Business Folk

Most, if not all, annual reports for 2013 have been published by now, and as investors attempt to glean what went right and what went wrong by wading through pages upon pages of corporate detritus, often the most readable section is that containing the shareholder letter.

Warren Buffet is arguably the most famous writer of shareholder letters because of his folksy, straight-to-the point style.  Buffet is so darn good at writing shareholder letters that myriad chairmen and chief executive officers attempt to emulate his knack for prose. The problem is, Buffet writes in his own voice, and trying to inject his vernacular into your shareholder letter could smack of inauthenticity, or even worse, someone might call you a poser.

Instead of invoking Buffet when trying to conjure up some down-home writing, l’d rather refer to his style as “business folk.”  Yes, it sounds like a music genre for MBAs.  But writing in the style of “business folk” seems a lot less intimidating than trying to emulate a genius.

Following are additional word-buffing tips:

    • Avoid clichés and creative analogies.  Yes, it is tempting to use catch phrases and descriptors to tell the company’s story, but words can easily become distracting, and soon enough the reader loses focus.


    • Write as quickly as possible.  This ensures you are writing what you know and staying on point.  It also helps lay a foundation that you can wordsmith later.


    • Use metrics that help demonstrate themes.  Numbers are great because they are hard facts, but they also pose challenges because they don’t always tell the full story.  Try to use numbers that help shareholders understand the overall direction of the company.


    • Describe the company’s strategic direction.  Many executives underestimate the power of writing and misuse the activity, particularly in shareholder letters, to recapitulate old news.  Effective writing presents a roadmap that can help manage expectations, as well as demonstrate leadership.


    • Read what you write out loud to determine if it actually sounds like something you would say.  If you employ a lot of three-syllable words in your daily conversations, then maybe your writing should contain three-syllable words.  (Note: If expletives factor into your daily conversations, then you should edit those out.)


    • Use subheads to break up thoughts.  It is easy for readers to get lost in corporate minutiae, which is why it is helpful to have guideposts.  Subheads help hammer home themes we want investor audiences to remember.


    • Make sure whatever you write is in reader-friendly formats both online and in print.


    • Words are more important than flashy design.  Sure, an interactive quarterly report is nice, but it’s the words that will help investors determine if you have “a wonderful company at a fair price (rather) than a fair company at a wonderful price,” according to a quote from Warren Buffet’s shareholder letter in 1989.


— Evan Pondel,


It has yet to be determined whether Warren Buffet and Jimmy Buffet are related.  The two certainly have taken divergent paths in life, and yet they share one similarity that is undisputable:  Both have amassed wealth far beyond what the average American can fathom.
The two Buffets also share another characteristic:  humility.  Whether it’s Jimmy crooning about “Wastin’ away in Margaritaville,” or the self-deprecating, folksy tone of Warren’s shareholder letters, the Buffets have their way with words.
And so, as Jimmy says, “if you’re living on sponge cake … and there’s booze in your blender,” why not take a little time to consider the following key message points from Warren Buffet’s most recent musings in his 2008 shareholder letter for Berkshire Hathaway.
“By year end, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.”
“The watchword throughout the country became the creed I saw on restaurant walls when I was young: ‘In God we trust; all others pay cash.’”
“The U.S. – and much of the world – became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear.”
“In poker terms, the Treasury and the Fed have gone ‘all in.’”
“Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel.”
“Weaning these entities from the public teat will be a political challenge. They won’t leave willingly.”
“Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”
“During 2008 I did some dumb things in investments.”
“Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.”
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
“We like buying underpriced securities, but we like buying fairly-priced operating businesses even more.”
“Home purchases should involve an honest-to-God down payment of at least 10% and monthly payments that can be comfortably handled by the borrower’s income.”
“Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective. Keeping them in their homes should be the ambition.”
“Beware of geeks bearing formulas.”
“We never want to count on the kindness of strangers in order to meet tomorrow’s obligations.”
“Beware of the investment activity that produces applause; the great moves are usually greeted by yawns.”
“Derivatives are dangerous.”
“Participants seeking to dodge troubles face the same problem as someone seeking to avoid venereal disease: It’s not just whom you sleep with, but also whom they are sleeping with.”


Evan Pondel,

Berkshire Special: Buffett Lunch for $650,000

Last year’s charity lunch with Warren Buffett, the CEO of Berkshire Hathaway and arguably one of the world’s best-known and most knowledgeable stock investors, cost a California-based investor $650,000.  For that sum, the Californian and seven of his closest friends had lunch with Mr. Buffett at Smith & Wollensky, a storied New York City steakhouse.
The bidding on eBay for this year’s charity lunch, also to be held at Smith & Wollensky, began yesterday and ends on June 27.  At present the lunch is being valued at $41,100 (the highest of five current bids).
All proceeds raised from the auction will go to the Glide Foundation, an organization that is working to alleviate human suffering and poverty in the San Francisco Bay Area.  Mr. Buffett’s charity lunches have raised more than $2.0 million for the organization since going online in 2003.
Personally, I think this would be the opportunity of a lifetime, but few of us have enough disposable income for a $650,000 steak (and maybe a glass of wine and a side dish of potatoes au gratin).  Even split eight ways, that’s a hefty $81,250 per person.  I guess I’ll just have to log on the Internet for free after the event to see how it went and whether Mr. Buffett provided any sage investing advice for today’s climate.
Given the extreme turmoil in the financial markets of late, how much would you pay for the ability to hear what Mr. Buffett has to say?  Tune back in after June 27 to see the winning bid.


Laurie Berman, Senior Vice President,