On Buffett's letter to shareholders

Berkshire Hathaway founder Warren Buffett is not in favour of using company shares to buy assets. Simon Brown explains why he agrees with this investment guru.

- Simon Brown

The last Saturday of February is eagerly awaited by investors around the world as it’s the day on which Warren Buffett publishes his annual letter to Berkshire Hathaway shareholders. (You can find it at berkshirehathaway.com, remember you are looking for the 2016 letter as it is for their 2016 financial year-end.)

Further, the annual general meeting is being webcast on 7 May, so we can watch live without the long trek to visit Buffett’s hometown of Omaha, Nebraska.

This latest letter included an update on his nearly decade-long bet that an S&P 500 index tracker would beat a basket of hedge funds. With just a year to go, the index is miles ahead of the basket of hedge funds, proving his point about excessive fees that kill returns, but also his point that active management is very difficult and return after costs are often modest and below the market average.