Over the past two weeks both Warren Buffett at Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) and Prem Watsa at Fairfax Financials (FRFHF.PK, Financial) released their shareholders. Both are great reads and investors can learn tremendously from these letters. We also published key takeaways from Buffett’s letter and Watsa’s letter.
These are the links to the letters: Warren Buffett letter to shareholders, and Prem Watsa letter to shareholders.
Under Buffett’s leadership, Berkshire Hathaway’s book value has grown from $66 a share in 1970 to $94,730 a share. For the thirty years from 1970 to 2000, Berkshire book value grew at about 25% a year. The rate of growth was 6.6% in the years from 2000 to 2010.
Similarly, Prem Watsa has grown Fairfax’s book value at 25% per year to $379 a share for over 20 years. These are the annual grow rates of the book values of Berkshire Hathaway and Fairfax in the past 20 years:
We can see that both Berkshire Hathaway and Fairfax had good years in the roaring 1990s. The growth rate slowed down dramatically in the 2000s. Berkshire has more consistent growth, although the best years in 2000s are quite random, due to the different investment philosophies of Warren Buffett and Prem Watsa. The details of their differences will be discussed in another article.
For the years from 1991 to 2000, both Berkshire Hathaway and Fairfax grew about 25% a year with their book values, while the S&P500 delivered a return of 17.5%. From 2001 to 2010, the S&P 500 barely delivered any return, Fairfax book value grew about 10% a year, while Berkshire book value grew about 9% a year.
With the solid and astonishing growth, both Berkshire Hathaway and Fairfax rewarded their shareholders handsomely. From Jan. 1991 to Dec. 2010, Berkshire Hathaway A shares grew from $8,300 to $120,450, a return of 1400%, while the S&P500 gained 580. Since went public in 2002, Fairfax stock gained 423%, while S&P 500 just gained 32%. In addition Fairfax paid special dividends to shareholder holders every year from 2003 to 2009.
Isn’t this what Warren Buffett said: “If the value grows, the stock will eventually follow?”
These are the links to the letters: Warren Buffett letter to shareholders, and Prem Watsa letter to shareholders.
Under Buffett’s leadership, Berkshire Hathaway’s book value has grown from $66 a share in 1970 to $94,730 a share. For the thirty years from 1970 to 2000, Berkshire book value grew at about 25% a year. The rate of growth was 6.6% in the years from 2000 to 2010.
Similarly, Prem Watsa has grown Fairfax’s book value at 25% per year to $379 a share for over 20 years. These are the annual grow rates of the book values of Berkshire Hathaway and Fairfax in the past 20 years:
| Year | Fairfax Book Value per share (%) | Berkshire Book Value per share (%) | S&P 500 (%) |
| 2010 | 3 | 13 | 15.1 |
| 2009 | 33 | 19.8 | 26.5 |
| 2008 | 21 | -9.6 | -37 |
| 2007 | 53 | 11 | 5.61 |
| 2006 | 9 | 18.4 | 15.79 |
| 2005 | -16 | 6.4 | 4.91 |
| 2004 | -1 | 10.5 | 12 |
| 2003 | 31 | 21 | 28.7 |
| 2002 | 7 | 10 | -22.1 |
| 2001 | -21 | -6.2 | -11.9 |
| 2000 | -5 | 6.5 | -9.1 |
| 1999 | 38 | 0.5 | 21 |
| 1998 | 30 | 48.3 | 28.6 |
| 1997 | 36 | 34.1 | 33.4 |
| 1996 | 63 | 31.8 | 23 |
| 1995 | 25 | 43.1 | 37.6 |
| 1994 | 18 | 13.9 | 1.3 |
| 1993 | 42 | 14.3 | 10.1 |
| 1992 | 1 | 20.3 | 7.6 |
| 1991 | 24 | 39.6 | 30.5 |
We can see that both Berkshire Hathaway and Fairfax had good years in the roaring 1990s. The growth rate slowed down dramatically in the 2000s. Berkshire has more consistent growth, although the best years in 2000s are quite random, due to the different investment philosophies of Warren Buffett and Prem Watsa. The details of their differences will be discussed in another article.
For the years from 1991 to 2000, both Berkshire Hathaway and Fairfax grew about 25% a year with their book values, while the S&P500 delivered a return of 17.5%. From 2001 to 2010, the S&P 500 barely delivered any return, Fairfax book value grew about 10% a year, while Berkshire book value grew about 9% a year.
With the solid and astonishing growth, both Berkshire Hathaway and Fairfax rewarded their shareholders handsomely. From Jan. 1991 to Dec. 2010, Berkshire Hathaway A shares grew from $8,300 to $120,450, a return of 1400%, while the S&P500 gained 580. Since went public in 2002, Fairfax stock gained 423%, while S&P 500 just gained 32%. In addition Fairfax paid special dividends to shareholder holders every year from 2003 to 2009.
Isn’t this what Warren Buffett said: “If the value grows, the stock will eventually follow?”
