Investing
We continue to feel that the ratio of operating earnings
(before securities gains or losses) to shareholders’ equity with
all securities valued at cost is the most appropriate way to
measure any single year’s operating performance.
(before securities gains or losses) to shareholders’ equity with
all securities valued at cost is the most appropriate way to
measure any single year’s operating performance.
Chairman's Letter - 1979
seeing how much $1 of net assets generates in earnings is the best indicator of evaluating a business.
in an asset light model, you can use intangible assets - like headcount, patents, etc.
how much earnings are you generating per $1 on net assets on the balance sheet
Our experience has been that the manager of an already high-
cost operation frequently is uncommonly resourceful in finding
new ways to add to overhead, while the manager of a tightly-run
operation usually continues to find additional methods to curtail
costs, even when his costs are already well below those of his
competitors
cost operation frequently is uncommonly resourceful in finding
new ways to add to overhead, while the manager of a tightly-run
operation usually continues to find additional methods to curtail
costs, even when his costs are already well below those of his
competitors
Chairman's Letter - 1978
when spending is already high, the spender will find ways to keep spending
when spending is tight and constrained, spender will find ways to show restraint and curtail costs
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
Benchmark Part II: The Dinner
youtube.comNotes in notion
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
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
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
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