To devotees of value investing, one of the most anticipated events of the year is the release of Warren Buffett's annual letter to the shareholders of Berkshire Hathaway (BRK.A) - Get Report. At 8 a.m. today, the 1999 Annual Letter becomes available for Buffett's many fans, as well as his growing number of detractors (please note -- the Berkshire Web site may be slow this morning, due to the anticipated traffic).
It's been a tough year for Buffett, as the share prices of many of his core holdings have not only failed to beat the market, but indeed have been battered. The share price of
has plummeted 30.7% since Jan. 1, 1999; that of
, 34.1%; that of
, 41%. And that, combined with a difficult year for his core insurance holdings, including the 1998 acquisition of
, has sent Berkshire stock sliding -- down nearly 50% from its January 1999 highs. The lagging stock price, in tandem with Buffett's
aversion to technology, has brought out the Oracle of Omaha's critics. To be fair, Buffett's longtime love affair with two financial bellwethers,
, treated him better, with Citigroup gaining 51.7% and AmEx up 19.9% since the beginning of 1999.
That handicap has been felt all the more keenly because fellow value fund manager
Bill Miller, manager of the
Legg Mason Value Trust, continues to enjoy market-beating returns through his prescient and sizable bets on
and, more recently,
. And as fellow columnist
so wisely noted last June, in
Probing Berkshire's Premium, even Berkshire's valuation grew increasingly out of touch with the underlying value of the company businesses and investments.
But to many, Buffett's intransigence remains an oasis of sanity in a market environment that has lost all touch with historical valuation measures. So, as the faithful pore through the report in search of Buffett's homespun witticisms, they are likely to continue to give the famed investor the benefit of the doubt.
And, if ever a time existed when investing in Buffett represented compelling value, now is it, as laid out in Bronchick's most recent take,
The Bargain in Berkshire.
As originally published, this story contained an error. Please see
Corrections and Clarifications.
Christopher S. Edmonds is president of Resource Dynamics, a private financial consulting firm based in Atlanta. At time of publication, neither Edmonds nor his firm held positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he welcomes your feedback at