Max Olson Helps Berkshire Hathaway with Letter Compilation
Berkshire Hathaway used to compile bound volumes of Warren Buffett’s letters to its shareholders but stopped that practice years ago. Only collectors could put their hands on such a thing. Until now. A young fan of the man and company has published a full compilation and put it on sale for $24.50 plus shipping. It is a good service and I am grateful to the fan, Max Olson, for sending me a comp copy (pictured at right; he sent them because I published The Essays of Warren Buffett: Lessons for Corporate America).
Berkshire annual reports of the late 1980s and early 1990s (some pictured at left), all stated that compilations of letters from earlier annual reports, dating to 1977 (also pictured), were available on request from the company without charge. By the mid-1990s demand had begun to rise, prompting a new policy: continuing to offer the historical compilations to shareholders for free, but charging non-shareholders $15 (for production and shipping).
Beginning with the 1997 report, the letters, again dating to 1977, were made freely available on the internet (and they still are there). The two-volume historical compilation remained available, but now at a charge of $30, payable by non-shareholders and shareholders alike (shipping included). In 1999, the printed set became a three-volume issue and the charge was raised to $35 for all.
Those printed volumes have not been available for several years (and I feel lucky to have some in my library). That’s been a relief to staff at Berkshire’s famously minimalist headquarters, a handful of people with no time to process payments and stuff envelopes. It is this lacuna that Max Olson’s alternative fills, a good job, especially at the price of $24.50 (plus shipping).
Olson’s volume is not exactly like what the company used to publish but it is close. There is no varnish, no commentary or much context, and little but the letters. Olson adds two interesting charts. One shows the historical relationship between Berkshire’s cost of using customer insurance premiums (called float) and the prevailing cost of money (proxied by government bonds). That difference has been a source of Berkshire’s impressive financial success. The other interesting chart shows the acquisitions Berkshire has made over the years, a useful image.
There are four other notable differences between the new result and the historical corporate compilations. First, the Olson volume includes letters, from 1966-1969, signed by Buffett’s predecessors, members of the Chace family; there is a notation reading [Letter written by Warren E. Buffett] but no explanation. It would be interesting to know why Buffett wrote but did not sign those letters. On the other hand, these letters are short and, particularly compared to the letters Buffett would write from 1977 on, dull.
Second, the Olson compilation contains letters for 1970-1976. Though signed by Buffett, letters from those years were omitted from all versions of the company’s various compilations. As far as I can tell, and as far as references appear in the annual reports dating to the late 1980s, all compilations begin with 1977; the internet menu dates only to 1977 as well. Again, these early letters are comparatively short, less colorful than those that follow and seem to contain information that later letters also present in superior ways.
Third, the official Berkshire corporate compilations also contained letters of Charlie Munger about important Berkshire subsidiaries, Blue Chip Stamps from 1981 and 1982 and WESCO Financial Corp. from 1989 and 1990. These are not part of the Olson volume. But some of these offer nice contributions to the overall state of Berkshire and its thinking in any given year. (I excerpt from these in my selective and thematic arrangement, The Essays of Warren Buffett: Lessons for Corporate America.)
Fourth, and most important, the company’s historic compilations always warned in the table of contents: “All of the letters are reprinted exactly as written and, therefore, considerable repetition of basic business information occurs in this compilation.” Eliminating the repetition was one of my goals in The Essays of Warren Buffett; for this full compilation, carrying over the old warning might have been a good idea.
Quibbles aside, Max Olson had a good idea and provides a useful service. I look forward to dog-earing and highlighting this tome. Thanks Max!