responsibility to manage but if someone else can do it better than you, why bother?
reap rewards through proxy
Of course, with a minor interest we do not have the right to
direct or even influence management policies of SAFECO. But why
should we wish to do this? The record would indicate that they
do a better job of managing their operations than we could do
ourselves. While there may be less excitement and prestige in
sitting back and letting others do the... See more
direct or even influence management policies of SAFECO. But why
should we wish to do this? The record would indicate that they
do a better job of managing their operations than we could do
ourselves. While there may be less excitement and prestige in
sitting back and letting others do the... See more
Chairman's Letter - 1978
if management is 10/10 and operated efficiently, then why ever change what they are doing or try to take full control — if it ain’t broke, don’t fix it
- YouTube
youtube.comWe 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
Benchmark Part II: The Dinner
youtube.comNotes in notion
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
Some of our expansion efforts - largely
initiated by your Chairman have been lackluster, others have been
expensive failures.
initiated by your Chairman have been lackluster, others have been
expensive failures.
Chairman's Letter - 1978
not everything works