4 Lessons from the 2016 Berkshire Hathaway Shareholders Letter

March 8, 2016 Brian Beattie

On February 27th, Warren Buffett published his annual letter to the shareholders of Berkshire Hathaway. As always, this letter outlined the financial performance of Berkshire Hathaway and its subsidiaries as well as other key learnings made throughout the year. Below are four lessons that we gleamed from the Oracle of Omaha.

1. Invest for the Long Term Gains

Berkshire Hathaway wanted to improve the customer service of its railroad subsidiary, BNSF Railway. In order to do that, Berkshire Hathaway invested an unprecedented $5.8 billion during the year in capital expenditures. Management realized that changes needed to be made or else they would lose customers. Because even the most loyal of customers will eventually leave if their needs aren’t being met.

When you own and hold your companies forever, you need to invest in both customer service and product development.

2. Empower Your Employees and Give Them Autonomy

While Buffett and his business partner, Charles Munger, searched for new acquisitions to join Berkshire Hathaway, they empowered their subsidiaries to make their own acquisitions within their business units. By giving them that autonomy, it resulted in 29 bolt on acquisitions.

Growth can be categorized in two ways – organic or acquired. At Volaris, we push our businesses to achieve both and empower them to make acquisitions on their own.  

3. Hire Talented People

Berkshire Hathaway’s success is due to more than just Warren Buffett and Charles Munger. It’s because they have smart people running their subsidiaries who know their businesses inside and out. Buffett is quick to say that some of his businesses wouldn’t be where they are today if it wasn’t for the people who run them.

When making acquisitions, Buffett looks at the leadership team just as much as the financial performance of the company. Why? Because leaders make or break the business. Having talented people leading the business sets the company on the path to success.

4. Admit Your Mistakes and Learn from Them

Warren Buffett admitted that he made some misjudgements when it came to allocating capital in 2015. Instead of placing the blame on someone else, he owns up to his errors and acknowledges that not every decision is going to be a good one.

It’s easy to step up when there’s a success but a true leader takes responsibility when things are good and bad. 

About the Author

Brian Beattie

Brian Beattie is the Chief Financial Officer at Volaris Group. Besides overseeing the financial health of the company, he works closely with Volaris’ legal and M&A team on all new acquisitions. Brian is an expert on every stage of the M&A process – from sending out the non-disclosure agreement to executing the sales purchase agreement.

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