How to Write a Shareholder Letter: Buffett vs. Lampert

Both started with an overview of the econ­omy and how their com­pa­nies per­formed within that con­text. Here’s how Buf­fett started:

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.* 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.

Lam­pert focused more on retail, which makes sense being this was the share­holder let­ter for Sears Hold­ing Com­pany:

This past year was a very dif­fi­cult year for the world economies and for retail in the United States, and 2009 needs to be the year of restor­ing con­fi­dence and trust in our finan­cial sys­tem. We have wit­nessed the weed­ing out process that inevitably accom­pa­nies dif­fi­cult eco­nomic times, with retail com­pa­nies like Cir­cuit City, Mervyn’s, Linens ’n Things, and For­tunoff not just fil­ing for bank­ruptcy, but under­tak­ing com­plete liq­ui­da­tion. Other retail com­pa­nies, many of whom are highly regarded, have seen their plans and expec­ta­tions thwarted by events rang­ing from con­sumer dis­tress and the tight­en­ing of credit mar­kets to rat­ing agency con­cerns, all of which have upset nor­mal expec­ta­tions about how a retail busi­ness should be run.

STAY TRUE TO OUR GOALS

Both chair­men showed con­fi­dence by reas­sur­ing their share­hold­ers that they will con­tinue to focus on things they can con­trol. Buf­fett shared his focus this way:

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.

I always enjoy the folksy way that Buf­fett shares his per­spec­tive. Here Lam­pert used the same focus on the con­trol­lable goals strat­egy, but wrote in lan­guage the reads more like generic com­pany speak.

We con­tinue to hone our vision and define what it will take to achieve it. There are five key pil­lars of our strat­egy, and I would like to lay them out for you:

1. Cre­at­ing last­ing rela­tion­ships with cus­tomers by empow­er­ing them to man­age their lives
   
2. Attain­ing best in class pro­duc­tiv­ity and efficiency
   
3. Build­ing our brands
   
4. Rein­vent­ing the com­pany con­tin­u­ously through tech­nol­ogy and innovation
   
5. Rein­forc­ing “The SHC Way” by liv­ing our val­ues every day

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