If you are a student of investing, you will often find yourself scrolling down the website of The Financial Times or thumbing through the pages of the Wall Street Journal. Maybe others pass time with CNBC or Bloomberg News on in the background. Such topics have even become mainstream in movies and bestselling books in recent years. But there is one source of investing insight and wisdom that people all too often leave untouched: shareholder letters.
The obvious starting point is Warren Buffett. He is known for his simple style of conveying complex information and clear-headed investment insights. Buffett’s letters to Berkshire Hathaway shareholders tend to be conversational regarding actual results rather than the grandiose forward-looking approach many other CEOs take. This is quite intentional as he claims that he writes the letters to his two sisters who are not directly involved in the business. He simply removes “Dear Doris and Bertie” before publishing. If you are interested in picking the brain of a successful investor, Buffett’s letters are certainly a great place to start.
“Rational people don’t risk what they have and need for what they don’t have and don’t need.”
-Warren Buffett in his 2019 Letter to Shareholders
Another interesting commentator in the CEO space is Jeff Bezos. Bezos’s letters to Amazon shareholders paint a clear picture of his expectations for the future of Amazon from day 1. In fact, if you dig into his letters you will find a new appreciation for “Day 1.” The first three paragraphs of the 1997 (a letter written to shareholders of a fledgling online book seller), paint a picture of Bezos’s vision for the future of Amazon. A future that appears to have come to fruition down to the word. Looking back, it is clear that Bezos had a vision and aligned his process to accomplish that vision.
“We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.”
-Jeff Bezos in his 1997 Letter to Shareholders
The most successful CEOs have wisdom that we can glean by reviewing their writings about how they view their business. If there is a particular company or industry leader you admire, I invite you to dig into their annual reports and see if the letters to shareholders provide any new perspectives.
