Warren Buffett’s Beige Book Guide To US Economy

The 27-page shareholder letter Berkshire Hathaway (BRKA, BRKB) chief executive Warren Buffett just released reads like a motivational speech or a pep talk trying to win over an audience that is increasingly pessimistic about America’s future: ‘In 2011, we will set a new record for capital spending–$8 billion–and spend all of the $2 billion increase in the United States,’ he writes. ‘Now, as in 1776, 1861, 1932 and 1941, America’s best days lie ahead.’

[Of course, Buffett also disclosed that Berkshire failed to outperform the S&P 500 in 2010 for the second year running, the first time in the company’s history that has happened.]

In any case, the letter is also replete with anecdotes that illuminate activity across various sectors of the U.S. economy. The style is somewhat reminiscent of the Federal Reserve’s own story-like account of economic activity, called the ‘Beige Book’ after the hue of its cover, which is released every six weeks. So, this perhaps could be dubbed the ‘Buffett Book.’ The Fed’s own latest report, by the way, is due out later this week.

The 2011 Forecast:

‘…we are envisioning a year free of mega-catastrophe in insurance and possessing a general business climate somewhat better than that of 2010 but weaker than 2005 or 2006.’

Facts & Figures:

-‘In 2010, Berkshire spent ‘$6 billion on property and equipment. Of this amount, $5.4 billion–or 90% of the total–was spent in the United States.’

-‘In 2011, we will set a new record for capital spending–$8 billion–and spend all of the $2 billion increase in the United States.’

-At GEICO…we enthusiastically spent $900 million last year on advertising to obtain policyholders who deliver us no immediate profits.’

-‘We will need…more major acquisitions. We’re prepared. Our elephant gun has been reloaded, and my trigger finger is itchy.’

-‘At Berkshire’s ‘World Headquarters’ our annual rent is $270,212. Moreover, the home-office investment in furniture, art, Coke dispenser, lunch room, high-tech equipment–you name it–totals $301,363.’

-‘TTI, our electronic components distributor, had sales 21% above its previous high [recorded in 2008] and pre-tax earnings that topped its earlier record by 58%. Its sales gains spanned three continents, with North America at 16%, Europe at 26%, and Asia at 50%.’

-‘CTB, our farm-equipment company, again set an earnings record.’

-‘At Iscar, profits were up 15% in 2010, and we may well surpass pre-recession levels in 2011. Sales are improving throughout the world, particularly in Asia.’

‘Our business related to home construction, however, continue to struggle. …profits are far below the levels of a few years ago. Combined, these operations [Johns Manville, MiTek, Shaw and Acme Brick] earned $362 million pre-tax in 2010 compared to $1.3 billion in 2006, and their employment has fallen by about 9,400.’

-‘A housing recovery will probably begin within a year or so. In any event, it is certain to occur at some point. … These businesses entered the recession strong and will exit it stronger. At Berkshire, our time horizon is forever.’

-‘Johns Manville is building a $55 million roofing membrane in Ohio, to be completed next year, and…Shaw will spend $200 million in 2011 on plant and equipment, all of it situated in America.’

-‘At Clayton, we produced 23,343 [manufactured] homes, 47% of the industry’s total of 50,046. Contrast this to the peak year of 1998, when 372,843 homes were manufactured. …the financing problems I commented on in the 2009 report continue to exacerbate the distress. To explain: Home-financing policies of our government, expressed through loans found acceptable by FHA, Freddie Mac, or Fannie Mae, favor site-built homes and work to negate the price advantage that manufactured homes offer.’

-‘If home buyers throughout the country had behaved like our buyers, America would not have had the crisis that it did. Our approach [with Clayton] was simply to get a meaningful down-payment and gear fixed monthly payments to a percentage of income.’

-‘…the third best investment I ever made was the [$31,500] purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks. [The two best investments were wedding rings.]’

‘Rail moves 42% of America’s inter-city freight, measured by ton-miles, and BNSF moves more than any other railroad–about 28%…Given the shift of population to the West, our share may well inch higher.’

‘In its electric business, MidAmerican has an [outstanding] record. Iowa rates have not increased since we purchased our operation there in 1999. During the same period, the other major electric utility in the state has raised prices more than 70% and now has rates far above ours. In certain metropolitan areas in which the two utilities operate side by side, I am told that comparable houses sell at higher prices in these cities if they are located in our service area.’

-‘MidAmerican will have 2,909 megawatts of wind generation in operation by the end of 2011, more than any other regulated electric utility in the country. The total amount the MidAmerican has invested or committed to wind is a staggering $5.4 billion. We can make this sort of investment because MidAmerican retains all of its earnings, unlike other utilities that generally pay out most of what they earn.’

But perhaps there is no better summary of present-day America than Berkshire annual meetings. Part circus, part ‘Woodstock,’ part economic stimulus:

-‘In a nine-hour period [last year], we sold 1,053 pairs of Justin boots, 12,416 pounds of See’s candy, 8,000 Dairy Queen blizzards, and 8,800 Quikut knives [that’s 16 knives per minute]. But you can do better. Remember: Anyone who says money can’t buy happiness simply hasn’t learned where to shop.’

-‘At Nebraska Furniture Mart…we will again be having ‘Berkshire Weekend’ discount pricing. Last year the store did $33.3 million of business during its annual meeting sale, a volume that–as far as I know–exceeds the one-week total of any retail store anyplace.’

-‘On Sunday, in the mall outside of Borsheims, a blindfolded Patrick Wolff, twice U.S. chess champion, will take on all comers–who will have their eyes wide open–in groups of six. Nearby, Norman Beck, a remarkable magician from Dallas, will bewilder onlookers. Additionally, we will have Bob Hamman and Sharon Osberg, two of the world’s top bridge experts…’

-‘This home office crew has my deepest thanks and deserves yours as well. Come to our Woodstock for Capitalism on April 30th and tell them so.’

伯克希尔哈撒韦(Berkshire Hathaway,简称:伯克希尔)公司的董事长巴菲特(Warren Buffett)周六发布的长达27页的致股东信读起来就像是一篇充满激情的演讲,或者说是在为对美国未来越来越悲观的读者加油打气。在报告中,巴菲特这样说:2011年,我们的资本支出将创下新的记录,达到80亿美元。其中增加的20亿美元将全部花在美国境内。现在,就如同1776年,1861年,1932年或1941年,美国的好日子就在前头。

(当然,巴菲特也披露了在2010年伯克希尔的业绩连续第二年未能超越标普500指数的涨幅,这是该公司历史上第一次发生这样的事情。)

无论如何,信中也充满了阐释美国经济各个行业的趣闻轶事。文风有点让人想起美联储每六周发布一次的“黄皮书”(Beige Book,因封面是黄褐色的,故有了这个名字),后者同样也是用讲故事的手法描述经济活动。所以,这封信或许可以叫做“巴菲特之书”(Buffett Book)。美联储最新一期的黄皮书本周晚些时候应该发布。

2011年预测:

我们预测2011年保险业没有重大灾害发生。总体商业气候比2010年略强,但不如2005年或2006年。

事实和数据:

2010年,伯克希尔在房地产和设备上花费了60亿美元,这其中90%,即54亿美元花在了美国境内。

2011年,我们的资本支出将创下新的记录,达到80亿美元。其中增加的20亿美元将全部花在美国境内。

在汽车保险公司GEICO,去年为了赢得不能直接创造利润的被保险人,我们在广告上花费了9亿美元。

我们需要进行更多的重大收购。我们准备好了。我们的猎象枪已再次上膛,我那准备扣动扳机的手指正在发痒。

在伯克希尔的全球总部,办公室的年租金是270,212美元。另外,用于家具、艺术品、可乐机、午餐室以及高科技设备的投资总共是301,363美元。

我们的电子元器件分销商TTI去年的销售额比2008年(上一次历史高位)高出了21%,税前盈利比2008年高出了58%。三大洲的销售出现了增长,其中北美洲增长了16%,欧洲增长了26%,亚洲增长了50%。

我们的农机公司CTB再一次创造了盈利记录。

在金属制造公司Iscar,2010年的利润增长了15%。在2011年,我们可能会大大超过经济衰退前的水平。全球范围内的销售额都在提高,特别是亚洲。

不过,我们的房屋建设相关业务依然处境艰难……利润远远低于几年之前的水平。2010年,这些公司(Johns Manville、MiTek、Shaw和Acme Brick)加在一起的税前收入为3.62亿美元,就业岗位减少了约9,400个,相比之下,2006年税前收入为13亿美元。

楼市可能会在大约一年内开始复苏。无论如何,楼市早晚肯定会复苏……这些企业在衰退袭来前实力很强,从衰退中走过来之后会更强。在伯克希尔,我们的投资期是没有尽头的。

Johns Manville目前正在俄亥俄州进行一个规模5,500万美元的房顶隔热建设项目,并将于明年完工。Shaw 2011年将在工厂和设备上投资两亿美元,所有的设施都位于美国国内。

在Clayton,我们建造了23,343套(预制)房屋,占了行业总数50,046套的47%。这与最多年份1998年时的372,843套房屋形成了鲜明的对比……我在2009年报告中曾谈到的融资问题目前依然在加剧不景气的程度。原因就在于我们政府的房屋融资政策,它青睐于现场建造的房屋,而否定预制房屋带来的价格优势。美国政府的房屋融资政策通过联邦住房管理局(FHA)、房地美(Freddie Mac)和房利美(Fannie Mae)认为可以接受的贷款得以体现出来。

假如全国的买房人都像我们的买家那样做,美国就不会遭遇这样的危机了。Clayton的做法只是要求适当的首付,然后把每月固定的还款额改成收入的一个百分比。

……我迄今为止做出的第三大好投资是花31,500美元买下了我现在的房子,不过假如我租房住,把买房的钱投资于股市的话,我赚的钱会多得多。(我最棒的两项投资是我们的结婚戒指。)

按吨英里计算,铁路运输占了美国城际货运的42%,而BNSF是铁路运输中运力最大的,约占了总量的28%……鉴于美国人口向西部迁移的趋势,我们的股票可能会随之上涨。

在电力业务,MidAmerican拥有出色的业绩。自1999年我们收购了爱荷华州的业务以来,那里的电费费率一直没有上调。同期,该州另外一家主要电力公司将价格上调了70%以上,目前的价格远远高于我们。在某些两大电力公司业务相邻的都市地区,据我所知,在这些城市中,位于我们服务区的房屋售价比其他地区同类房屋价格要高。

-2011年年底前,MidAmerican风力发电能力将达到290.9万千瓦,是美国受监管的电力公司中最高的。MidAmerican在风力发电领域的总投资及拨款达令人吃惊的54亿美元。我们可以进行这类投资,因为和其他电力公司不同的是,MidAmerican保留了全部的收益,而不是把大部分收益作为红利派发给了股东。

不过,或许伯克希尔的年度股东大会是对目前美国的最佳总结。一点有趣的表演、一点音乐、一点“经济刺激”:

在(去年)一段九小时的时间里,我们卖掉了1,053双Justin靴子、12,416磅时思(See’s)糖果、8,000个DQ冰淇淋、8,800把 Quikut刀具(相当于每分钟16把)。不过,你们可以做得更好。记住:要是有人说金钱买不到幸福,那他只是还不知道该上哪儿买。

在Nebraska Furniture Mart……我们将再次推出“伯克希尔周末”折扣价。去年,该店在年度股东大会折扣促销期间,实现了3,330万美元的销售额,据我所知,超过了全美任何一个零售店一周的销售额。

周日,在Borsheims外的购物中心,曾两获全美象棋冠军的沃尔夫(Patrick Wolff)将蒙住双眼,接受任何睁大双眼的挑战者的挑战,他将一次对战六人。在附近,来自达拉斯的杰出魔术师贝克(Norman Beck)会令旁观者眼花缭乱。此外,我们还会邀请到全球顶尖桥牌大师哈曼(Bob Hamman)和奥丝博格(Sharon Osberg)……

我要对我们的公司员工致以最诚挚的谢意,你们也该感谢他们。4月30日,来参加我们的年度股东大会,向他们表示感谢吧。

Kelly Evans

http://cn.wsj.com/gb/20110228/bog114913.asp
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One Response to Warren Buffett’s Beige Book Guide To US Economy

  1. Or a house (like most other Forms are considered)?

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