The Berkshire Hathaway annual meeting is tomorrow (May 1). This marks the second consecutive year that the meeting will be held virtually, due to the global pandemic. Ordinarily, more than 40,000 shareholders flock to Omaha, Nebraska (where Berkshire is based) to attend the meeting in person. The meeting has become something of an “event” in itself.

As per tradition, Warren Buffett, the “Oracle of Omaha”, has released his annual letter to shareholders in advance of the meeting – and it remains a must-read for businesses and investors alike.

Buffett is an easy man to trust. He writes and speaks with transparency. He highlights the good and the bad in the company’s performance. And while he speaks from the heart, his sentiments are based on data and fact.

Three things stood out to us in Buffett’s most recent letter:

  1. He owns up to his mistakes. Buffett says he over-paid for Precision Castparts in 2016, resulting in an $11 billion write down. He says this was far from the first mistake he had made that way, but notes this one “was a big one.” Buffett’s humility, and his ability to admit mistakes, remains one of the qualities we admire most.
  1. He explains his faith in letting great management run great businesses. Buffett notes that one of the main differences of Berkshire Hathaway from other conglomerates is that they don’t insist on buying 100% of businesses. He says that few great businesses are available for purchase. As a result, many conglomerates buy less than great businesses at too high a price. Berkshire has no trouble making partial investments – like its 5.4% ownership of Apple – and then letting exceptional entrepreneurs and management grow the business (and the value of the investment).
  1. And he highlights the stunning talent and ambition of entrepreneurs and business families. Buffett is the opposite of a promoter, financier or trader – and he has little patience for Wall Street and its fee-based deals. He’s a “builder” in the truest sense of the word, and greatly admires the skills, spirit and actions of entrepreneurs. Buffett devotes an entire section of his most recent letter to stories of families that have built incredible businesses. He concludes this section by writing:

“When you next fly over Knoxville or Omaha, tip your hat to the Claytons, Haslams and Blumkins as well as to the army of successful entrepreneurs who populate every part of our country. These builders needed America’s framework for prosperity – a unique experiment when it was crafted in 1789 – to achieve their potential. In turn, America needed citizens like [them] to accomplish the miracles our founding fathers sought.”

This passage in Buffett’s letter particularly hits home with us. Here in Canada, an entire “northern army” of entrepreneurs and business families have built our economy in a similar way. And they continue to drive the growth, employment and success of our own nation.

Like Buffett, we’re proud to work with quality businesses built by quality families. And we’re grateful for them.

Buffett says this better than anyone.  You can read his full letter here.