Here are the highlights (for me, at least):
p. 4 - When writing about an Israeli-based company, which Berkshire acquired in 2006, ISCAR, "the maker of consumable cutting tools that are used in conjunction with large and expensive machine tools," Buffett wrote: "ISCAR makes money because it enables its customers to make more money. There is no better recipe for continued success."
p. 12 - Buffett is tireless in promoting the businesses Berkshire owns. Sometimes with humor. In writing about improved performance at NetJets, he says that "at Berkshire, and at a number of our subsidiaries,
NetJets aircraft are an indispensable business tool. I also have a contract for personal use with NetJets and so do members of my family and most Berkshire directors. (None of us, I should add, gets a discount.) Once you've flown NetJets, returning to commercial flights is like going back to holding hands."
And later (p. 22) when outlining the plans for the annual meeting, Buffett says this about shopping among the Berkshire companies with displays for shareholders: "Stop by the NetJets booth at the Qwest to learn about viewing these plans. Come to Omaha by bus; leave in your new plane. And take all the hair gel that you wish on board with you."
p. 17 - One of the dominant themes of this year's letter is management succession. "The good news: At 76, I feel terrific and, according to all measurable indicators, am in excellent health. It's amazing what Cherry Coke and hamburgers will do for a fellow."
p. 18 - He's subtle, but I think taking a dig at the inefficiencies of the federal government and its certain inability to qualify to run any of Berkshire's businesses. Here's a relatively long quote under the heading of "This and That":
"Berkshire will pay about $4.4 billion in federal income tax on its 2006 earnings. In its last fiscal year the U.S. Government spent $2.6 trillion, or about $7 billion per day. Thus, for more than half of one day, Berkshire picked up the tab for all federal expenditures, ranging from Social Security and Medicare payments to the cost of our armed services. Had there been only 600 taxpayers like Berkshire, no one else in America would have needed to pay any federal income or payroll taxes.
"Our federal return last year, we should add, ran to 9,386 pages. To handle this filing, state and foreign tax returns, a myriad of SEC requirements, and all of the other matters involved in running Berkshire, we have gone all the way up to 19 employees at World Headquarters.
"This crew occupies 9,708 square feet of space, and Charlie [Munger, Buffett's management partner] - at World Headquarters West in Los Angeles - uses another 655 square feet. Our home-office payroll, including benefits and counting both locations, totaled $3,531,978 last year. We're careful when spending your money.
"Corporate bigwigs often complain about government spending, criticizing bureaucrats who they say spend taxpayers' money differently from how they would if it were their own. But sometimes the financial behavior of executives will also vary based on whose wallet is getting depleted. Here's an illustrative tale from my days at Salomon. In the 1980s the company had a barber, Jimmy by name, who came in weekly to give free haircuts to the top brass. A manicurist was also on tap. Then, because of a cost-cutting drive, patrons were told to pay their own way. One top executive (not the CEO) who had previously visited Jimmy weekly went immediately to a once-every-three-weeks schedule."
Don't limit yourself to the highlights I've chosen to post here. There's probably no better way to get a dose of good management technique - and humility - than by reading the entire "Letter to Shareholders" for this or any Berkshire year. Here's the link to download the 2006 and all others.
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