Warren Buffett said in his letter to shareholders in the 1977 annual report that Berkshire Hathaway selected marketable equity securities in much the same
way it would evaluate a business for acquisition in its entirety.
Warren Buffett said then: “We want the business to be (1) one that we can understand, (2)
with favorable long-term prospects, (3) operated by honest and
competent people, and (4) available at a very attractive price.”
The fourth point, “available at a very attractive price”, was changed to “available at an attractive price” in his letter to shareholders in the 1992 annual report.
“We have seen cause to make only one change in this creed: Because of both
market conditions and our size, we now substitute an attractive
price’ for ‘a very attractive price’,” Warren Buffett said in the 1992 annual report.
The consistency of Berkshire Hathaway’s investment creed can be seen in Warren Buffett’s letter to shareholders in the 2007 annual report.
Warren Buffett said then: “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. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases. It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.” “Charlie” refers to Charlie Munger, Warren Buffett’s partner at Berkshire Hathaway.
Berkshire Hathaway Letters to Shareholders, 1965-2013