BUFFETT PARTNERSHIP, LTD. 810 KIEWIT PLAZA OMAHA 31, NEBRASKA
November 1, 1965
To My Partners for 1966:
Enclosed are:
(1) Two copies or the commitment letter for 1966, one to be kept by you and one returned to us. You may amend the commitment letter right up to midnight, December 31st. So get it back to us early, and if it needs to be changed, just let us know by letter or phone. Commitment letters become final on December 31st. Every year I get a number or calls in the first week in January expressing a desire to add to the January 1st capital. THIS CAN'T BE DONE.
(2) A copy of our ever-popular "The Ground Rules." It is essential that we see eye-to-eye on the matters covered therein. If you have different views - fine, yours may be better - but you shouldn't be in the partnership. Please particularly note Ground Rule 7. This has been added this year reflecting a moderate shift in my attitude over a period of time. It represents a decidedly unconventional (but logical in my opinion when applied to our operation) approach and is therefore specifically called to your attention.
Any withdrawals will be paid January 5th. You may withdraw any amount you desire from \$100 up to your entire equity. Similarly, additions can be for any amount and should reach us by January 10th. In the event you are disposing of anything, this will give you a chance to have the transaction in 1966 if that appears to be advantageous for tax reasons. If additions reach us in November, they take on the status of advance payments and draw 6% interest until yearend. This is not true of additions reaching us in December.
The partnership owns a controlling interest in Berkshire Hathaway Inc., a publicly-traded security. As mentioned in my midyear letter, asset values and earning power are the dominant factors affecting the valuation of a controlling interest in a business. Market price, which governs valuation of minority interest positions, is of little or no importance in valuing a controlling interest. We will value our position in Berkshire Hathaway at yearend at a price halfway between net current asset value and book value. Because of the nature of our receivables and inventory this, in effect, amounts to valuation of our current assets at 100 cents on the dollar and our fixed assets at 50 cents on the dollar. Such a value in my opinion is fair to both adding and withdrawing partners. It may be either of lower than market value at the time.
As I write this, we are orbiting in quite satisfactory fashion. Our margin over the Dow is well above average, and even those Neanderthal partners who utilize such crude yardsticks as net profit would find performance satisfactory. This is all, of course, subject to substantial change by yearend.
If anything needs clarification, call or write John Harding who is in charge of "de-confusing" partners. The tax situation is about as reported in the August letter, but if you would like John to make the calculation for you, he will be glad to do it.
Cordially,
Warren E. Buffett
P/S: We are continuing our "no prize" policy for the last ones to get their commitment letters back to us. It will make things easier for us if you get it back pronto. If you want to make changes later (before January lst), just give us a call, and we'll amend it for you.
BUFFETT PARTNERSHIP, LTD. 810 KIEWIT PLAZA OMAHA 31, NEBRASKA
1965年11月1日
致我1966年的合伙人：
随函附上：
(1) 两份1966年承诺函，一份由您留存，一份寄回给我们。您在12月31日午夜前均可修改承诺函。因此，请尽早将承诺函寄回；如需修改，只需来信或来电告知即可。承诺函于12月31日最终生效。每年一月的第一周，我都会接到几个电话，表示希望增加1月1日的资本金。这无法操作。
(2) 一份我们广受欢迎的《基本原则》。我们在其中涉及的事项上意见一致至关重要。如果您有不同意见——那也没关系，您的意见可能更好——但您不应留在合伙企业中。请特别留意基本原则第7条。这是今年新增的，反映了我一段时间以来态度的温和转变。它代表了一种明显非常规（但在我看来，适用于我们的运作时是合乎逻辑的）方法，因此特意提请您的注意。
提款将于1月5日支付。您可以提取从100美元到您全部权益的任何金额。同样，追加资金可以是任何金额，并需在1月10日前送达我们。如果您要处理任何资产，这使您有机会将交易安排到1966年，如果这从税务角度看有利的话。如果追加资金在11月送达我们，它们将具有预付款性质，并到年底按6%计息。12月送达的追加资金不享受此待遇。
合伙企业拥有伯克希尔·哈撒韦公司（Berkshire Hathaway Inc.）（一家公开交易证券）的控股权。正如我在年中信中所提，资产价值和盈利能力是影响一项业务控股权估值的主导因素。市场价指导少数股权头寸的估值，但在评估控股权时，其重要性很小或毫无影响。我们将在年底将我们在伯克希尔·哈撒韦的头寸估值定在净流动资产价值与账面价值之间的中间价。由于我们的应收款和库存的性质，这实际上相当于我们按100美分兑1美元评估流动资产，按50美分兑1美元评估固定资产。在我看来，这样的估值对追加资金和撤资的合伙人都是公平的。它届时可能低于或高于市场价值。
在我写这封信时，我们的运作情况相当令人满意。我们领先道指的超额收益率远高于平均水平，即使是那些使用"净利润"等原始标准来衡量业绩的原始人合伙人，也会对业绩感到满意。当然，这一切到年底都可能发生重大变化。
如有任何需要澄清之处，请致电或致信负责为合伙人"解惑"的John Harding。税务情况大致如8月份信函所述，但如果您希望John为您计算，他很乐意为您效劳。
此致，
沃伦·E·巴菲特
附言：我们继续执行对最后交回承诺函者"不设奖励"的政策。如果您能尽快寄回，将方便我们处理。如果您之后（1月1日前）想修改，只需给我们打个电话，我们就会为您修改。