Buffett's Berkshire Hathaway issues annual shareholder letter for 2010

Berkshire Hathaway has released its 2010 Annual Shareholder letter (see full letter at http://www.berkshirehathaway.com/letters/2010ltr.pdf).

Some key highlights are:

• The per share book value of Class and Class B stock increased by 13% in 2010. Over the last 46 years, book value has grown from $19 to $95,453, a rate of 20.2% compounded annually (compared with 9.4% for the S&P 500 with dividends included)
• On the acquisition of Burlington North Santa Fe (rail road company) - It now appears this railroad company will increase Berkshire's "normal" earning power by nearly 40% pre-tax and by well over 30% after tax. Berkshire bought the outstanding 77% of Burlington on November 3, 2009, for $100 per share in cash and stock - a deal valued at $44 billion.
• Money will always flow toward opportunity, and there is an abundance of that in America. Commentators today often talk of "great opportunity". But think back, for example, to December 6, 1941, October 18, 1987 and September 20, 2001. No matter how serene today may be, tomorrow is always uncertain.
• Cultures self propagate. Winston Churchill once said "You shape your houses and then they shape you.". That wisdom applies to businesses as well. Bureaucratic procedures beget more bureaucracy, and imperial corporate palaces induce imperious behaviour. (As one wag put it, "You know you're no longer CEO when you get in the back seat of your car and it doesn't move."). 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. As long as Charlie and I treat your money as if it were your own, Berkshire's managersare likely to be careful with it as well.

On the latter point, I wish more of the fund managers on Wall Street and in London had the same attitude as Mr Buffett and Charlie Munger! The "sage of omaha's" treat for the day is his Diet Coke and steak in the local diner, not Krug and a Michelin star lunch. Less costs = more returns for investors.

The succession to Buffett and Munger is the key question for Berkshire Hathaway investors given their respective, 80 years and 85 years. It will be a hard act to follow. Why can't we have a Berkshire type fund on this side of the Atlantic that could have said to have delivered twice the FTSE All share over decades?