Morningstar’s 2008 CEO of the Year Award goes to none other than….
…legendary investor and Berkshire Hathaway’s own, Warren Buffett.
Beyond creating a company that treats common shareholders with the utmost fairness and respect, one needs only to look at the long-term value created at Berkshire Hathaway to see why Buffett deserves the award. Since taking the helm of the sleepy textile business 44 years ago and turning it into arguably the strongest conglomerate on the planet, Buffett and his managers have grown the book value per A share from $19 to just over $77,500, as of Sept. 30. This translates to a 20.7% annualized increase in book value since 1965, versus a mere 9.6% annualized return in the S&P 500 (including dividends) over the same time period.
And while 2008 was an exceptionally difficult year for just about all investors, it was much less trying on Berkshire Hathaway and its shareholders. Berkshire’s balance sheet equity should be roughly flat from a year ago once the books are closed on 2008. More importantly, the competitive positioning and cash-flow generating ability of Berkshire’s businesses remain robust.
Buffett wasn’t perfect this year though:
Ironically, for the first time in many years, giving the CEO of the Year award to Buffett may be a tad controversial. Among the perceived mistakes at Berkshire are the writing of large put option contracts on broad stock indexes last year, the company’s $8 billion worth of investments in General Electric (GE) and Goldman Sachs (GS) in September and early October, as well as Buffett’s editorial in The New York Times on Oct. 16 urging investors to “Buy American. I Am.” With the market taking a sharp turn for the worse in late October and again in November, clearly the timing was not the best on these particular bullish actions.
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