Warren Buffett's annual letter to the shareholders of Berkshire Hathaway is absolutely a must read for every value investor. In addition to discussing Bershire's business, holdings and investments in detail Buffett gives his opinion on market uncertainty ("tomorrow is always uncertain") and US economy in the long run. He also explains his management style ("hire well, manage little").
A section titled "Life and Debt" discusses using leverage (debt). It's no news that Buffett isn't keen on companies that have a lot of debt. He shares a letter that was sent by Buffett's grandfather Ernest to Buffett's uncle Fred. The letter talks about importance of keeping some cash for unexpected events (i.e. an emergency fund). Buffet keeps $20 billion and stated that they will always keep minimum of $10 billion as cash or equivalents (US treasury bills). Hurricane "Katrina" cost Berkshire $3 billion. However, the cash is also there in case of sudden panics in the market. Buffett invested $15.6 billion in the 25 days following Lehman bankruptcy in 2008.
In the end Buffett shares his biennial letter to CEOs of Berkshire subsidiaries. He states how important reputation and good business practises are. Then he asks his managers to tell him who is their primary candidate for succession at their company in case something happens to them. That's it.
Impressive.
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