2015 Letter to Shareholders

To the Shareholders of Berkshire Hathaway Inc.

In 2015, Berkshire made several significant moves that will shape the company for decades. Our largest acquisition was Precision Castparts Corp. for $37 billion. It was a premium price, but one we were willing to pay for a business with a durable competitive advantage and exceptional management.

"It's far better to buy a wonderful business at a fair price than a fair business at a wonderful price."

Precision Castparts

Precision Castparts makes complex metal components for aerospace, power generation, and industrial applications. Its products are mission-critical—you cannot fly a plane or run a power plant without PCC parts.

What makes PCC special is its manufacturing expertise, built over decades. The company's engineering capabilities are unmatched, and its products are specified by original equipment manufacturers who will not substitute. This is a true moat.

Matt Klein and his team have run PCC for decades with extraordinary skill. They will continue to run it as a Berkshire subsidiary, with the same culture and the same people. That is how we operate.

Insurance Operations

Our insurance businesses continued to generate the float that drives Berkshire's investment returns. In 2015, our float reached $88 billion, up from $83 billion the year before.

Ajit Jain again delivered extraordinary results. His ability to assess and underwrite risks that others cannot even understand is unique in the industry. The float from his reinsurance operations alone exceeds what most insurance companies have in total capital.

GEICO made progress in its turnaround, with policies in force growing for the first time in years. Our technology investments are paying off, and the cost savings from our direct sales model are being passed to policyholders and retained as profit.

Kraft Heinz

In 2015, we completed the Kraft Heinz merger, creating the third-largest food company in North America. The combination of Kraft's brands and Heinz's distribution capabilities created significant synergies.

3G Capital brought operational expertise that combined perfectly with our capital. The Kraft Heinz model—simplify operations, reduce costs, focus on quality—is replicable across our consumer products businesses.

Investment Managers

In 2015, Todd Combs and Ted Weschler continued to demonstrate their investment skills. Between them, they now manage over $30 billion of Berkshire's equity portfolio, freeing me to focus on larger allocation decisions.

Both Todd and Ted share our philosophy: they think like owners, focus on business quality, and are willing to be patient. They have earned their compensation many times over.

Looking Forward

Our formula remains unchanged:

1. Own excellent businesses — We look for companies with durable competitive advantages and honest management
2. Hold forever — We prefer to buy and hold, avoiding the taxes and transaction costs of active trading
3. Deploy capital intelligently — When opportunities arise, we move decisively; when they don't, we wait
4. Maintain financial strength — We will never risk Berkshire's solvency for short-term gains

Thank you for your continued support.

Warren E. Buffett February 2016