058-1: Investing Intensive 2007-2009

Table of Contents

Part 1:
1. 2007 Letter
2. 2008 Letter
3. 2009 Letter
Part 2:
4. 2010 Letter
5. 2011 Letter

This issue does not and is not meant to fully summarize or recap the Berkshire Hathaway shareholder letters. Rather, it includes the tidbits I found interesting and wanted to highlight during my reading. Always do your own reading and come to your own conclusions about Mr. Buffett’s opinions.

How to find the quotations: It is difficult to cite specific sections of a given letter because there are no consistent page numbers and the sections are not numbered. The easiest way to find the quote is to open a PDF of the letter and use the search feature.

(Things never go smoothly upon returning! I’ve not been feeling well this week, even more than usual, and then for reasons past the understanding this email was too packed full with content to go out as one email. I’ve split it into two emails to solve that problem. Still, Mr. Buffett remains a joy. Reading these letters is a privilege. Looking forward to two more weeks of reading and then gathering together all of the teachings from this round of the Investing Intensive. Enjoy the coming week! –Danielle)

1. 2007 Berkshire Hathaway Letter, dated February 2008 (no specific date)

2007 Letter in PDF from Berkshire Hathaway website

Major Berkshire investments reported in the letter:

Standard of success mentioned at the beginning: net worth, per-share book value, and overall book value.

Highlights:

  • This letter was about remembering and sticking to what’s important in investing. Evaluating companies, being very careful with derivatives, and hedging with currency positions.
  • How to evaluate investments. Not by stock price! “I should emphasize that we do not measure the progress of our investments by what their market prices do during any given year. Rather, we evaluate their performance by the two methods we apply to the businesses we own. The first test is improvement in earnings, with our making due allowance for industry conditions. The second test, more subjective, is whether their “moats” – a metaphor for the superiorities they possess that make life difficult for their competitors – have widened during the year.” (emphais mine)

Checklist points:

  • Lovely section that appears to have been written entirely for our checklist, entitled, “Businesses – The Great, the Good and the Gruesome.”
    • “Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag.”
      • “A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success.”
        • “Our criterion of “enduring” causes us to rule out companies in industries prone to rapid and continuous change….A moat that must be continuously rebuilt will eventually be no moat at all.”
      • “Additionally, this criterion eliminates the business whose success depends on having a great manager. Of course, a terrific CEO is a huge asset for any enterprise, and at Berkshire we have an abundance of these managers. Their abilities have created billions of dollars of value that would never have materialized if typical CEOs had been running their businesses. But if a business requires a superstar to produce great results, the business itself cannot be deemed great.”
    • “Long-term competitive advantage in a stable industry is what we seek in a business. If that comes with rapid organic growth, great. But even without organic growth, such a business is rewarding.” (emphasis mine)
    • Great, and quick, rundown of how he evaluated buying See’s Candy for his price. “We bought See’s for $25 million when its sales were $30 million and pre-tax earnings were less than $5 million. The capital then required to conduct the business was $8 million. (Modest seasonal debt was also needed for a few months each year.) Consequently, the company was earning 60% pre-tax on invested capital.”
      • “Typically, companies that increase their earnings from $5 million to $82 million require, say, $400 million or so of capital investment to finance their growth. That’s because growing businesses have both working capital needs that increase in proportion to sales growth and significant requirements for fixed asset investments. A company that needs large increases in capital to engender its growth may well prove to be a satisfactory investment. There is, to follow through on our example, nothing shabby about earning $82 million pre-tax on $400 million of net tangible assets. But that equation for the owner is vastly different from the See’s situation. It’s far better to have an ever-increasing stream of earnings with virtually no major capital requirements. Ask Microsoft or Google.” (emphasis mine)
    • Conversely: “The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines.”
    • “To sum up, think of three types of “savings accounts.” The great one pays an extraordinarily high interest rate that will rise as the years pass. The good one pays an attractive rate of interest that will be earned also on deposits that are added. Finally, the gruesome account both pays an inadequate interest rate and requires you to keep adding money at those disappointing returns.”
  • I love this point for the checklist: if it has a great reputation, is it backed up by today’s reality? “For decades, General Re was the Tiffany of reinsurers, admired by all for its underwriting skills and discipline. This reputation, unfortunately, outlived its factual underpinnings, a flaw that I completely missed when I made the decision in 1998 to merge with General Re. The General Re of 1998 was not operated as the General Re of 1968 or 1978.” (Of course, in this instance, even Mr. Buffett, who could ask and get anything answered, didn’t know about the problems General Re had within. By saying this here, though – that in 1998 it was not the same as 1978 – I think he’s tacitly saying he didn’t look hard enough in 1998.)

Particular points of candor:

  • Good lord…this is such an almost cautionary tale. Don’t be too strict on price? Is that the lesson? Or too cheap? “…I almost blew the See’s purchase. The seller was asking $30 million, and I was adamant about not going above $25 million. Fortunately, he caved. Otherwise I would have balked, and that $1.35 billion would have gone to somebody else.”
  • “Finally, I made an even worse mistake when I said “yes” to Dexter, a shoe business I bought in 1993 for $433 million in Berkshire stock (25,203 shares of A). What I had assessed as durable competitive advantage vanished within a few years. But that’s just the beginning: By using Berkshire stock, I compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business – one now valued at $220 billion – to buy a worthless business. To date, Dexter is the worst deal that I’ve made. But I’ll make more mistakes in the future – you can bet on that.” (emphasis mine)

I was also struck by:

  • Looks good on paper doesn’t mean much (as anyone who’s ever dated anyone already knows). “(An aside: Charlie and I are not big fans of resumes. Instead, we focus on brains, passion and integrity. Another of our great managers is Cathy Baron Tamraz, who has significantly increased Business Wire’s earnings since we purchased it early in 2006. She is an owner’s dream. It is positively dangerous to stand between Cathy and a business prospect. Cathy, it should be noted, began her career as a cab driver.)” (emphasis mine)
  • NetJets’ continuous losses clearly rankle, yet he stuck with the company, and I’m struck by his reasoning. Though losing money, NetJets increased its massive network moat and improved its brand. He’ll stick with a company with moat and prospects. It’s a bit Amazonian, no? At some point the earnings follow – or else the whole business model just doesn’t work.
  • Interesting section on derivatives. He wants his readers to understand he doesn’t view what he’s done as risky. “…in all cases we hold the money, which means that we have no counterparty risk.” Huge point. Especially considering we can see the future and know what 2008 will bring in the financial markets.
  • Ah! The many years of decrying options accounting in his letters ends here. “”Decades of option-accounting nonsense have now been put to rest…” while pension accounting remains suspect, and predictions of huge equity returns are unrealistic. “During the 20th Century, the Dow advanced from 66 to 11,497. This gain, though it appears huge, shrinks to 5.3% when compounded annually. An investor who owned the Dow throughout the century would also have received generous dividends for much of the period, but only about 2% or so in the final years. It was a wonderful century. Think now about this century. For investors to merely match that 5.3% market-value gain, the Dow – recently below 13,000 – would need to close at about 2,000,000 on December 31, 2099….I should mention that people who expect to earn 10% annually from equities during this century envisioning that 2% of that will come from dividends and 8% from price appreciation – are implicitly forecasting a level of about 24,000,000 on the Dow by 2100. If your adviser talks to you about double-digit returns from equities, explain this math to him – not that it will faze him. Many helpers are apparently direct descendants of the queen in Alice in Wonderland, who said: “Why, sometimes I’ve believed as many as six impossible things before breakfast.” Beware the glib helper who fills your head with fantasies while he fills his pockets with fees….What is no puzzle, however, is why CEOs opt for a high investment assumption: It lets them report higher earnings. And if they are wrong, as I believe they are, the chickens won’t come home to roost until long after they retire.” (emphasis mine)

2. 2008 Berkshire Hathaway Letter, dated February 27, 2009

2008 Letter in PDF from Berkshire Hathaway website

Major Berkshire investments reported in the letter:

Standard of success failure mentioned at the beginning: net worth, per-share book value, and overall book value.

  • I love that he emphasized with italics “decrease” at the very top of the letter, instead of obfuscating. “Our decrease in net worth during 2008 was $11.5 billion, which reduced the per-share book value of both our Class A and Class B stock by 9.6%. Over the last 44 years (that is, since present management took over) book value has grown from $19 to $70,530, a rate of 20.3% compounded annually.” (emphasis Buffett’s)

Highlights:

  • This letter was about the financial meltdown. It is WELL worth reading in full. Excerpts here don’t do it justice. His thoughts are rich, nuanced, cautionary, and educational.
  • I was so struck by his commentary at the opening of the letter. After the dot-com bust and 9/11, he said almost nothing about the events themselves; rather, only how Berkshire was responding. But here, he wrote about the overarching events concisely and directly.
    • “The table on the preceding page, recording both the 44-year performance of Berkshire’s book value and the S&P 500 index, shows that 2008 was the worst year for each. The period was devastating as well for corporate and municipal bonds, real estate and commodities. By yearend, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game. As the year progressed, a series of life-threatening problems within many of the world’s great financial institutions was unveiled. This led to a dysfunctional credit market that in important respects soon turned non-functional. The watchword throughout the country became the creed I saw on restaurant walls when I was young: “In God we trust; all others pay cash.” By the fourth quarter, the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country. A freefall in business activity ensued, accelerating at a pace that I have never before witnessed. The U.S. – and much of the world – became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear. This debilitating spiral has spurred our government to take massive action. In poker terms, the Treasury and the Fed have gone “all in.” Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects….Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown. Had one occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”
    • The economy and the stock market are connected, but tenuously. “Take a look again at the 44-year table on page 2. In 75% of those years, the S&P stocks recorded a gain. I would guess that a roughly similar percentage of years will be positive in the next 44. But neither Charlie Munger, my partner in running Berkshire, nor I can predict the winning and losing years in advance. (In our usual opinionated view, we don’t think anyone else can either.) We’re certain, for example, that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond – but that conclusion does not tell us whether the stock market will rise or fall.” (emphasis mine)

Checklist points:

  • Principles for life. “In good years and bad, Charlie and I simply focus on four goals: (1) maintaining Berkshire’s Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources of earnings and cash; (2) widening the “moats” around our operating businesses that give them durable competitive advantages; (3) acquiring and developing new and varied streams of earnings; (4) expanding and nurturing the cadre of outstanding operating managers who, over the years, have delivered Berkshire exceptional results.”
  • He notes that insurance and utilities aren’t correlated to the general economy, and that those Berkshire groups actually did relatively well in 2008. Antifragility in action. More detail: “As we view GEICO’s current opportunities, Tony and I feel like two hungry mosquitoes in a nudist camp. Juicy targets are everywhere. First, and most important, our new business in auto insurance is now exploding. Americans are focused on saving money as never before, and they are flocking to GEICO.”
  • These lessons are everything. Looking backward, using old models and formulas: Dangerous.
    • “Indeed, the stupefying losses in mortgage-related securities came in large part because of flawed, history-based models used by salesmen, rating agencies and investors. These parties looked at loss experience over periods when home prices rose only moderately and speculation in houses was negligible. They then made this experience a yardstick for evaluating future losses. They blissfully ignored the fact that house prices had recently skyrocketed, loan practices had deteriorated and many buyers had opted for houses they couldn’t afford. In short, universe “past” and universe “current” had very different characteristics. But lenders, government and media largely failed to recognize this all-important fact.”
    • “Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.” (emphasis mine)
  • “Approval, though, is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re-examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns.” (emphasis mine)

Particular points of candor:

  • “During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt. I will tell you more about these later. Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.”
  • I just always cackle when someone points out the etymological history of private equity. For the record, some private equity actually do get businesses rolling again (like Berkshire, which could absolutely be called private equity), but it is true that many still follow the model of their ancestors. “Some years back our competitors were known as “leveraged-buyout operators.” But LBO became a bad name. So in Orwellian fashion, the buyout firms decided to change their moniker. What they did not change, though, were the essential ingredients of their previous operations, including their cherished fee structures and love of leverage. Their new label became “private equity,” a name that turns the facts upside-down: A purchase of a business by these firms almost invariably results in dramatic reductions in the equity portion of the acquiree’s capital structure compared to that previously existing.”
  • It’s my opinion this precarious rerun is happening now, all over again. What happens when interest rates rise? Who, and which countries, will not be able to pay their debts? “This 1997-2000 fiasco should have served as a canary-in-the-coal-mine warning for the far-larger conventional housing market. But investors, government and rating agencies learned exactly nothing from the manufactured-home debacle. Instead, in an eerie rerun of that disaster, the same mistakes were repeated with conventional homes in the 2004-07 period: Lenders happily made loans that borrowers couldn’t repay out of their incomes, and borrowers just as happily signed up to meet those payments. Both parties counted on “house-price appreciation” to make this otherwise impossible arrangement work. It was Scarlett O’Hara all over again: “I’ll think about it tomorrow.””
    • And more: “Funders that have access to any sort of government guarantee banks with FDIC-insured deposits, large entities with commercial paper now backed by the Federal Reserve, and others who are using imaginative methods (or lobbying skills) to come under the government’s umbrella – have money costs that are minimal. Conversely, highly-rated companies, such as Berkshire, are experiencing borrowing costs that, in relation to Treasury rates, are at record levels. Moreover, funds are abundant for the government-guaranteed borrower but often scarce for others, no matter how creditworthy they may be. This unprecedented “spread” in the cost of money makes it unprofitable for any lender who doesn’t enjoy government-guaranteed funds to go up against those with a favored status. Government is determining the “haves” and “have-nots.”” (emphasis mine)
    • “Though Berkshire’s credit is pristine – we are one of only seven AAA corporations in the country – our cost of borrowing is now far higher than competitors with shaky balance sheets but government backing. At the moment, it is much better to be a financial cripple with a government guarantee than a Gibraltar without one.” (emphasis mine)
    • Berkshire lost its AAA rating the next year: Moody’s and S&P. The only AAA corporations in the US right now are Microsoft and Johnson & Johnson. Fascinating. Does that say more about the ratings agencies or the companies? Here’s a wiki list of companies by credit rating (no promises it’s accurate). Interesting commentary I randomly found online, for some context.

I was also struck by:

  • Berkshire was able to buy some companies during the crash. Any great company with cash on hand and little debt could do the same. “Overall, these [Berkshire] companies improved their competitive positions last year, partly because our financial strength let us make advantageous tuck-in acquisitions. In contrast, many competitors were treading water (or sinking)….MiTek, Benjamin Moore, Acme Brick, Forest River, Marmon and CTB also made one or more acquisitions during the year.”
  • Fascinating section entitled “Tax-Exempt Bond Insurance” which is too long and detailed to excerpt here. He goes into how much WHO provides lending and insurance affects solutions to a crisis.
    • One bit: “A universe of tax-exempts fully covered by insurance would be certain to have a somewhat different loss experience from a group of uninsured, but otherwise similar bonds, the only question being how different. To understand why, let’s go back to 1975 when New York City was on the edge of bankruptcy. At the time its bonds – virtually all uninsured – were heavily held by the city’s wealthier residents as well as by New York banks and other institutions. These local bondholders deeply desired to solve the city’s fiscal problems. So before long, concessions and cooperation from a host of involved constituencies produced a solution. Without one, it was apparent to all that New York’s citizens and businesses would have experienced widespread and severe financial losses from their bond holdings. Now, imagine that all of the city’s bonds had instead been insured by Berkshire. Would similar belt-tightening, tax increases, labor concessions, etc. have been forthcoming? Of course not. At a minimum, Berkshire would have been asked to “share” in the required sacrifices. And, considering our deep pockets, the required contribution would most certainly have been substantial.” (emphasis mine)
  • Again he went even more deeply into his derivatives trades. So interesting that he put it all out there! Incredibly educational and well worth reading the entire section. He began, “With apologies to those who are not fascinated by financial instruments, I will explain them in excruciating detail.”

3. 2009 Berkshire Hathaway Letter, dated February 26, 2010

2009 Letter in PDF from Berkshire Hathaway website

Major Berkshire investments reported in the letter:

Standard of success mentioned at the beginning: net worth, per-share book value, and overall book value.

Highlights:

  • This letter was about Berkshire’s acquisition of Burlington Northern Santa Fe railroad, and explaining Berkshire’s methods to the new shareholders coming into Berkshire because of it. “In this letter we will also review some of the basics of our business, hoping to provide both a freshman orientation session for our BNSF newcomers and a refresher course for Berkshire veterans.”
    • Have a standard for success from the beginning. “From the start, Charlie and I have believed in having a rational and unbending standard for measuring what we have – or have not – accomplished. That keeps us from the temptation of seeing where the arrow of performance lands and then painting the bull’s eye around it. Selecting the S&P 500 as our bogey was an easy choice because our shareholders, at virtually no cost, can match its performance by holding an index fund. Why should they pay us for merely duplicating that result? A more difficult decision for us was how to measure the progress of Berkshire versus the S&P.”
    • Stock price is too erratic from year to year. So: “The ideal standard for measuring our yearly progress would be the change in Berkshire’s per-share intrinsic value. Alas, that value cannot be calculated with anything close to precision, so we instead use a crude proxy for it: per-share book value.” (emphasis mine)
    • He settled on these benchmarks: “First, we have never had any five-year period beginning with 1965-69 and ending with 2005-09 – and there have been 41 of these – during which our gain in book value did not exceed the S&P’s gain. Second, though we have lagged the S&P in some years that were positive for the market, we have consistently done better than the S&P in the eleven years during which it delivered negative results. In other words, our defense has been better than our offense, and that’s likely to continue.”
  • “In the end, what counts in investing is what you pay for a business – through the purchase of a small piece of it in the stock market – and what that business earns in the succeeding decade or two.”

Checklist points:

  • Their checklist points:
    • “Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be.”
    • “Just because Charlie and I can clearly see dramatic growth ahead for an industry does not mean we can judge what its profit margins and returns on capital will be as a host of competitors battle for supremacy. At Berkshire we will stick with businesses whose profit picture for decades to come seems reasonably predictable. Even then, we will make plenty of mistakes.”
    • “[We want investors who] wish to make a long-term investment in a business they themselves understand and because it’s one that follows policies with which they concur.” (italics Buffett’s, bold mine)
  • Rare, but terribly important when found. “In my view a board of directors of a huge financial institution is derelict if it does not insist that its CEO bear full responsibility for risk control. If he’s incapable of handling that job, he should look for other employment. And if he fails at it – with the government thereupon required to step in with funds or guarantees the financial consequences for him and his board should be severe.” (emphasis mine)
    • “The CEOs and directors of the failed companies, however, have largely gone unscathed. Their fortunes may have been diminished by the disasters they oversaw, but they still live in grand style. It is the behavior of these CEOs and directors that needs to be changed: If their institutions and the country are harmed by their recklessness, they should pay a heavy price – one not reimbursable by the companies they’ve damaged nor by insurance. CEOs and, in many cases, directors have long benefitted from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well.” I don’t see much having changed in the last ten years. Still no real sticks. Lots of carrots.
  • Mr. Buffett paid for part of the BNSF acquisition with Berkshire stock, and he spent a few paragraphs rationalizing it because he’s railed against doing so many times in his letters. Appropriate, I think, for him to explain why. And it’s a checklist point to look at whether, and how many, acquisitions of a potentially investable company have been bought with stock. “In the end, Charlie and I decided that the disadvantage of paying 30% of the price through stock was offset by the opportunity the acquisition gave us to deploy $22 billion of cash in a business we understood and liked for the long term. It has the additional virtue of being run by Matt Rose, whom we trust and admire. We also like the prospect of investing additional billions over the years at reasonable rates of return. But the final decision was a close one. If we had needed to use more stock to make the acquisition, it would in fact have made no sense. We would have then been giving up more than we were getting.”
    • Additionally, he told a quick story about a bad deal made for stock, not cash. My takeaway was his last point: “Our bank sold at a modest price (that’s why we had bought into it), hovering near book value and possessing a very low price/earnings ratio. Alongside, though, the small-bank owner was being wooed by other large banks in the state and was holding out for a price close to three times book value. Moreover, he wanted stock, not cash. Naturally, our fellows caved in and agreed to this value-destroying deal. “We need to show that we are in the hunt. Besides, it’s only a small deal,” they said, as if only major harm to shareholders would have been a legitimate reason for holding back. Charlie’s reaction at the time: “Are we supposed to applaud because the dog that fouls our lawn is a Chihuahua rather than a Saint Bernard?”” Checklist point is don’t overlook a bad action just because it’s small. They’ll do it again.

Particular points of candor:

  • “And now a painful confession: Last year your chairman closed the book on a very expensive business fiasco entirely of his own making. For many years I had struggled to think of side products that we could offer our millions of loyal GEICO customers. Unfortunately, I finally succeeded, coming up with a brilliant insight that we should market our own credit card….Our pre-tax losses from credit-card operations came to about $6.3 million before I finally woke up. We then sold our $98 million portfolio of troubled receivables for 55¢ on the dollar, losing an additional $44 million. GEICO’s managers, it should be emphasized, were never enthusiastic about my idea. They warned me that instead of getting the cream of GEICO’s customers we would get the – – – – – well, let’s call it the non-cream. I subtly indicated that I was older and wiser. I was just older.”
  • Regarding the difficulties in their manufactured homes business, Clayton. He’s saying they’re literally competing against the government. “…we will continue to use Berkshire’s credit to support Clayton’s mortgage program, convinced as we are of its soundness. Even so, Berkshire can’t borrow at a rate approaching that available to government agencies. This handicap will limit sales, hurting both Clayton and a multitude of worthy families who long for a low-cost home.” Important point that when government gets involved, anyone not receiving benefits will have it harder against those who have that help.

I was also struck by:

  • Evocative description of a social compact between the public and the railroad and utilities. It’s beautiful to read a CEO’s understanding of the community in which the business exists. If it were anyone else, I’d say it’s too good to be true. “Our BNSF operation, it should be noted, has certain important economic characteristics that resemble those of our electric utilities. In both cases we provide fundamental services that are, and will remain, essential to the economic well-being of our customers, the communities we serve, and indeed the nation. Both will require heavy investment that greatly exceeds depreciation allowances for decades to come. Both must also plan far ahead to satisfy demand that is expected to outstrip the needs of the past. Finally, both require wise regulators who will provide certainty about allowable returns so that we can confidently make the huge investments required to maintain, replace and expand the plant. We see a “social compact” existing between the public and our railroad business, just as is the case with our utilities. If either side shirks its obligations, both sides will inevitably suffer. Therefore, both parties to the compact should – and we believe will – understand the benefit of behaving in a way that encourages good behavior by the other. It is inconceivable that our country will realize anything close to its full economic potential without its possessing first-class electricity and railroad systems. We will do our part to see that they exist.” (emphasis mine)
  • NetJets got a new CEO to stem the bleeding. People make such a difference, it’s crazy, and yet it’s constantly overlooked. “Dave Sokol, the enormously talented builder and operator of MidAmerican Energy, became CEO of NetJets in August. His leadership has been transforming: Debt has already been reduced to $1.4 billion, and, after suffering a staggering loss of $711 million in 2009, the company is now solidly profitable.”

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